Energetics' paper on energy generation in building energy efficiency standards

14 May 2012Archived News Publications

Energetics was commissioned by the Department of Climate Change and Energy Efficiency to prepare a paper providing insights into the issue of energy generation and its impact on building energy efficiency standards as part of the consultation process for the Draft National Building Energy Standard-Setting, Assessment and Rating Framework. The paper is now available on the DCCEE website.

As outlined on the DCCEE website, “The Draft Framework is intended to drive significant improvement in Australia’s building stock by establishing a pathway for future increases in minimum building standards to 2020, and improving the approach to assessing and rating buildings.”  Below is the Executive Summary of Energetics’ report “Inclusion of energy generation in building energy efficiency standards” within which Energetics makes a number of recommendations. 

Executive Summary

The National Strategy on Energy Efficiency includes the development of a consistent outcomes-based National Building Energy Standard Setting, Assessment and Rating Framework for driving significant improvement in the energy efficiency of Australia’s building stock. Development work on the Framework has flagged the possibility that building standards for both new residential and commercial buildings should allow offsets for the energy use of the building by the use of energy generated by zero and low emission energy (ZLEG) systems that supply the building. The study outlined in this Report explores the implications of a policy that would broaden and facilitate the scope to use zero and low emission energy to offset any form of energy use within the building. This is not to say that any proposals to encourage ZLEG systems have been agreed by governments. The mechanism for this policy would be a change in the National Construction Code (also referred to as the Building Code of Australia or BCA).

Definition of Zero or Low Emission Energy​ Generation

The study proposes that zero or low emission energy generation (ZLEG) is that which offsets any form of energy use within the building it is associated with.

  • The generation technology can be on-site or off-site and must be connected to the building by way of a private wire network, or pipes carrying hot or chilled thermal fluid.
  • The generation technology must provide a 50% reduction in emissions, consistent with the IPCC target for emissions reduction.

This definition will allow for technologies such as cogeneration and trigeneration to be included provided the associated emissions reductions exceed the reduction target.

Cost Effectiveness

When discussing the issues that may arise due to potential policy change, two broad types of ZLEG were explored. These were scalable, non-dispatchable renewable generation typically for the residential sector (modelled as solar PV) and dispatchable generation, typically for the business sector (modelled as cogeneration). Solar PV and cogeneration were selected after an examination of the cost effectiveness of various ZLEG options. Rapidly falling PV module costs and rising electricity prices will see a rapid improvement in the cost effectiveness of solar PV to the point where take-up may not require any form of incentive. The case of cogeneration and trigeneration is less clear for the residential sector but it is an established technology for the business sector. Results suggest that district level cogeneration/trigeneration is already cost effective but that residential cogeneration/trigeneration will not be cost efficient in the short to medium term.

Existing Standards and Tools

The BCA already sets standards for the energy efficiency of buildings (primarily the thermal efficiency of the building shell). For instance, the BCA requires that new houses achieve a minimum 6 star rating using the accredited NatHERS software tools or elemental (formally deemed to satisfy) standards. However, because the regulations relating to the construction of buildings are specific to individual states and territories, there are different variations of the BCA requirements around Australia. In particular, Queensland allows the use of optional credits for certain design features, including a one star credit towards the 6 star energy requirement where a solar PV system with a capacity larger than 1 kWp is installed. NSW has its own scheme for rating the performance of buildings, and a BASIX certificate is required for development approval in NSW. BASIX also allows solar PV installations to contribute to the energy performance target but not the thermal comfort performance target. Any changes to the BCA to encourage the take-up of ZLEG would need to be aligned with state and territory planning or building laws. Key issues that may need addressing in the planning or building laws are regulations to ensure the on-going operation of any ZLEG technologies that were needed for a building to comply with BCA targets, the management of the certification of ZLEG technologies, particularly in the residential context, and the modifications to the local building regulations to ensure the ongoing performance of ZLEG systems.

Impacts on Distri​bution

ZLEG technologies will have an impact on the power networks should the BCA encourage wider deployment of ZLEG in either the residential or the business sector. These impacts are both opportunities and threats. ZLEG, particularly cogeneration and trigeneration, offers a means to defer capital expenditure that would otherwise be used to expand the networks. The situation with solar PV is less clear as the output of solar panels is often quite low at the time of a typical afternoon peak demand for electricity. Certain types of renewable energy generation such as solar PV can also give rise to problems with the quality of electricity on the networks. Further, networks may need to invest in additional power generation systems to backup non-dispatchable renewable generators. Extensive research in Europe and elsewhere has pointed to systems and procedures that can address these problems, although the cost of implementing such procedures in Australian conditions would need further investigation.

Connecting ZLEG systems to the networks is a challenge to the developers of these systems, and is often a major barrier to the implementation of large ZLEG systems. The recommendations regarding improvements to the process for network connections for ZLEG have been made in a number of forums. Should the BCA encourage cogeneration and trigeneration systems to be installed, building owners and developers can reasonably expect that the complexity of network connections is removed, the time to obtain a connection shortened and the costs reduced. The Commonwealth and the states and territories may need to take action to ensure that this happens. The widespread take-up of ZLEG may also see upward pressure placed on retail electricity prices due to the tariff structures that the network service providers use to determine customer charges, and due to market based incentives for these technologies.

Retail Competition

Incentivising ZLEG through the BCA may result in impacts on electricity consumers’ competitive energy supply options, and in particular access to best pricing. This may threaten the full retail contestability which is the goal of energy regulation in Australia. Complexity is introduced when a ZLEG system such as cogeneration or trigeneration seeks to supply multiple customers over an “embedded” or “private” network. The study notes that the UK introduced the concept of the virtual private wire network over the local distribution network. Virtual private wire networks provide advantages to the ZLEG owner and customers without the cost of installing a physical network. The study recommends that the Australian Energy Regulator explore the use of virtual private wire networks should the BCA incentivise district level cogeneration and trigeneration.

ZLEG and Energy Efficiency

Finally, the study explored the balance between improvements to energy efficiency and ZLEG as means to reduce a building’s operational emissions, and found that evidence from Europe and North America supports improvements in energy efficiency as the preferred method to reduce the building emissions. This was a position that was strongly supported by local stakeholders.


The key recommendations mentioned in this report are:

  • A consultation on the most efficient methodology to calculate the savings due to low emissions generation be undertaken.
  • Should the BCA be modified to incorporate a method to calculate the impact of a ZLEG, Energetics recommends that the same method be used in all related rating tools such as NatHERS and NABERS.
  • A national discussion on changes to the state and territory planning and building laws to better deal with ZLEG in the context of low or zero energy buildings be undertaken.
  • Options to extend the output of solar PV panels into the period when the residential peak occurs be explored. These options could include panels that face to the North West or the installation of batteries.
  • Any moves to require take-up of ZLEG (and especially cogeneration or trigeneration) through changes in government regulations must be supported by changes to the procedures adopted by the Distribution Network Service Providers to manage connections. The changes must also address the connection of cogeneration systems across multiple sites which are contiguous for instance, a hospital or university.
  • Subject to a cost-benefit analysis, the Commonwealth, states and territories explore changes to building regulations to require the installation of smart meters on any new building and any renovation that requires work done by a licensed electrician.
  • Current network tariff structures may not be optimal in an environment where there is significant take-up of ZLEG, and any future investigations into network tariffs should explore the role that network tariffs could play in incentivising ZLEG.
  • A ZLEG should not be used in preference to improvements in the energy efficiency of the building shell and fixed appliances, unless it can be shown that it offers clear financial benefits.
  • A study into the optimum balance between further improvements in the energy performance of the building and take-up of ZLEG be undertaken. This is especially relevant to residential buildings.
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