Environmental IQ

An energy efficient Australia? Easy/

Andrew Dyer  25th July 2010, Climate Spectator

There’s been a lot of talk lately about energy efficiency. There have been various manifestations of new meter programs around our states and, most recently, federal proposals for “energy efficiency certificates” as a new program to drive behaviours to reduce electricity demand.

This should not be a complicated issue. There are two basic problems to solve: One, we need to reduce the average electricity consumption per capita; second, we need to move demand during peak times to off-peak times, to reduce the average to peak load ratio. In places like South Australia, this ratio is below 50 per cent – one of the worst ratios in the world.

But we seem, largely, to be pursuing longer-term solutions to contemporary problems that can be solved today with some pragmatic actions. By contrast, we have done a fantastic job reducing water consumption per capita in places like Victoria – without changing meters or introducing certificates.

Just good old-fashioned awareness and marketing campaigns, along with some regulation, improved water devices, and peer pressure did the trick. However, we have not generated any similar peer pressure or awareness to reduce our electricity consumption.

On the front page of The Age each day is a simple graphic detailing the current water reserves in Victoria’s reservoirs, and how that compares to a year ago. It’s a daily reminder that we need to be on top of our game in minimising our water use and protecting this finite resource. Yet, there is no such public graphic or reporting on our consumption of electricity.

Pragmatic solutions are not far away. California, a state with similar climates to much of populated Australia, has aggressively tackled energy efficiency over the past 20 years. Their efforts have reduced average consumption per capita down to levels that are just 50 per cent when compared to the US average; and California’s Public Utilities Commission (CPUC) claims this has circumvented the need to build several thousands of megawatts of large-scale fossil power stations.

According to the CPUC, by the mid 2000s, some 40,000 GWh per year of electricity (the equivalent of the output of over five 1000MW power stations) have been saved in California, and peak demand load has been reduced by 22 per cent. And California continues to push ahead, with targets to reduce electricity demand by a further 16,000 GWh per year by 2020, based on estimates documented by The Climate Group.

Simple but effective, the California program has focused on three key areas – lighting & appliances, HVAC Systems (heating, ventilation and air-conditioning), and motors.

California has put in place legislation and incentives to clean up these devices that are heavy users of electricity, distributed throughout the customer network. They also have a simple 12 point plan for home energy efficiency, with tips that range from turning in your old beer fridge, to upgrading your insulation (it is a good idea if you do it properly), through to tackling leaky windows and inefficient AC and water heater systems. Basic stuff but, on mass, makes a huge difference to the aggregate load on the power system.  Anyone can read the details at www.cpuc.ca.gov/ee.

Then there’s load management on a high demand day. In Australia, that is usually in the summer, with our ever-increasing population of air conditioners humming. If the aggregate consumption is too great, there is no choice but to shed load by turning off entire neighbourhoods.

For load management, there are simple solutions available that can be implemented now. When we lived in Florida during the 1990s, our local utility provided a “load control program”.  This allowed the utility to remotely switch off our air conditioner or pool pump at their discretion in times of peak load on the system – typically for just 30 minutes of interruption.

It was a simple, low cost radio device and, during the four years we lived there, I can only recall a couple of short interruptions when we were home. We received around a $10 credit off our bill each month and the program gave the utility the control it needed to shed selected load, rather than whole neighbourhoods, when the power load was excessive.

Importantly, the electric utility was not relying on individual customer actions to shed load – it managed this process efficiently and effectively on behalf of customers to minimise any customer impact.

It is not a surprise to see that these load control programs are still in existence today. According to their website, nearly one million of Florida Power & Light’s customers, today, are signed up for this voluntary program – known as the “On Call” program.

The other problem to solve, and a potential benefit of the new “smart” meters down the track, is load shifting – motivating customers to shift discretionary activities away from the peak load periods to times where the load on the power system is much less. This helps reduce costs of generation and costs of the transmission and distribution system by “flattening” out the load over a 24 hour period.

Remarkably, in states like Victoria and NSW, many premises already have a variable tariff meter – known as a “time-of-use” tariff meter. These meters record the use of power in peak and off-peak times, so that the customer can be easily encouraged to put off heavy electricity consuming activities until off-peak times (ie. during evening and weekends).Our house in Melbourne has such a meter and we have certainly modified our behavior to minimise power costs and shift load to the off-peak times.

But, the retailers do not seem to promote this tariff and, if anything, provide dis-incentives for customers to stay or switch to this tariff. Our electricity retailer charges a premium of around 8 cents/kwh, over and above the standard flat tariff, for electricity we consume during weekdays for the privilege of being on this time-of-use tariff. This discrepancy is quite a barrier to getting customers that already have a time-of-use meter installed to move from a flat tariff to one based on time of use.

And the off-peak period doesn’t kick in until 11pm in the evenings (midnight during daylight savings), making it virtually impossible for most households to take advantage of lower tariffs when shifting load during the shoulder, evening period.  8pm or 9pm would make much better sense, and the meters are easily able to be changed to fit this model.

So, if we are serious about energy efficiency, here’s a simple four point plan:

– Set a target of 20 per cent reduction in electricity consumption per capita by 2014 or sooner. Publish simple metrics, on a daily basis, to get public awareness of our electricity consumption per capita and average to peak load ratio. Communicate that we need to improve on both of these metrics.

– Adopt simple, executable programs to further reduce demand from appliances, HVAC, lighting and motors. Learn from successful best-practice programs in other jurisdictions. Be prepared to ban the sale of lighting and appliances that do not meet our minimum standards for energy efficiency and provide simple, point-of-sale rebates and incentives for purchase of efficient appliances.

– Maximise use of existing technologies for metering and control. Better utilise the existing time-of-use meters that are already installed, with appropriate tariffs and time intervals to attract customers to that tariff and reduce peak loads. Investigate implementation of low-cost load control programs to better manage the grid and peak load.

– Establish governance to resolve silo issues. Install appropriate governance arrangements that can resolve issues between any of the current silos that exist in the multi-tiered and regulated electric utility supply chain. Establish at a state level as arrangements differ in each state jurisdiction.

States are best placed to lead the charge in their own jurisdictions to drive the programs that will capture the many opportunities to reduce consumption and shift load. With our overall electricity consumption continuing to grow, this is a time to take practical action, as we have done so well with water, to make a significant impact on our long-term sustainability.

Andrew Dyer was the Victorian Commissioner to the Americas, based in San Francisco. A former McKinsey & Co consultant, he has worked extensively in the energy and utilities industries in Europe, the US, Asia and Australia and is now a company director.