Policy update July 2021 14 July 2021
By Rob Murray-Leach
There is a huge amount of consultation underway on energy policy issues at both the state and the federal level. However, one of the most significant is Victoria’s consultation process on how to decarbonise natural gas use in Victoria. The Government’s consultation paper looks at a range of potential actions, including energy efficiency, electrification, hydrogen and biomethane. While there is much to discuss in terms of the paper’s content, the reason that it is so significant is that it shows how fast the debate is moving in carbon and energy.
Natural gas is no longer perceived as a low-risk transition fuel – as it was in 2010 – but as a fuel that we must rapidly decarbonise. The pace of change in the energy debate is remarkable, and is only accelerating. I’m coming to the view that businesses and organisations need to be mindful that we are in a moment of transition, with a firm view of what conditions look like in a zero-emission energy system. It’s really not very far away.
Submissions close on 30 July and the EEC will be holding a member forum on this consultation next week. EEC members that wish to provide input on this submission should keep an eye on their inboxes – you’ll be notified of details in the coming days.
Energy efficiency schemes
The Victorian and NSW governments have undertaken consultations on a jointly developed methodology for commercial and industrial hot water heat pumps. The EEC’s submission, which will be uploaded to our submissions page shortly, focusses on ensuring that the schemes drive installation of quality heat pumps. It can be necessary to heavily subsidise some technologies to drive ‘market transformation’ that leads to their rapid uptake. However, these high levels of subsidy can dramatically reduce the effort that consumers invest in assessing the quality of a product before they buy it. Accordingly, subsidy programs need to add in a strong element of quality control.
The NSW Government has also opened its consultation on the 2020-21 Energy Savings Scheme Rule Change, with a public forum on 15 July and submissions due by 23 July. The NSW Government updates (or ‘tweaks’) the Energy Savings Scheme on an annual basis, and this consultation looks at a wide range of issues. As always, we’ll be canvassing member views via the Energy Efficiency Schemes Task Group; EEC members that wish to join the conversation should email Juliane Tice at firstname.lastname@example.org.
On 22 June the Australian Senate disallowed regulation that would have allowed the Australian Renewable Energy Agency (ARENA) to invest in a broad range of ‘lower-carbon’ technologies, including energy efficiency, carbon capture and storage and hydrogen derived from natural gas. This decision was driven by objections from Labor and The Greens to ARENA’s funding being directed to fossil-fuel activities, and unfortunately energy management got caught in the crossfire.
It’s possible that Labor and the Coalition will negotiate a mutually agreeable version of the expansion through the Senate, which would include expansion of ARENA’s remit to include activities like electric vehicles and energy efficiency but not fossil fuels. However, I don’t think the chances are strong – the expansion of ARENA has become symbolic for the clean energy debate, and unfortunately all sides of politics benefit more from being seen to fight on this issue than come to a compromise.
Given that dynamic, while there is bipartisan agreement that ARENA should be expanded to cover energy management and electric vehicles, the most likely outcome is that ARENA remit will be expanded after the federal election.
Demand response by appliances
The last couple of years have seen a growing hullaballoo over ‘appliance demand response’. This is a very important issue so I’m currently writing a longer article on the topic.
However, here’s the short version: as our electricity system is increasingly dominated by wind and solar, the more precisely that we’re able to shift energy use to match this generation, the more we will support renewable energy, reduce emissions and lower everyone’s energy bills.
To enable this type of load shaping and demand response, it really helps if appliances are able to adjust their energy use in response to signals from the energy sector. For example, if there’s a lot of wind generation at a particular time, switching on water heaters can help absorb this cheap energy and reduce the use of fossil fuel generation when the wind isn’t blowing.
South Australia is currently considering how to ensure that appliances can respond to demand response signals. There are a number of critical issues that need to be worked through to do this effectively and on a reasonable timeframe. Stay tuned for the next edition of this newsletter, in which I’ll dig into this issue in more detail.
Rob Murray-Leach is Head of Policy with the Energy Efficiency Council
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This article was originally published in the July edition of Efficiency Insight.