National Energy Performance Strategy: What’s In it?

On 5 April, the Department of Climate Change, Energy, the Environment and Water released the National Energy Performance Strategy. The strategy is intended to provide a long-term framework to manage energy demand, “so our community can enjoy the economy, climate and health benefits of improved energy performance”. It also designed to contribute to Australia meeting its legislated emissions reduction and renewable energy targets.

Successive governments have identified that improved energy performance could offer benefits in terms of both GDP and reducing carbon emissions.  Energy performance is achieved through improvements over the long term in things like energy efficiency, demand management, and energy productivity.

The government opened consultations on a national energy performance strategy in late 2022 with the release of a consultation paper and received 138 submissions. These came from a wide range of companies, associations, organisations and individuals, illustrating the potential broad reach for a strategy.

Below we summarise the focus areas and key supporting areas, included in the strategy.

Economy-wide momentum

To maximise economic opportunities on the path to net zero, the Australian Government plans to integrate energy performance into net zero planning across six sectors – its sectoral pathways being overseen by the Climate Change Authority.

• Electricity and energy
• Industrial
• The built environment
• Agriculture and land
• Transport and infrastructure
• Resources

This integration will lead to energy performance measures being included in all sectors, ensuring all current and future work being undertaken to help meet our Net Zero targets will include measures to improve energy efficiency.

The NEPS will try to make it easier to invest in energy performance by improving access to finance, in particular this will allow residential and commercial consumers to install more energy efficient technologies which will enable them to save on energy costs (see below).

The Government will provide further funding of $1 billion to the Clean Energy Finance Corporation (CEFC) to support decarbonisation and energy performance projects across the economy, as well as backing sustainable housing and climate technology innovators.

On top of this, a new Sustainable Finance Strategy along with the expanded Capacity Investment Scheme (CIS) are intended to give financial institutions confidence to support the transition, ensuring the electricity sector remains reliable, while ageing generation is retired and replaced by renewables

Supply chain challenges and workforce availability challenges have been highlighted as impeding the speed of the energy transition in Australia. The government has announced the development of a National Energy Workforce Strategy, which aims to address workforce shortages, while ensuring the sector have the appropriate skills needed to address future demands brought on by the net zero transition. This will build on the Clean Energy Generation report by Jobs and Skills Australia – a capacity study into the workforce needs for the transition which made 50 recommendations on steps required.  The newly announced strategy will also build on the previously announced  New Energy Apprenticeships Program and the New Energy Skills Program which are aimed at supporting the training of 10,000 new energy apprentices.

Households

Most of Australia’s 10.9 million dwellings were built before minimum energy efficiency standards were introduced for houses (2003) and apartments (2005) and retrofitting of homes is considered a major opportunity for improving energy performance.

The Australian Government has also allocated an extra $1 billion to the CEFC for a new Household Energy Upgrades Fund. This fund will offer discounted finance to help Australian households upgrade their homes with solar panels, energy efficient appliances, and other energy performance improvements. One of the challenges of retrofitting houses, is those on low-income and those facing energy hardship cannot pay the upfront fees to upgrade their home which would reduce their energy bills. In response to this, the Government, in partnership with the states and territories, has announced a $300 million social housing energy performance initiative under the Household Energy Upgrade Fund, to help those in financial hardship access energy efficient technology. Additional to this, both the federal, state and territory governments are investing $101 million to deploy community-scale solar, rooftop solar and clean energy technologies, allowing more than 25,000 households unlock the benefits of cheaper cleaner electricity.

Communities, businesses and industry

The Federal Government is seeking to improve energy performance through the delivery of energy ratings and tools. This includes the expansion of the National Australian Built Environment Ratings System (NABERS) into schools, retail, private hospitals and medical centres. The Government has also commissioned research to provide data on the carbon footprint of Australia’s buildings and infrastructure construction pipeline over the next five years, to support the government in their policy development on embodied carbon in new construction, emission savings forecasting, and a NABERs rating for embodied emissions in new buildings.

Alongside the government’s energy ratings and tools, they will also partner with councils to co-fund high-impact energy upgrades to help councils cut emissions and reduce energy bills, through the $100 million Community Energy Upgrades Fund (CEUF). They will also provide $200 million to deploy 400 community batteries across Australia, providing shared storage for up to 100,000 households, reducing bills, cutting emissions and supporting the grid. The Government will also be partnering with CitySwitch to help office tenants and local governments improve energy performance within their communities.

ARENA has also announced the $125 million Regional Microgrids Program, with $75 million earmarked for projects in First Nations communities. This project aims to empower First Nation communities to participate in their electricity supply arrangements and the development of renewable energy infrastructure.

The Government also has committed to assisting industry to improve energy performance and decarbonise operations by supporting, through the Powering the Regions Fund’s $400 million Industrial Transformation Stream, feasibility assessments, trials, demonstrations and the deployment of a range of decarbonisaton and clean energy technologies.

Energy System

Through the National Energy Transformation Partnership (NETP), it’s intended federal and state governments will work together to improve energy performance across the economy. The Federal Government will work with state governments to build on existing schemes and develop a framework to coordinate and share benefits of projects, reducing barriers to industry participation.

Demand flexibility is a key element of energy performance, which can support improvements to affordability, security and reliability of the energy system. To support the transformation, further reforms will be needed to the market and governance. Better integration of demand flexibility and consumer energy resources will provide more effective market signals. This will encourage end users to take advantage of times of abundant low-cost renewables while reducing demand when dependent on higher-cost peaking generation and storage.

The development of the NCER roadmap, aims to deliver national reforms for efficient and effective CER integration, deliver on emissions and renewable energy commitments, and drive positive outcomes for the system as a whole, and for all consumers – regardless of income.

Additionally, the Government is taking action to improve demand management and planning, and to embed demand-side resources into policy-making by addressing key gaps in data availability and improving related analytics. Both the state and federal government are implementing the Energy Security Board’s Data Strategy designed to help inform policy, planning research and consumer protections by increasing transparency and revealing how energy consumers are both driving and being affected by new technologies and market changes.

The Government is also developing a national dashboard to track, measure and drive action to improve energy performance across the country, ensuring benchmarks can be achieved and progress is made towards improving energy performance.  This new dashboard will build on existing data collated by Australian Energy Statistics, the Australian Bureau of Statistics, the Clean Energy Regulator and the Australian Energy Market Operator.

The dashboard is expected to allow international comparisons.

Work is also underway to establish an Energy Performance Advisory Group with the aim of bringing together energy, industry and consumer affairs expertise to provide system-level advice on energy performance.

Technology and Innovation

Appliance labels and minimum standards are one of the most effective mechanisms for decarbonisation and helping consumers to benefit from energy performance improvements.  State and federal governments regulate the energy efficiency of certain products through the Greenhouse and Energy Minimum Standards Act (GEMS Act). This provides a single integrated approach to energy efficiency standards and labelling. Currently there are 24 GEMS determinations establishing mandatory energy efficient requirements in Australia, but these do not cover as many products as energy regulations in the US and EU. The government is preparing a second tranche of reforms to streamline, expand and modernise the GEMS Act.

As well as modernising the GEMS Act, the Federal Government is supporting research and development on emerging and innovative processes and technologies, particularly industries which are hard to decarbonise. On top of already announced funding research, the government is proposing a strategic research plan, including mapping existing research and collaboration to identify gaps and opportunities.