Is your business leaving money on the table? Understanding the NSW Energy Savings Scheme
Bill McGhie – Energy and Carbon Specialist@Simble
The majority of NSW businesses are failing to make use of the savings available under the NSW Energy Savings Scheme. Implementing an eligible ECM (Energy Conservation Measure) can earn ESC (Energy Savings Certificates or Eskys) which subsidise the upfront cost.
As an example, in a typical industrial lighting scenario where older mercury vapour high bay lights are replaced by LED lights, the ROI improves from 48 months to 16 months with the ESS contribution.
To participate businesses can contact equipment suppliers or ask their trusted electrician to research the options available.
There are other projects which can be eligible under various methods in the ESS. The Energy Savings Scheme allows energy savings to be calculated using 3 methods (which have a number of sub-methods in each):
- Deemed– where all of the certificates are created in advance for the life of the project. Commercial Lighting is the most common example of this.
- Metered Baseline– where the savings are calculated against a baseline and claimed annually for 10 years.
- Project Impact Method– uses modelling to calculate energy savings based on the difference between the modelled and actual energy use.
The method you use will depend on the activities you will be implementing:
Deemed Methods
Commercial Lighting Energy Savings Formula
This method is used to calculate energy savings from eligible commercial lighting upgrades, where lighting standards have been met.
This is by far the most popular method used in the ESS. The main reason is the deeming allows for the ESC value for the whole life of the project to offset the upfront costs, improving affordability and creating attractive ROIs.
Energy savings returns vary with the type of area. It gives the biggest returns in industrial premises, and where there is a big reduction in energy consumption.
Public Lighting Energy Savings Formula
This method can be used to calculate energy savings from eligible upgrades of lighting for roads, public spaces or traffic signals.
Power Factor Correction (PFC)
This method calculates energy savings from the reduced electrical losses resulting from the installation of Power Factor Correction equipment.
Home Energy Efficiency Retrofits (HEER)
This method is used to calculate energy savings from a range of common household and small business energy saving upgrades.
High Efficiency Appliances for Businesses (HEAB)
This method is used to calculate energy savings from the installation of high efficiency commercial refrigeration and air conditioning systems and high efficiency motors.
Removal of Old Appliances (ROOA)
This method is used to calculate the energy savings resulting from removal of old, energy intensive appliances.
Sale of New Appliances (SONA)
This method is used to calculate the energy savings resulting from bulk sales of energy efficient appliances and whitegoods.
Metered Baseline Methods
These methods are best suited to ‘whole of site’ energy savings. One of five calculation methods can be used, depending on the site.
- Baseline per unit of output – used when consumption is strongly linked to output (eg, aluminium smelting)
- Baseline unaffected by output – used where consumption is not linked to output (eg, hotels, schools and swimming pools)
- Normalised baseline – used where explainable variation needs to be accounted for in the baseline (e.g weather dependent HVAC and refrigeration)
- NABERS baseline – used for commercial buildings
Project Impact Assessment with M&V
This method utilises internationally recognised measurement and verification principles to verify energy savings. It allows ‘equipment level’ energy savings to be deemed for up to ten years, using persistence and confidence factors to discount initial certificate creation. The scheme has NSW Government support until at least 2025.
There is also the newly released Power to Save program, which initially will subsidise the cost of LED upgrades for small business. The scheme is being expanded in the second half of 2018 to include upgrading air conditioning units to high efficiency models.
Businesses can access finance for these projects from a range of sources. Some of the banks have a “green” finance arm which assist business with project finance and have a range of technology suppliers and integrators on their approved provider lists. The Clean Energy Finance Corporation and the Australian Renewable Energy Agency also provide finance for eligible projects. Used wisely, these sources can create a cash positive scenario from day one, as the annual savings exceed the cost of finance.