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8 July 2013

Dear David,

Re: Review of the Energy Saver Incentive: Issues Paper – June 2013

Thank you for the opportunity to make a submission into the Review of the Energy Saver Incentive – Issues Paper June 2013.

Ironbark Sustainability is a specialist consultancy that works with Local, State and Federal government and organisations around Australia by assisting them to reduce energy and water usage through sustainable asset and data management and on-the-ground implementation.

Ironbark works in partnership with the Municipal Association of Victoria (MAV) to assist Victorian councils to implement energy efficient street lighting changeovers. Ironbark has in fact worked with every single Victorian council that has implemented an energy efficient street lighting changeover and holds a unique place in the industry.

The response below focuses on the importance of the continuation and expansion of the Energy Saver Incentive to assist councils implement street lighting projects and fulfil a State Government election promise to reduce electricity and costs for councils and ratepayers

We are happy to provide further information on request.

Kind Regards,

Alexi Lynch
Business Leader, Sustainability Strategy

Ironbark Sustainability

Barriers to the Uptake of Energy Efficiency Measures: The Street Lighting Context

CFL luminaire after installation

Street lighting is commonly the single largest source of energy use from local government around Victoria, typically accounting for 30 to 60 per cent of electricity use.

For Victorian councils the focus on energy efficient street lighting has been gaining strength since the early to mid-1990's and the key interest over the last decade has been in residential street light efficiency. There are a wide range of technologies that have been developed and made available over the last decade to improve energy efficiency in residential streets. In January 2011 the Australian and New Zealand Road Lighting Standards Committee changed the standard to exclude any new designs from using mercury vapour lamps. This means in order to meet relevant standards all stakeholders would need to choose energy efficient products for new designs.

This is positive, and looking backwards the change appears to have been inexorable and is clearly tracking towards a more sustainable street lighting future. However, the detail, and the results, shows something quite different.

Due to the complexity of the sector (in particular approaches to contestability, relationships with the electricity distribution businesses, pricing models and technology choices) and scale of these projects (commonly in excess of $1 million), a significant amount of preparation is required.

As part of the development of the Federal Government's National Strategy on Energy Efficiency on Street Lighting, Ironbark Sustainability collated information on barriers to improving street lighting energy efficiency in Australia.

The main barriers that were identified included:

  • Financial cost (most commonly capital cost)
  • Expertise and time to deal with the complexity of street lighting
  • Delays around lighting approvals and working with external stakeholders

The strong response (over 200 respondent organisations) to the survey is consistent with the complex nature of the issue of energy efficiency in street lighting. It also reflects the current situation where there has been a lack of widespread action despite significant attempts by local government.

It also supports the need for a strategic approach to the issue. It is likely that no single initiative will be sufficient to untangle the web of financial, regulatory and expertise issues preventing progress.

This is consistent with the view of the Victorian State Government. Before the 2010 election, a Victorian Liberal-Nationals Coalition media release  headlined "Coalition's Green Light Plan Will Save Money, Cut Emissions" was released on Saturday 20th November 2010. It stated:

Victoria's street lighting system is regulated by the Commonwealth Government, funded by local councils, and was set up by the Victorian Government, so any effective transition to energy- efficient street lighting would need to occur in partnership with all three levels of government.

Victorian families and businesses are already doing a great job in saving energy and cutting greenhouse gas emissions, but governments also have to play their part and investing in energy-efficient street lighting is a great way to reduce emissions

Ironbark agrees strongly with these comments. Most importantly, partnership is required with all three levels of government and governments have to play their part.

Before the 2010 state election, the then-opposition promised $20m in funding to Victorian councils to change their street lights, under the Green Light Plan.

In March 2012, the Minister for Local Government Jeanette Powell sent out a press release headlined "Spotlight on $20 million for green lights", welcoming the "overwhelmingly positive response during the
consultation phase for the Victorian Coalition Government's Green Light Plan." She said;

The Green Light Plan is a Coalition election promise that will provide $20 million in funding to assist councils meet the cost of replacing old, energy guzzling street lights with energy efficient technology. The Green Light Plan will support local councils as they transform street lighting in Victoria, making it more energy-efficient, environmentally friendly and economically sustainable.

Street lighting is typically the single highest electricity cost faced by councils as well as being a substantial source of greenhouse gas emissions. If all of the old mercury vapour lights across Victoria were replaced they would collectively reduce green house gas emissions by 1.56 million tonnes - the equivalent of taking 341,917 cars off the road for a year - over the life of the new lights.

With more than 70 per cent of Victoria's street lights being the responsibility of local councils, the Green Light Plan is an important initiative which assists Victoria's local councils adopt environmentally friendly lighting

Again, Ironbark agrees with the Minster for Local Government Powell – indeed the Green Light Plan was a critical initiative to assist Victorian councils in changing their lights and reducing the electricity cost burden to ratepayers.

Unfortunately funding to the Green Light Plan was cut in May 2012. Ironbark appreciates that budgetary pressures and changing circumstances mean changes are inevitable, however through the Energy Saver Incentive the state Government now has a unique opportunity to assist councils overcome the major barrier (capital cost) for councils and ratepayers to change their lights.

The Performance of the ESI to Date

Victorian councils can currently create Victorian Energy Efficiency Certificates (VEECs) for certain energy efficiency activities they have implemented and many have done this since being eligible in 2012. Councils can also claim VEECs for open space lighting energy efficiency projects for metered installations in parks, sporting clubs and car parks.

However un-metered street lighting has not yet been included in this scheme.

Councils in NSW have been able to claim energy efficiency certificates through the Energy Savings Scheme (ESS), which is essentially the NSW equivalent of the ESI. For NSW councils the creation of Energy Savings Certificates (ESCs) from a street lighting bulk change has reduced the overall costs considerably – up to $100 per light.

Ironbark is an Accredited Certificate Provider (ACP) for street lights for ESS, and has witnessed the benefits for councils. For example, we worked with one council in northern NSW who had nearly 2,666 lights that were changed over, representing a reduction in greenhouse emissions of around 656  tonnes a year. This also represents 7,868 ESCs worth $176,850. This is the equivalent of saving $57 per light. This could be the difference between a project being financially viable or not.

If street lighting was to be included in the ESI it could save councils anywhere from $50-$100 per light depending on the price of VEECs.

In June 2013 legislation passed in Victorian state parliament that will allow street lights to be included in the ESI. Ironbark congratulates the Government for this change, however we understand that in practice, councils will not be able to create VEECs (i.e. participate in the ESI) for street lighting until at least the beginning of 2014, and possibly not until 2015.

Looking Forward: the Future of the Scheme

The inclusion of residential street lights into the ESI represents a simple, low-risk and cost-effective way to improve energy efficiency.

The activity would involve implementing energy efficiency through the whole of Victoria, centered around replacing inefficient and polluting mercury vapour (MV) lamps in Category P (residential) streets. Most of these lamps can be replaced by efficient lighting technologies to reduce energy consumption by 68%. In addition to offering lower costs and energy consumption, the new lights provide better lighting outcomes for the community, including:

  • Greater uniformity of light across and along the street
  • Better colour rendering and visibility
  • Less depreciation of the light output over time
  • Lower glare

From a technical point of view this is one of the most straight-forward projects a council can implement. It is simply changing one type of light to another, and repeating around three hundred thousand times1. It's as easy as 1-2-3:

1. Find this: 2. Replace with this: 3. Repeat 300,000 times:
An old inefficient 80W MV An approved 28W efficient alternative new-lighting-design
An old inefficient 80W MV An approved 28W efficient alternative A new lighting design

The lights are all standard, all the same, and all un-metered. So the procedure for determining the energy consumption is specified in Parts A and B if the National Electricity Market (NEM) Metrology Procedures. This means that the electricity use of the old and new technology, and the energy efficiency savings are known in advance and guaranteed.

Summary

Assisting councils to undertake energy efficient street lighting projects will reduce the energy cost burden on councils and ratepayers. As made clear through previous statements from the Government, replacing all the outmoded street lights in Victoria would save councils and ratepayers $7 million a year by reducing electricity bills.

The key barrier to a street lighting changeover is capital cost to councils, which has been previously recognised by the Government. This barrier can be eliminated through the inclusion of street lighting in the ESI and the continuation of the scheme.

Ironbark looks forward to the release of the Regulatory Impact Statement later in 2013 and the opportunity for the Energy Saver Incentive to continue and expand to improve energy efficiency and financial outcomes for councils around Victoria.

1 Councils have anywhere between 500 and 20,000 street lights. There are approximately 300,000 80 Watt Mercury Vapour lights throughout Victoria.

Page last updated: 24/06/20