Energy efficiency schemes – retailer risk vs business and household opportunities

Climate Change Energy Environment & Planning

Incentivised energy-saving schemes offer new opportunities and potential partnerships for your business

A number of states and territories have established schemes that provide electricity users with incentives to implement energy saving measures and which require electricity retailers to achieve energy saving targets.

These schemes are:

  • the NSW Energy Savings Scheme, which allows Accredited Certificate Providers to issue Energy Savings Certificates whenever businesses and households implement energy saving measures. Energy Savings Certificates can be sold to electricity retailers. Each year, electricity retailers must surrender enough Energy Savings Certificates to meet their energy savings targets (currently equivalent to 8.5% of the amount of electricity that retailer purchases for resale);
  • the Victorian Energy Upgrades Program operates in a similar way to the NSW Energy Savings Schemes. Accredited providers can implement energy savings measures that generate Victorian Energy Efficiency Certificates that can be sold to electricity retailers who can surrender the certificates to meet mandated energy efficiency targets;
  • the South Australian Retailer Energy Efficiency Scheme requires retailers to implement energy efficiency activities with households and businesses to achieve energy efficiency targets. Unlike NSW and Victoria, South Australia does not have a mechanism for trading energy savings certificates on the market. However, electricity retailers can subcontract their energy efficiency obligations to third parties; and
  • the Australian Capital Territory Energy Efficiency Improvement Scheme is similar to the South Australian Scheme. Electricity retailers can engage Approved Abatement Providers to deliver energy savings measures to satisfy mandated targets.

These state-based schemes sit alongside the Federal Government's Emissions Reduction Fund. For example, in NSW, projects that access the Emissions Reduction Fund are not entitled to participate in the Energy Savings Scheme.

Key risks and opportunities

Currently, the state-based energy efficiency schemes generally present:

  • opportunities to businesses that wish to become an accredited provider to accrue and sell energy efficiency certificates;
  • limited opportunities to businesses and households that could benefit from energy efficiency measures installed by accredited providers; and
  • a limited risk to electricity retailers who are under an obligation to purchase and surrender certificates under state-based schemes.

However, a National Energy Saving Scheme (NESS) has been under consideration for some time. A NESS was investigated by the Federal Government in 2015 and was most recently recommended by the Climate Change Authority in 2017. Depending on the nature and details of any such national scheme, a NESS could present opportunities for businesses to partner with accredited providers to implement energy efficiency measures throughout their operations, and it may be possible to split profits derived from the generation of energy savings certificates.

Key questions

  • Are there any energy saving opportunities that your organisation can implement to take advantage of a scheme?
  • Is there any appetite in your business to explore the possibility of partnering with an accredited provider to take advantage of any of these opportunities, and potentially split profits from the generation of certificates?

Climate change guide

This insight is part of our climate change guide for legal and compliance teams in Australia