Working with Germany to supercharge progress on energy efficiency 14 July 2021

By Julianne Tice

There has been a lot of talk about collaboration on hydrogen between Germany and Australia in recent months, however it’s not the only game in town!

The opportunity for collaboration on energy efficiency is huge, and was examined in a recent report written by the Energy Efficiency Council in partnership with the German-Australian Chamber of Industry and Commerce and the German think tank adelphi: Further, faster, together – Opportunities for collaboration between Germany and Australia on energy efficiency in buildings.

The report was initiated by the Australia-Germany Energy Working Group, which contains a Sub Working Group on energy efficiency, established in 2019. The Sub Working Group was created to advance cooperation on driving energy efficiency improvement in both nations.

The research considered two broad categories of buildings – commercial and residential – and found that each country has clear strengths in energy efficiency in one category which could be shared with the other. It also did a deep dive on a cross cutting technology – heat pumps – and looked at the opportunities to work together to accelerate the uptake of this crucial technology.

Residential buildings

The report found that Germany is well ahead of Australian in driving energy efficiency in residential buildings, an effort that is underpinned by the generous funding available through the German Development Bank (KfW). This funding is available for both retrofits and construction of new, efficient buildings and is based on the ‘efficiency house’ standard, which takes into account thermal insulation and primary energy demand.

One of the most exciting aspects of this funding is the partial debt relief element (‘repayment subsidy’ in the below table), through which buildings that achieve higher levels of efficiency are relieved of a portion of the loan taken out to fund the work. This is notable because not only are homeowners getting low interest rates on the loans they take out, but they are actually relieved of more debt as their home becomes more efficient. That results in savings on the loan and operational savings on energy once the upgrades are complete. Funding is provided through financing partners such as retail banks and insurance companies, which ensures the funding is highlighted when it is most useful to a customer and provides broad distribution for the product.

Efficiency house standards and funding levels, including partial debt relief amounts. Source: KfW.

Another critical element of the KfW scheme is the requirement for an energy efficiency expert, or energieberater, to support householders through the upgrade process. The involvement of an expert removes the need for householders to research efficiency upgrades on their own, something they are likely to do only once in their life. These experts can also provide a personalised renovation roadmap to householders, which includes a step-by-step, building-specific plan for renovation over 15-20 years based on a comprehensive energy audit. The government offers funding for the involvement of an expert.

The good news is Australian governments have been working together to establish a national framework for disclosing the energy performance of existing residential buildings. However, the German experience suggests a few more ingredients will be needed to scale up the retrofit market; expert support and finance will be crucial to encourage uptake.  

Commercial buildings

By contrast, the report found that Germany could learn from Australia when it comes to commercial buildings. Though some premium commercial buildings in German city centres are certified with green labels such as LEED, DGNB, and BREEAM, there is no requirement for these or other German commercial buildings to have their environmental performance certified or disclosed. Most do not have a rating of any kind, and the result is a lack of data on the energy consumption of most German commercial buildings. A survey funded by the German Government may change this, but has been delayed for several years.

Luckily for Germany, Australia has a tool which could solve its data and certification issues: NABERS Energy. Because NABERS Energy rates buildings on actual energy performance, the introduction of NABERS Energy – ideally paired with a disclosure requirement, as occurs in Australia – could drive the sort of market transformation that we’ve seen here in Australia. At approximately 47% of Germany’s building sector emissions, it is absolutely critical that commercial building energy consumption is measured and managed.

NABERS Energy was highlighted during a webinar held with German and Australian experts last December, and was subsequently discussed with numerous German experts as part of the research that underpins the report. There is a strong appetite to explore the lessons of NABERS for the German commercial building market, so those insights can be applied in their own market. And there is precedent for NABERS expanding to other nations – New Zealand and the United Kingdom were first cabs off the rank. Watch this space.

Heat pumps

Heat pumps were the final major category examined in the report. Heat pumps are widely acknowledged as a crucial technology for decarbonising global building stock as countries work towards net zero emissions. However, as the market for heat pumps is still developing in both Germany and Australia, there is opportunity to collaborate not just on deployment of heat pump technologies, but on innovation.

Both Germany and Australia are interested in heat pumps for good reason: they can be used in both residential and commercial buildings, as well as industrial processes; they can be powered by renewable energy for zero-emissions heating and cooling; they can be utilised at times of peak renewable generation to create ‘thermal batteries’; and they can enable demand-side flexibility to improve the security and stability of the grid as the electricity system decarbonises. In short, heat pumps present massive opportunities for the energy transition.

While Germany has a longer history with the technology than Australia, uptake remains quite low. One of the reasons for this is the high cost of electricity relative to gas (some of the highest electricity prices in the world are found in Europe), which results in higher operating costs. The newly introduced carbon price is expected to reverse this price disparity, encouraging homeowners to take up heat pumps, especially when coupled with generous government incentives.

In Australia, heat pumps for space conditioning (i.e., split system air conditioners) are very common. However, the poor thermal performance of most Australian buildings means a lot more electricity is required to power these otherwise very efficient systems than would be necessary with better sealed and insulated buildings. For commercial heat pumps, poor availability and lack of performance standards makes it challenging for building owner and managers to source heat pumps and discourages governments from offering incentives. In both countries, the workforce qualified to install heat pumps is small and largely unfamiliar with the technology, further hindering uptake. These are barriers that will need to be addressed in the coming years to improve penetration, but by working together, Germany and Australia can learn from each other to get further, faster.

Continuing the momentum

The recent release of the Further, faster, together report has generated a huge amount of interest. The report made clear recommendations for progressing the conversation, some of which have already picked up: NABERS is now working on an international resource on the general applicability of NABERS to different country contexts, which is expected to be finished by the end of the year. Watch this space for more initiatives coming out of this report.

To learn more about how Australia and Germany can work together to make their residential and commercial building stock ready for the energy transition, check out the Energy Efficiency Council, German-Australian Chamber of Industry and Commerce, and adelphi’s joint report Further, faster, together – Opportunities for collaboration between Germany and Australia on energy efficiency in buildings.


This article was originally published in the July edition of Efficiency Insight.