In this edited version of a presentation given at the recent Clean Energy Council’s Clean Energy Week conference in Sydney, Bruce Easton suggests energy efficiency is more important than renewables and needs a stronger voice in the Australian energy debate.
This is a big call and I’m not wanting to detract attention from the solar versus coal battle, but I am simply suggesting the discussion needs to broaden a little to give energy efficiency its due.
Let’s start with the facts:
- energy savings gained through efficiency measures is cleaner than delivering the energy otherwise required, including renewables
- energy efficiency activities reduce energy costs immediately
- energy efficiency has a greater return on investment – especially when net present value is included – than solar.
- energy efficiency delivers peak reduction as well as baseload, whether it’s sunny or windy or not
- while it was estimated that the direct employment though activities within state-based energy efficiency schemes was over 2000 people at peak, the indirect effect would have been much greater – the impact of upgrading lighting and other appliances to energy efficient alternatives involves huge numbers of designers, trades, project managers, finance, sales and so on
- energy efficiency has a broader economic benefit through the improvement in energy productivity – Australia’s energy productivity languishes behind comparable economies and is dropping further behind. For every one per cent increase in energy productivity we get 2.2 per cent increase in GDP by 2030 – $1200 per person and $26 billion in GDP.
- A more difficult calculation relates to the additional benefit of updating machinery in commerce and industry. The replacement of old with new usually delivers more than just an improvement in energy productivity.
This is not an exhaustive list but the point has been made – energy efficiency deserves to be centre stage rather than hidden in the wings while solar and wind star. If the target is to deliver 20 per cent of all energy by renewables, great. But let’s also reduce energy use by 20 per cent and benefit more broadly and deeply through the economy.
The benefits of energy efficiency do have limits though, but where are those limits?
We know by looking at our energy productivity levels we are significantly lagging and therefore we must be able to at least move to an equivalent point. We know from a commercial consulting view point that there is usually a 10 per cent and often a 20 per cent reduction in energy use available within a three-year return on investment.
There are of course many benefits of renewable energy, and one of its beauties is that it is iconic and visible and easily described, while efficiency may be delivered in a very understated manner.
If we consider the return on investment for solar PV compared with LED lighting, its 6 years compared with less than three years. This means that LED lights pay for themselves in half the time and that is without a net present value being included.
Of course solar has a life expectancy of twice that of LED lights, somewhat balancing the straightforward economic judgement. And of course the equation changes depending on the type of light – replacement of incandescent lights moves the ROI to a year or even less, and streetlights, shop lighters and high bays can be replaced by LED and will achieve five or more times the efficiency. With fluorescent lights its twice the efficiency gain.
So what is the answer?
Simple, really. We’ve got work to do in both renewables and efficiency, and the sooner governments understand this, the better. Support the RET and provide an energy efficiency framework to deliver the significant benefits available.
Bruce Easton is chief executive of Ecovantage and convenor of the Energy Efficiency Certificate Creators Association.