There are a few ways of looking at the impacts of covid-19 on energy upgrade opportunities. Many industrial sites have remained fully operational, various commercial sites such as retail, hospitality and office sites have been using less electricity as they have been closed, and households have been using more electricity as families work, study and entertain themselves at home. So, on the one hand, many sites have not been accessible for undertaking project scopes and completing energy upgrades. On the other hand, other sites have been able to grasp the opportunity, turning their attention to scoping out and even completing upgrades more easily than when sites are fully operational.
As part of covid-19 recovery plans, the Energy Savings Industry Association has asked governments across Australia to consider providing targeted economic stimulus in the next 12-24 months to kickstart energy upgrades. Stimulus will empower energy customers to invest in behind-the-metre infrastructure improvements. This is in keeping with the direction of the recommendations in April by the Energy Security Board (ESB) in its paper Moving Towards a Two-sided Energy Market.
Stimulus strategies for energy efficiency and demand reduction will strengthen economic resilience, improve infrastructure and increase competitiveness. Upgrades will rapidly stimulate thousands of labour-intensive job hours, support businesses and help households experiencing financial hardship by delivering many millions of dollars a year in energy bill savings and reduce electricity system stress.
Energy upgrades are ready to roll with highly attractive and significant reductions to upfront installation costs. With businesses and households likely to have less available cash in the short-term due to covid-19, stimulus in the form of grants, loans, tax concessions or rebates will be effective. Incentives that negate or reduce the need for upfront capital will be get maximum traction.
If we turn our minds back to the global financial crisis recovery, large infrastructure projects made encouraging headlines and they are doing so again. Ten years on, we have a well-established energy upgrade industry that is highly agile, with sophisticated product and service capabilities, efficient supply chains and marketing channels and a register of high-quality products, regulated services, proven compliance regimes and legislative frameworks. While some of those processes during the first part of 2020 have been delayed or consultation periods extended due to remote working for covid-19, the overarching game plan remains: stay firm on ambitious targets and rollout the obvious upgrades, including air-conditioning, lighting, system controls and batteries.
It is a low-risk approach, which is what the existing schemes in NSW, Victoria, South Australia and the ACT have been doing very effectively for the past 10 years. Their capacity to deliver is still largely untapped. We know this because all four schemes are committed to expand from 2021 by increasing their targets and they may consider introducing a component that provides additional financial incentives for reducing electricity during peak demand periods.
Whatever the method of covid-19 stimulus for energy efficiency and demand reduction, it can complement existing scheme frameworks or stand alone in jurisdictions that have no scheme. Some synergy would uphold a spirit of harmonisation as requested by the COAG Energy Council in recent years regarding energy savings schemes.
For example, a national stimulus initiative could be inspired by the latest advice of the Climate Change Authority, which continues to recommend a National Energy Savings Scheme (NESS) in its March 2020 advice updated from 2017. The federal government could develop a package that sets the groundwork to complement a NESS framework over the next few years.
Worth the effort: upgrade case studies
Refrigerated site cuts peak and saves $150,000 a year
Commercial lighting upgrades are a perfect match for covid-19 rapid stimulus as they are straightforward. Under the Victorian Energy Upgrades (VEU) program, Nestle changed out 707 old HID high bay lights for LEDs, cutting annual energy consumption by 81% and saving 1,371,173kWh, or about $150,000 in electricity bills. A key driver was to reduce peak demand consumption on hot summer days as the site is refrigerated to protect perishable goods.
Boiler upgrade improves gas efficiency, saving $250,000 a year
The energy savings schemes provide incentives for improving gas efficiency. This is especially attractive when fuel switching is not an option. It helps address increasing pressure on gas supplies and supports decarbonisation.
A boiler and steam system upgrade is saving Australian Tallow Producers more than $250,000 a year on its gas bill. This equates to a 15.4% reduction in gas consumption annually, which will avoid more than 1,100 tonnes of carbon emissions. Based on energy savings, the energy upgrade was eligible for creation of Victorian Energy Efficiency Certificates (VEECs) under the VEU valued at $300,000. The customer received the financial incentive about 18 months after the upgrade was completed, as energy savings were proven. This was based on measurement and verification data being supplied to the Essential Services Commission, which manages audit and compliance.
The payback period for the project will be 11 months, based on the cost of the upgrade less financial incentives and energy savings. The project was managed by Energy Conservation in close collaboration with Beam Energy Labs, including identifying project challenges such as outdated inefficient machinery at a large complex site, minimal interruption to operations, pressures to reduce gas consumption due to rising costs, export of gas to a neighbouring facility and detailed production flows that vary based on the production schedule.
Energy Conservation worked through data and verified savings from various measures including boiler economising, blow-down heat recovery and oxygen trim control, flash steam heat recovery and steam trap improvements. Such projects require appropriate VEU accreditation (in this case the project-based activities method) and significant expertise in energy upgrades and VEU financial incentive opportunities and certificate creation accreditation.
ATP recycles millions of kilograms of perishable material from the livestock and poultry processing industry. Goods produced include edible fats, soaps, cosmetics, explosives, toothpaste, pharmaceuticals, leather, textiles, lubricants and biodiesel.
HVAC upgrade saves $44,000 a year in electricity bills
Marina Square is a retail, commercial and residential development at Wentworth Point in NSW which is saving 295MWh, or $44,000, a year on electricity bills and avoiding 271 tonnes of carbon dioxide emissions due to an energy upgrade. The project was eligible for a net $57,000 financial incentive under the NSW Energy Savings Scheme a few weeks after completion of the installation.
This benefit is the result of project manager Energy Conservation overseeing the installation of two Daikin high-efficiency air-cooled water chillers to service a heating, ventilation and air-conditioning system. The system services a 12,000-square-metre retail centre including common areas and more than 45 retail tenancies.
Rod Woolley is president of the Energy Savings Industry Association and managing director of Yellow Door Consulting.
With thanks to ESIA and members for contributions to this article.