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with the conventional generation
business model where instead of
paying for generation it is possible
to be cheaper to produce
“negawatts” and removes the
split incentive for a utility that
also wants to maximise its sales
of generated electricity.
Since no tariff charge will
be required to fund the obligation,
there will likely be a loss
of revenue scenario to the
utility. To offset the loss in
revenue, utilities can recoup
through embracing a new business
model of on-bill financing of
energy efficiency. This then shifts
the obligation partially to the
beneficiaries. UEEOs have arisen
because essentially most energy
users are unwilling to invest in
EE. UEEOs essentially subsidise
the cost of EE, reducing paybacks
down to a level where ordinary
energy users are willing to invest
some of their own money in a
more efficient product or improving
the efficiency of their existing
buildings.
Similar to building generation
capacity, achieving large energy
savings requires large investment,
which the private sector
is generally unwilling to make
unless substantial incentives
exist. A UEEO is an effective way
of financing and creating these
incentives.
UEEOs are a relatively complex
instrument and are significantly
more complex to administer than
the Feed in Tariff as already exists
in Malaysia. Without effective
administration, measurement,
verification, evaluation and
enforcement a UEEO is unlikely
to be effective. Strong commitment
across all political divides is
required to develop a sustained,
long term UEEO.
What sort of activities are
undertaken to generate
savings from UEEOs?
Savings can be generated from
either “standard measures”
where the savings are deemed
(i.e. estimated) or “project
measures” which require measurement
and verification of the
savings achieved.
Some examples of activities
include:
+ Efficient Water heating
+ Efficient Heating and cooling
+ Weather proofing and
insulation
+ Efficient Lighting
Figure 3 - The electricity market with an EEG-on-bill.
+ Standby power controllers
+ Efficient appliances, such
as televisions, refrigerators,
clothes dryers
+ Efficient Pool pumps
+ Efficient refrigerated display
cabinets
+ Efficiency refrigerator fans
+ Efficient motors
+ Metered baseline for commercial
and industrial (any activity
can be implemented, providing
savings can be measured)
With on-bill financing each
beneficiary of the reduced
upfront cost of an EE measure
pays for the financing provided
through an additional charge on
their electricity bills.
There is no need for tradeable
certificates or a marketplace.
Example in Figure 2 shows
how this would work for the purchase
of a 5 star air conditioner.
Such a scheme:
+ Has a set of regulator
approved standard
measures for EE fixtures. For
example an air-conditioner,
insulation installed in a roof
cavity, installed light fitting
are all fixtures. A domestic
refrigerator is not a fixture.
+ Has regulator approved
standard calculations for
determining the amount of
financing that can be provided
and the payback period.
+ Attaches the on-bill payment
to the electricity meter
number. So that is, irrespective
of whether a property is sold or
changes tenants, a payment is
still made, for a fixed number of
payment periods.
+ The payment could normally
be expected to be less than the
savings arising from EE.
As shown in Figure 3 below,
the utility company is not
required to pay the EE generator
any more than what it collects
form the on-bill payments and
potentially generate income to
supplement the revenue loss
from the on bill financing business
model. Whilst it may lose
some revenue due to decreased
sales of electricity, its electricity
purchases from generators will
also drop.
Enabling Legislation
Possible ways of creating the
enabling legislation are:
+ Incorporate it into the
Electricity Supply Act (as has
been done in NSW, Australia)
+ Create a separate Act (as
has been done in Victoria,
Australia)
+ Links to both these pieces of
legislation are included at the
end of this document.
If changes were to be made in
the Electricity Supply Act a new
part VB could be incorporated into
the Act.
Alternatively it could be incorporated
in Part VA – Efficient use
of electricity – although a UEEO is
substantially different to Part VA,
and for the purposes of clarity it
would be better to have it has an
entirely new part.
Synergy with other policies,
regulations and thrusts
A UEEO has substantial synergy
with other proposed measures
mentioned in the National Energy
Efficiency Action Plan. It complements
MEPS, and the expansion
of MEPS. It can be used to incentivise
improved whole of building
performance. It can be used to
drive electricity savings in both
the building and industrial sector,
and create significant employment
opportunities in energy
efficiency. A UEEO has synergies
with a range of other policies and
regulations:
+ Labelling and MEPS. A UEEO
can use MEPS to allow certificates
for the purchase of 5 star
appliances. This leverages the
labelling system
+ An energy efficiency
rating tool for buildings.
Improvements in performance
based on the rating tool could
be used to award certificates.
+ A national EE energy consumption
database. This adds
value to a UEEO by facilitating
measurement and verification
of savings. For example, if a
lighting upgrade was undertaken
and certificates claimed
under a UEEO for the upgrade,
the actual drop in electricity
consumption at the site where
the upgrade was undertaken
could be identified from a
national energy consumption
date based. With appropriate
database design, this could
be used to tune the methods
used to calculate savings.
+ Building energy performance
standards. Certificates could
be used to incentivise performance
that was measured to
be better than the standard.
+ Energy savings at large facilities
(i.e. those facilities subject
to the Efficient Manager of
Electrical Energy regulations)
– based on reductions in
energy use certificates could
be generated.
+ Promotion of ESCOs. ESCOs
could create certificates from
a range of activities
+ Enabling of mortgages for
EE in housing. The deeming
methodologies used
under the scheme could be
used as the basis by which
financial institutions can
calculate the amount they can
lend for different EE features
(such as high efficiency air
conditioning).
+ Need to allocate resources to
analysing the data and fine
tuning policies.
green+.2014, november-december 39