shineOn

Monday July 8th, 2013

Dear David,

The proceeding document contains our submission to the Review of the Energy Saver Incentive: Issues Paper – June 2013.

Thank you for the opportunity to respond.

What evidence can you provide that supports the existence of the barriers outlined above and whether the extent of these barriers has remained constant, increased or diminished over time?

Under the first and current phases of the scheme, is there evidence from household and business participants on the existence of these barriers?

What evidence is there to show that the ESI effectively addresses these barriers?

Information gaps

VEEC accreditation allows us to more effectively communicate the benefits of investing in energy efficient technologies to both homes and businesses.

The existence of the ESI and our involvement in the program provides enhanced legitimacy in the eyes of householders and businesses. They are more inclined to listen to what we have to say in regards to investing in energy efficient technologies when they know that the state government is actively promoting the uptake of these technologies.

For example, the rigorous nature of LED product accreditation under the program has provided assurance to a number of hospitality businesses we have dealt with. The ESI has been extremely helpful in providing legitimacy and support when explaining to businesses and householders the benefits of LED technology.

Similarly, the existence of the ESI and the VEEC subsidy have clearly helped us to engage with stakeholders and decision makers who may otherwise be dismissive of investing in such technologies. We have found that often these individuals will give us an audience, as they have been made aware of the program and the benefits it offers through trusted 3rd parties. An example of this would be householders who have experienced our residential retrofit services and subsequently contacted friends and relatives who they know would be appreciative of our services and encouraged them to contact us directly. There have been many examples of this.

Similarly, after successfully completing an installation at a retail outlet for a national video rental chain, the state franchise manager promoted our service to the franchise network with particular emphasis placed upon the ESI and the advantages of the VEEC subsidy.

Access to capital;

There is no doubt that a reduction in the upfront cost of investing in energy efficient technologies assists in the rate of uptake. The vast majority of householders would never have invested in the energy-saving/CO2 reducing technologies installed in their residences without the existence of the ESI.

Businesses that are presented with the opportunity to benefit from a finite subsidy are clearly more motivated to act. Reduced pay back periods and lower capital investment requirements achieved through the ESI have been the catalyst for investment for the bulk of our commercial LED installations to date.

Split incentives;

We recently completed an energy efficient lighting installation at a multitenanted office facility where the full cost of the upgrade was paid for by the building owner. In this instance, the building owner was willing to invest in the upgrade due to the VEEC subsidized price we were able to offer. The reduced capital costs meant that the benefits of improved tenant retention and the 'future proofing' of his asset outweighed the cost of investing in an energy efficiency upgrade for the facility. It was perceived as a net benefit. Without the ESI, this installation is unlikely to have gone ahead.

What evidence can you provide to indicate the extent to which the ESI is complementary to national emissions reduction schemes?

When the subject is broached, householders and businesses understand that the ESI is complementary to national emissions reduction schemes. In particular, the carbon tax.

They appreciate that it is a form of assistance designed to reduce energy use (as thus energy costs) and CO2 emissions at the point of consumption.

What evidence can you provide to demonstrate the impact of the ESI on energy consumption and retail prices?

We can show that the lighting energy consumption (and associated costs) for businesses that have undergone our VEEC subsidized retrofit services (under Schedule 34) have been reduced by an average of 64%.

Has the mix of activities included in the scheme been appropriate to maximise energy efficiency uptake?*

We believe it has been appropriate to date.

However, from our perspective, for the next phase of the scheme we believe that an emphasis should be placed on Schedule 34 and Schedule 21c and 21d.

Is there evidence you can provide that suggests that there are barriers to the participation of specific groups in the ESI? For example, low-income households, rural consumers and business and non-residential customers?

No. The nature of the residential and business activities, and the way that are marketed by APs, provides ample opportunity for all sectors, demographics and regions to participate and benefit from the program.

In terms of the residential sector, our database shows that a broad range of customers from different social and geographic sectors have benefited from the scheme.

In particular, there has been a great level of participation in regional areas. Including more remote areas that would not typically benefit from a program of this nature. This is due to the level of uptake of the no-cost domestic products and the intensity of the search for new markets.

Any business that uses lighting has the opportunity to benefit from this program.

How are the costs and benefits of the scheme distributed between different customers?

Can you provide evidence of the impact the scheme has had on investment, employment and technology development in industries that supply goods and services which reduce the use of electricity and gas by consumers?

We are an energy-efficiency specialized and currently employ 27 staff, the majority of which are full-time, in a variety of administrative, marketing, operational and trade-related roles. We employ our own teams of qualified electricians and apprentices. Without the ESI, the future of our business would be in question.

Has the scheme created any unintended consequences and what evidence can you provide to support this?

No

Is there any further information in relation to the performance of the scheme to date that we should consider?

No

Under the scheme to date there has been a very strong uptake of low cost activities. Can you provide information and data on the remaining demand for these activities?

We have seen a steady decline in the uptake of no-cost residential activities over recent months. Particularly SPC installations.

We are of the opinion that these categories are close to saturation and the bulk of the installation opportunities have been exhausted.

Some of the newer domestic product categories, such as door and chimney seals require the installation of additional product with high saturation levels (eg SPC, CFLs) to make them viable. Thus, we do not anticipate a significant uptake of these relatively new domestic activities moving forward.

We do not anticipate that any of these no-cost activities will be viable beyond the next 12 months. Regardless of the VEEC price. The level of saturation and the number of duplicates is too high.

Can you provide information and data on current or new types of activities that may be taken up once these opportunities are exhausted? What would the energy savings be associated with their uptake?*

From our perspective, we believe that if the opportunity is removed for no-cost domestic activities, there will be a significant increase in installations under Schedule 34 and Schedule 21c and 21d. Certainly, this is where efforts will be focused.

The energy savings associated with these activities can be in excess of 80%, depending upon the nature of the incumbent lamps/fittings and proposed retrofit alternatives.

With scheme costs and technology limitations in mind, if the scheme were to continue what would be an appropriate target for its next phase?

We believe that an appropriate target would be one that incentivizes the uptake of activities by providing an average subsidy in the range of 30% - 60% of the total upfront cost of these activities.

We believe the program should incentivize householders and business operators to invest in energy efficiency technologies, whilst at same time maintaining a level of customer contribution to the upfront costs, such that a suitable level of due diligence will be applied when selecting product and providers under these activities.

Is the ESI the most appropriate scheme in which to encourage energy efficiency uptake for large energy users?

Yes

If large energy users are to be excluded from the scheme what would be the appropriate definition of 'large energy users' and how could this be effectively implemented to reduce the red tape burden on both energy retailers and APs?

Is there any further information in relation to the continuation of the scheme that we should consider?

Despite the success of the first two phases of the program, we believe that it should no longer focus on no-cost product for householders. We believe that 6 years has provided ample opportunity for the uptake of these products. And as previously stated, there is already a very high level of saturation within these activities. We do not anticipate installation opportunities within these activities beyond the end of 2014.

From our perspective, we believe that the scheme should be focused on Schedule 34, and Schedule 21c and 21d.

We see these activities as the best opportunity for delivering effective, quantifiable energy consumption and C02 savings, in-line with the stated goals of the program.

Thank you.

Regards,

James Johnson
Director

Home Green Pty Ltd T/A Shine On Energy & Shine On Solar

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