Efficiency, Emissions Reduction, Renewables

NSW Peak Demand Reduction Scheme meets first summer targets

The NSW Peak Demand Reduction scheme has completed its first summer compliance period and comfortably met its targets, writes Energy Savings Industry Association president Rod Woolley.

Following the completion of the first summer compliance period of the NSW Peak Demand Reduction Scheme (PDRS), from 1 November 2023 to 31 March 2023, the first-year targets of four million Peak Demand Certificates (PRCs) are likely to be comfortably met.

PRC registration in NSW is significantly increasing month-on-month. Eligible energy retailers will need to purchase certificates to meet their annual individual liable demand.

The first-year PDRS target in 2022 was just 0.5 per cent, but it will rapidly increase annually to 10 per cent by 2030. By reducing electricity demand at peak times, the scheme will reduce the risk of power outages and decrease pressure on NSW wholesale electricity prices. Participating household and business bill savings of $1.2 billion are predicted from 2022 to 2040.

PRC vintages

At a recent ESIA seminar, the NSW Government explained how Peak Reduction Certificate (PRC) vintages work. Some PRCs can be “forward created” during the life of an implementation. This means they are created upfront and assigned various vintages in relation for when capacity can be made available.

Eligible upgrade types

For the second summer, it is anticipated more activities will be eligible for PRCs, in addition to the current ones, which are commercial and residential refrigeration and air conditioning, and commercial and industrial hot water heat pumps.

Public consultation on new methods is expected in mid-2023. Technologies being considered to include in the next NSW Government PDRS Rule are demand shifting (water heaters and pool pumps); demand response (air-conditioning); consumer batteries; commercial and industrial technologies; and behavioural demand response.

Case study: Air-conditioning

At the ESIA seminar, certificate creator National Carbon Bank of Australia shared early learnings in residential air-conditioning, including that a little return can go a long way. PRC revenue represented only an additional 20 per cent in financial incentives, yet client installations increased by 55 per cent per month on average. The average number of Energy Savings Certificates (ESCs) per installation also increased by 23 per cent as the additional incentive enabled customers to replace their larger and more costly ducted systems.

Rod Woolley is president of Energy Savings Industry Association. Photo: ESIA.

Case study: Commercial refrigeration

Engineering services firm and certificate creator Energy Conservation shared several case studies on commercial hot water and refrigeration at the recent ESIA seminar. For example, a supermarket upgraded its baseline equipment – a remote multi-deck open meat case. The upgrade equipment was a low Energy Efficiency Index, four-door, remote multideck meat case. The certificate incentive stack included 91 ESCs worth $2821 (at $31 each) plus 1118 PRCs worth $2515 (at $2.25 each). The incentive provides an offset to upgrade cost up to a material $5336.

Electricity bill savings are around $1510 a year, calculating a simple payback period under four years. Further bill savings are being achieved as the supermarket is saving on space heating because cold air no longer seeps storewide. Previously, additional heating was needed for customer comfort at the site.

National outlook

It is game on for the rollout of peak demand reduction incentives across Australia under the National Energy Performance Strategy (NEPS) provided the Federal Government is prepared to build on the success of the Victorian and NSW energy savings schemes, and now NSW’s world-first PDRS.

This is what is needed for transformative change before 2030. ESIA considers that the $1.6 billion committed in the Federal Budget in May 2023 might not mobilise the volume of upgrades anticipated for a few hundred thousand households.

What Australia needs is a National Energy Savings Scheme (NESS) including a peak demand reduction incentive that mobilises industry to drive millions of household and business upgrades. This much-needed transformative measure will address the biggest barrier to energy efficiency: reduced customer costs at point of sale.

We weren’t expecting transformative strategy from the Federal Budget. But we are expecting transformative measures in NEPS, which has been through consultation and for which we await the government to respond later in 2023.

Rod Woolley is president of Energy Savings Industry Association (ESIA), the national peak body representing and regulating businesses that create and trade energy efficiency certificates under state and federal schemes in Australia.

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