Opportunities in NSW to Participate in the Energy Savings Scheme (ESS)

14 Feb 2011Archived News Climate Change Matters

An opportunity exists for NSW businesses to generate Energy Savings Scheme (ESS) Certificates that may have substantial value when either traded or used to improve the return on energy efficiency projects.

Background

The ESS was introduced on 1 July 2009 by the NSW Government to encourage greater efficiency of electricity use in NSW households, industry and commerce. Energy Savings Certificates (ESCs or 'Eskies') can be created for energy savings as defined under the Scheme that have been made after 1 July 2009. Each Energy Savings Certificate represents 1 tonne of carbon dioxide equivalent (CO2-e) avoided.

Under the ESS, certificates can be created for individual energy efficiency projects or activities. Once these projects have been approved by the regulator, the Accredited Certificate Provider can create ESCs via an online registry system. In general, ESCs are created after the energy has been saved but there are also options available to generate certificates in advance. Once the projects are recognised, it is possible to generate certificates on an ongoing basis for the life of the project or through to 2020, the end of this scheme, whichever is earlier.

The certificates can then be used or sold on the market.
IPART administers the creation of ESCs and has recently advised a predicted shortfall of ESCs for 2010 and potentially beyond. This means the energy retailers must pay a penalty for the shortfall; hence the value of the ESCs generated and sold on the market will be near that value as the demand exceeds the supply. As of 10 January 2011, forward trades for ESCs were reported around $31.00 per certificate.

Accessing this opportunity for your business

At Energetics we have helped our clients save energy and costs through the creation of ESCs for various energy savings projects. Some of the projects implemented to date include lighting and lighting control upgrades, commercial refrigeration upgrades in supermarkets, HVAC upgrades and other general energy savings opportunities. Essentially participation in the ESC scheme assists the payback of projects by generating approximately $20 per tonne of CO2-e saved, in addition to the energy savings that are made as part of the project.

This may assist some projects with a longer payback period to become viable with the assistance of the ESC sales.

The report of the Prime Minister's Task Group on Energy Efficiency, commissioned by former Prime Minister Kevin Rudd, proposes a national energy savings initiative, encouraging Australians to cut energy use by an average 16 per cent over the next decade. It is suggested that the NSW ESS scheme will become the basis of a national ESS scheme, but may incorporate aspects from other state-based schemes. The current NSW scheme runs to 2020 and certificates can be created up until that time.

Should you wish to discuss the possibility of creating ESCs for some of your recently implemented or proposed energy savings projects in NSW, please contact Energetics.

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