On Thursday 24th October 2019 at the Energy Efficiency Expo in Melbourne, Jack Brown from the Department of Environment, Land, Water and Planning (DELWP) stated in his address to the conference that DELWP are re-considering lighting in the 2021-2025 target setting for the VEU. DELWP are basing their decision on the ‘business as usual’ (BAU) case. However, it was not clear if DELWP are planning on applying this to both commercial and residential activities and to what levels this could be applied.

It is also important to note:

–          the DELWP ‘Regulation Impact Statement’ (RIS) is due out soon,

–          there will be a consolation period to follow, and;

–          the carbon abatement target for VEU needs to be set by May 2020.

‘Business As Usual’ (BAU) case explained

The BAU case is made up of a number of factors. These factors should be applied independently when considering their impact across energy efficiency schemes such as the VEU. This is based on the economies that apply to the VEU and in particular the basis that the VEU is an energy efficiency upgrades program.

Factors that apply to BAU

1 – New builds: BAU does apply to new builds. Most states and local governments apply requirements to new builds or renovations that a percentage of their lighting must be ‘energy efficient’.

2 – Natural upgrades: the ‘natural upgrade’ factor assumes consumers are upgrading their lighting ‘naturally”, as a matter of course without the support of an energy efficiency scheme.

For example:

– Residential lighting upgrade: the average Australian home has 37 Lights. At an average of $65per LED light installed, this is a total cost of approximately $2,000.

– Commercial lighting upgrade: office scenario – 100 fluorescent troffers to be replaced with LED panels. At an average of $80.00 per LED light installed, this is a total cost of approximately $8,000.

– Commercial lighting upgrade: warehouse scenario – 100 metal halide high-bays to be replaced with LED high-bays. At an average of $400 per LED light installed, this is a total cost of approximately $40,000.

On this basis, the BAU case should not be applied to lighting ‘upgrades’

In a struggling economic climate, residentially and commercially, these types of ‘BAU’ upgrades have very low take-up without financial support (via government energy efficiency schemes). This is often due to the payback periods being too long and the capital outlay being too high. This is evidenced in Queensland, a state where there is no deemed energy efficiency scheme and very low take-up in lighting upgrade activity. Furthermore, in South Australian’s Retailer Energy Efficiency Scheme (REES), customer contributions are higher. The Essential Services Commission of SA (ESCOSA) are proposing the removal of the 900Gj cap on commercial installations to help stimulate lighting upgrade activity by removing the barrier of the initial capital outlay.

More details to follow next week…