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Finkel review: Why tackling energy demand is key for grid stability

“Clean coal” may be the new darling of government rhetoric on energy security, but key players in the sustainability space have told the Independent Review into the Future Security of the National Electricity Market that the real solutions involve low-carbon renewable energy and demand-side measures such as energy efficiency.

Submissions to the review, chaired by Australia’s chief scientist Alan Finkel, close this week.

The aim of the review process is to advise the government on a blueprint for reform of the troubled – and troublesome – NEM.

The Australian Sustainable Built Environment Council in its submission said the built environment had immense potential to help harmonise and advance energy reliability, affordability and emissions reduction.

“Implementation of an appropriate suite of [built environment] policy measures could deliver almost $20 billion in financial savings by 2030, in addition to productivity benefits and improvements in quality of life for Australian businesses and households,” ASBEC stated.

However, the cost of inaction in the built environment could lead to “over $24 billion in wasted energy and over 170 megatonnes of lost emission reduction opportunities, through lock-in of emissions intensive assets and equipment”.

It’s a message that ought to resonate more loudly now, as industry braces for eletricity price rises of up to 30 per cent, according to property industry and energy efficiency sources.

ASBEC’s key recommendations included recognising that supply and demand were “two sides of the same story”.

“The current energy system dialogue focuses heavily on supply-side technologies (including onsite generation and energy storage). Demand-based strategies such as smart energy use offer the fastest and cheapest ways to cut energy bills and reduce emissions, as well as reduce the burden on Australia’s energy infrastructure.”

It suggests the government should establish a national plan towards 2050 zero carbon buildings and look at establishing an independent energy efficiency authority.

“Such an authority could coordinate energy efficiency policy development and implementation, and evaluation and reporting of the effectiveness of energy efficiency policies. This would provide greater regulatory certainty and stability in the context of impacts, influences and limitations of new demand-side technologies on the energy system.”

Emerging technologies in the buildings space that ASBEC identified may also impact the energy market in future include sensors, smart glass, smart thermometers, prefabrication, geothermal, building integrated PV and real-time energy reporting.

Let’s raise minimum standards!

The submission also pointed out there is a “largely untapped” opportunity to improve energy efficiency through higher minimum standards for buildings – including residential buildings.

It highlighted the role of the National Construction Code, in terms of minimum standards and a trajectory for increased stringency for building energy provisions.

“The National Construction Code – which sets the minimum necessary requirements for new buildings and new building work in existing buildings – is updated every three years.

“The minimum energy performance standards are not necessary adjusted at these points. In fact the energy provisions in the Code have not been updated since 2010.

“The next update is due in 2019. It is likely that that stringency for energy performance will only be reviewed for commercial buildings in the 2019 Code, meaning that residential buildings will have effectively waited for 12 years before a stringency review is undertaken.”

ASBEC called for the establishment of a trajectory for future upgrades of the energy provisions in the code to provide a “clear opportunity to catalyse innovation, investment and market transformation in the sector by providing a strong regulatory signal of the direction for future standards, and deliver higher performing buildings.”

Other aspects of energy in the built environment highlighted by ASBEC included the role of mandatory energy disclosure, widening the reach of state-based energy efficiency obligation schemes and harmonising them nationally, and looking at the role of on-site generation, storage and microgrid technologies.

It also highlighted the need to phase-out appliances that use gas as part of transitioning to  net-zero built environment.

  • Read the full ASBEC submission here.

AIRAH agrees it’s about efficiency

AIRAH has also lodged a submission highlighting the role of energy efficiency in buildings.

It told the review that energy use was significantly driven by heating and cooling loads and the associated heating, ventilation, airconditioning and refrigeration plant.

“The electricity sector, property sector and HVAC&R sector should all collaborate and play a central role in helping Australia meeting agreed greenhouse gas reduction targets and improving energy productivity.”

The three key activities AIRAH identified to reduce emissions were improving the energy performance of existing buildings, improving the efficiency of HVAC&R systems and shifting to cleaner, low-carbon energy sources.

“Monitoring and improving the energy performance of existing buildings and existing HVAC&R systems is a key action to help reduce peak demand, improve energy security and improve the reliance of buildings and the electricity grid and infrastructure.

“The electricity sector needs to engage with, and facilitate, owners of existing buildings to address and optimise electricity demands. Buildings need to be viewed as electricity generators (power stations) and energy storage devices that can be used to reduce peak demand on grid infrastructure.”

AIRAH said that new heating and cooling technologies, building integrated renewables, thermal storage and phase change materials were among the innovations that would impact the energy market in future.

“Good policy must be made based on evidence. The incentivising and support of distributed energy generation and storage is an immediate action that can be taken. New planning frameworks are needed to help planners to consider buildings as energy generators and thermal energy storage devices. There is a need to move away from the idea of buildings as stand-alone assets, with town planning playing a significant role in ensuring for instance that waste heat can be used.”

Modernisation is urgently needed

The Alternative Technology Association, Australian Conservation Foundation, City of Sydney, Central Victorian Greenhouse Alliance, ClimateWorks Australia, Goulburn Broken Greenhouse Alliance, Greenpeace AustraliaPacific, Low Carbon Living Cooperative Research Centre, Nature Conservation Council of NSW, Northern Alliance for Greenhouse Action, Queensland Conservation Council, Sustainable Living Tasmania and Total Environment Centre lodged a joint submission.

The groups identified a need to urgently modernise energy market regulation.

“The Finkel review recognises the pressing need to address the ‘energy trilemma’: security, affordability and sustainability,” Total Environment Centre’s energy market advocate Mark Byrne said.

“At present, however, the national energy objective recognises price and reliability as being in the long term interest of consumers. It is failing in these while making no mention of sustainability.”

Mr Byrne said it was “critical” decarbonisation be part of the mix when regulators are making decisions about the future of the energy sector.

“Instead we have a situation where decarbonisation targets and the costs of climate change mitigation, adaptation, damage and delayed action are effectively ignored in a regulatory bubble.”

He said the recent blackouts and price spikes in several states indicated that a “whole of system” approach is needed.

That means the energy market regulator, rule-maker and the operator need to work together and align their processes with government decarbonisation targets. These include Australia’s Paris commitments.

“This would ensure, for instance, that we incentivise the rapid rollout of grid scale energy storage technologies alongside more wind and solar energy to ensure that the system remains reliable even during those peak periods when there is insufficient renewable generation,” Mr Byrne said.

“This is not rocket science.

“We have provided the Finkel panel with evidence of numerous other jurisdictions which have successfully aligned climate policies with energy market regulation without higher prices or more blackouts than we have in Australia.”

Among the options for reform the groups have suggested are a short-term option of the COAG energy council issuing a statement of policy principles requiring energy regulators to issue carbon impact statements with every major decision.

The panel could also be required to factor decarbonisation goals and climate change costs into its decisions. This may require amendments to the national electricity law to include decarbonisation in the national energy objective.

  • Read the full submission here

Responding to those full of gas

Lock The Gate Alliance also lodged a submission stating that gas was not the answer to long-term NEM security and stability, or a low-carbon future. The submission is in response to the preliminary report, which suggested that greater gas supplies for electricity generation were required.

Recent research from ANU found that renewables and hydro would be the most cost-effective solution for grid stability.

The preliminary report position failed to address the rising cost and damage from gas mining, Lock the Gate Alliance spokesperson Georgina Woods said.

“The roll out of unconventional gas for export in Queensland has driven up domestic gas prices and created market turmoil while at the same time inflicting considerable damage to farmland, water and other industries,” Ms Woods said.

She said state governments were starting to respond to the level of public opposition from affected communities.

“Unconventional gas is expensive, it’s risky and now it is also politically untenable. Fortunately for Australia, it is also unnecessary.

“There are clean and reliable energy options like concentrated solar thermal ready to be built. Unlike coal and gas, renewable energy will not lock in rising energy prices or damaging mining activity.”

Ms Woods said the Finkel review should not be pushing more gas mining onto regional communities. Instead, it should be proposing a “smooth adjustment towards the kind of electricity generation that investors and the public want built: renewable, non-extractive and non-polluting.”

  • Read the submission here

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