The Energy Savings Scheme (ESS) is a NSW-based mandatory energy efficiency scheme for electricity retailers and other liable parties under the Electricity Supply Act.
The ESS reduces electricity consumption in NSW by creating financial incentives to invest in energy savings.
It assists households and businesses to reduce electricity consumption and electricity bills.
Businesses that save energy by installing, improving or replacing energy savings equipment can gain financial incentives by participating in the scheme (see Background to the Energy Savings Scheme and the Energy Savings Scheme website for more information).
Energy Savings Scheme Review
In August 2013, the NSW Government released the NSW Energy Efficiency Action Plan. Action 1 of the Plan is to review the Energy Savings Scheme to identify how it could be enhanced, including:
- targets, penalties and scope to help meet NSW 2021 targets (i.e. the annual energy savings target of 16,000 gigawatt hours (GWh) above business as usual) and drive sustainable industry growth
- scheme functions and capabilities to define roles and responsibilities to make the administration of the scheme more understandable, logical and transparent
- the state of the current energy efficiency market to identify pathways for market transformation.
This review is separate to the 2014 Rule change. The review will also provide information for the Scheme’s statutory review, which is to be undertaken after 1 July 2014.
NSW Trade & Investment and the NSW Office of Environment & Heritage jointly released an Issues Paper for public consultation as part of the review, which closed to submissions on 10 March 2014.
Further information on the Energy Savings Scheme Review can be found here.
Energy Savings Scheme Rule Change Consultation
The NSW Government is proposing changes to the ESS Rule to commence in early 2014.
Changes to the ESS Rule are being proposed to:
1. Encourage the take-up of a broader range of energy efficiency actions
- more household energy efficiency activities, aligning more closely with the Victorian Energy Efficiency Target (VEET) scheme
- more opportunities for more businesses to access the scheme
- minimising the overall cost of delivering activities.
2. Remove unnecessary red-tape that creates a barrier to households and businesses accessing incentives
- clarifying technical requirements of the Scheme
- streamlining certificate creation processes.
3. Ensure consumers receive lasting savings through quality products and services
- requiring co-payments for low-cost activities to improve customer engagement
- clarifying product lifetime and quality test requirements
- removing activities where there is high uncertainty over energy savings
- updating energy savings calculations in line with market changes.
A public Rule change forum was held on 20 November 2013. Presentations from the forum are available below.
Further information on the Energy Savings Scheme Rule Change can be found here.
Energy Savings Scheme Exemptions 2014
The ESS is established by Part 9 of the NSW Electricity Supply Act 1995. Sections 119-122 of the Act allow the Minister to publish an Order in the NSW Government Gazette granting full or partial exemption from ESS liabilities in respect of any electricity load used by persons in connection with emissions intensive and trade exposed (EITE) activities.
The Minister must be satisfied that the electricity load is both EITE and that the exemption is otherwise generally consistent with the objects of Part 9 of the Act.
ESS exemptions are closely aligned with the approach to EITE industries and activities adopted by the Commonwealth Government’s Clean Energy Regulator (CER).
The activities included in the 2014 Order are based on the CER’s list of approved EITE activities for the Jobs and Competitiveness Program. The 2014 ESS Exemptions Order and the explanatory 2014 ESS Exemptions Policy Framework can be accessed from the links below
Background to the Energy Savings Scheme
The ESS commenced on 1 July 2009 with an energy efficiency target of 0.4 per cent of total electricity sales, which will increase to 4 per cent in 2014.
Liable parties meet the target by undertaking energy efficiency activities or contracting specialist companies to undertake them.
The Scheme creates a separate class of tradeable certificates. Parties who participate in eligible energy efficiency activities and projects under the Scheme can create certificates. In order to comply with their liability under the Scheme, liable parties can either create these certificates themselves or purchase certificates from other parties.
In the first four years of the Scheme an estimated 8.5 million megawatt-hours of electricity will be saved. This is equivalent to around 8.5 million tonnes of carbon dioxide.
The NSW Greenhouse Gas Reduction Scheme (GGAS) previously provided incentives for energy efficiency through its Demand Side Abatement component. This part of GGAS was successful in delivering low-cost energy efficiency activity.
The Division of Resources and Energy, NSW Trade & Investment and the Office of Environment and Heritage have led the development of a detailed policy and legislative framework to ensure the efficient operation of the Energy Savings Scheme.
The Energy Savings Scheme will operate until 2020 unless replaced by a national energy efficiency trading scheme.
Further information can be found on the Energy Savings Scheme website.