Energy savings scheme

The Energy Savings Scheme ('the Scheme') is a NSW-based mandatory energy efficiency scheme for electricity retailers and other liable parties under the Scheme.

The Scheme 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.

An Energy Savings Scheme website has been launched by the Independent Pricing and Regulatory Tribunal (IPART) - the Scheme Regulator and Scheme Administrator. The website provides useful information on the Scheme, particularly for scheme participants, including for accredited certificate providers. See the Energy Savings Scheme website.

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.

GGAS will cease to operate upon the commencement of the Commonwealth Government's proposed Carbon Pollution Reduction Scheme (CPRS) in 2011. As the CPRS will not incorporate energy efficiency trading requirements, the NSW Government decided to transfer most of the incentives for energy efficiency activity in GGAS into the Energy Savings Scheme. The new Scheme builds on the success of GGAS and maintains incentives for energy efficiency in NSW.

Industry and Investment (NSW), Minerals and Energy Division (formerly the NSW Department of Water & Energy, or DWE) and the Department of Environment, Climate Change & Water (formerly the Department of Environment & Climate Change, or DECC) have led the development of a detailed policy and legislative framework to ensure the efficient operation of the Scheme.

The Scheme will operate until 2020 unless replaced by a national energy efficiency trading scheme.

Key Scheme documents

Preparing for the Energy Savings Scheme (PDF 53 KB) provides an overview of the Scheme.

The legislation for the Energy Savings Scheme is contained in Part 9 of the Electricity Supply Act 1995. See Part 9 of the Act.

The Regulation for the Energy Savings Scheme is contained in Part 9A of the Electricity Supply (General) Regulation 2001. See Part 9A of the Regulation.

The Energy Savings Rule (PDF 369 KB) determines the activities that are eligible under the Scheme for certificate creation and outlines methods for calculating the number of certificates a given activity can generate.

The Better Regulation Statement (PDF 231 KB) provides more detail on the case for the Energy Savings Scheme.

Exemptions

The Minister for Energy has granted interim exemptions from the Energy Savings Scheme for emissions-intensive and trade-exposed industries. More information is available from the links below.

• Interim Exemptions Order (PDF 18 KB) - published in the NSW Government Gazette on Friday 14 August 2009.
• Policy framework (PDF 45 KB) - provides background and explanatory material in relation to the interim exemptions.

Consultation on energy savings measures for the Scheme

Input into the Energy Savings Scheme Rule was sought through a request for ideas in January 2009, at a Workshop on 3 April 2009 and through a public submission process on a draft version of the Rule in May-June 2009.

A half-day workshop was held on the morning of Friday 3 April 2009 at the Sydney Masonic Centre. The workshop provided an opportunity for further stakeholder input into the development of energy efficiency measures to be included in the Scheme, and in particular on development of Default Abatement Factors that will be included in the Scheme Rule.

The Program and presentations made at the Workshop are available below:

• Workshop program (PDF 42 KB)
• Keith Tarlo, Manager Special Projects, Climate Change, Air and Noise Branch, DECC:
  Energy Savings Scheme Overview (PDF 71 KB)
• David Hemming, Manager, Sustainable Energy, DWE:
  Overview of the Energy Savings Rule (PDF 123 KB)
• Steven Beletich, Consultant, Beletich Associates:
  Commercial Lighting for the NSW Energy Efficiency Target (PDF 332 KB)
• Henry Adams, Senior Project Officer, DECC:
  Commercial Sector - Other New Activities and Methods (PDF 53 KB)
• Nathan Rosaguti, Energetics:
  High Efficiency Motors and Power Factor Correction (PDF 671 KB)
• Henry Adams, Senior Project Officer, DECC:
  Industrial Sector - Other New Activities and Methods (PDF 45 KB)
• Tim Aldrich, Principal Policy Officer, DWE:
  Residential Sector (PDF 94 KB)
• Steven Beletich, Consultant, Beletich Associates:
  Residential Measures for the NSW Energy Efficiency Target (PDF 136 KB)
• Henry Adams, Senior Project Officer, DECC:
  Residential Sector - Other New Activities and Methods (PDF 67 KB)

In January 2009 the Department of Water & Energy requested ideas for energy efficiency measures to be included in the Scheme, including suggestions of ways to improve upon the current energy efficiency provisions in the GGAS Demand Side Abatement Rule. It was requested that all suggestions for new activities and their appropriate factors be supported by a robust methodology in order to determine the benefits of the proposed activity.

In developing the rule for the new Scheme, two objectives were to:

• maximise the potential energy savings by maximising the number and types of activities that are eligible;
• minimise the transaction costs to business of delivering these savings, while ensuring the integrity of the Scheme.

Submissions were considered in developing the NSW Government's final design of the Energy Savings Scheme.

Background and previous consultation on the Scheme

Prior to the NSW Government's announcement of the Energy Savings Scheme on 27 February 2009, the Energy Savings Scheme was referred to as the 'NSW Energy Efficiency Trading Scheme' or 'NEET'. Documents and presentations produced prior to the announcement make reference to the previous Scheme name.

A Stakeholder Consultation Forum was conducted by the NSW Government on Friday, 4 July 2008 to start discussions on the design of the Scheme.

Presentations delivered at the forum are available below:

• David Hemming Manager, Sustainable Energy, DWE:
  NSW Energy Efficiency Trading Scheme Forum 4 July 2008 (PDF 115 KB)
• Simon AY Smith, Deputy Director General, DECC:
  NSW Energy Efficiency Trading Scheme Forum (PDF 140 KB)
• Walter Gerardi, McLennan Magasanik Associates:
  Opportunities for Energy Efficiency in NSW (PDF 142 KB)

The Department of Environment & Climate Change and the Department of Water & Energy released a Discussion Paper on the NSW Energy Efficiency Trading Scheme (PDF 141 KB) in mid-2008.

An invitation to comment on the design of the Scheme was issued on this website, with a closing date for comments of 6 August 2008.

Non-confidential submissions received are available below. Views represented in these submissions are those of the respondents and not necessarily those of the Departments or of the NSW Government.

• Australian Environment Business Network (PDF 54 KB)
• Beletich (PDF 46 KB)
• Cement Australia (PDF 114 KB)
• Clean Energy Council (PDF 110 KB)
• Cogent Energy (PDF 334 KB)
• CSR (PDF 76 KB)
• Demand Manager (PDF 1.1 MB)
• Enact Energy (PDF 169 KB)
• Energetics (PDF 59 KB)
• EnergyAustralia (PDF 366 KB)
• Engineers Australia (PDF 221 KB)
• Energy Retailers Association (PDF 53 KB)
• Energy Supply Association of Australia (esaa) (PDF 58 KB)
• Hydro Aluminium (PDF 21 KB)
• Insulation Council of Australia and New Zealand (ICANZ) (PDF 731 KB)
• Integral Energy (PDF 33 KB)
• Lend Lease (PDF 667 KB)
• Next Energy (PDF 39 KB)
• NSW Business Chamber (PDF 57 KB)
• NSW Minerals Council (PDF 74 KB)
• OneSteel (PDF 51 KB)
• Origin (PDF 1 MB)
• Property Council (PDF 250 KB)
• Rheem (PDF 108 KB)
• Swaab Attorneys (PDF 38 KB)
• Sydney Water (PDF 3.1 MB)
• Tomago Aluminium (PDF 91 KB)
• Total Environment Centre (PDF 40 KB)
• TRUenergy (PDF 34 KB)
• Wattwatchers (PDF 65 KB)

Submissions were considered in developing the NSW Government's final design of the Energy Savings Scheme.