Eight ways NSW could lower energy bills
Delivering savings during the cost-of-living crisis – and beyond
Key Takeaways:
High energy costs are a key factor impacting the cost of living in New South Wales, but deploying a range of sensible measures could deliver lasting energy bill savings.
Transitioning households to efficient electric appliances can reduce costs for consumers, while improving energy security – especially if coupled with thermal efficiency upgrades, greater deployment of consumer energy resources, and by unlocking the potential of flexible demand
Electricity network costs could be reduced via better utilisation of networks, and by curtailing the supernormal profits made by the networks.
To protect consumers from stranded asset risks, further growth of the gas distribution network should be halted, and a plan urgently developed to manage the phase-down of the existing network.
25 July 2024 - (IEEFA Australia): Sensible, cost-effective measures could deliver significant cuts to energy bills in New South Wales (NSW), easing the cost-of-living crisis, and locking in savings beyond that.
While cost-of-living pressures are hitting consumers and businesses all over Australia, energy costs are having a disproportionately large impact in NSW. Increasing numbers of households in the state are struggling to pay energy bills, with many at risk of disconnection. A recent inquiry found that NSW was the only competitive retail electricity market where bills have consistently increased over the last five years.
However, a new briefing note from the Institute for Energy Economics and Financial Analysis (IEEFA) shows how a range of sensible, cost-effective measures could bring down energy costs in NSW, providing rapid cost-of-living relief, while also lowering bills for households and businesses in the longer term.
Jay Gordon, Energy Finance Analyst, Australian Electricity at IEEFA, explains: “This briefing note looks at some sensible steps that could help households and businesses by reducing the burden from energy costs. IEEFA’s research has shown how these options that could deliver ongoing, long-term energy bill savings.
“While high energy costs are hitting NSW consumers particularly hard, these measures would bring benefits in every state or territory.”
IEEFA highlights eight ways NSW could cut deliver quick, lasting cuts to energy bills:
- Go all-electric to save costs and safeguard energy supplies.
- Stop wasting electricity on inefficient appliances.
- Make homes easier to heat and cool.
- Unlock the cost-saving potential of flexible demand.
- Help households to produce, and use, more of their own energy.
- Use electricity networks more effectively and efficiently.
- Stop the growth of stranded gas assets, and future liabilities.
- Start planning for an efficient, equitable phase-down of gas networks.
The briefing note explores in detail the immediate benefits to be gained by promoting household appliance and efficiency upgrades; boosting uptake of consumer energy resources (CER) such as rooftop solar and battery storage; and using smarter, more efficient technology to ease the burden on electricity networks.
It also shows how these measures can help to ensure NSW’s future energy security as the east coast gas market faces an imminent supply shortfall. And it highlights ways that policymakers can help to ensure an equitable transition for all households while minimising any stranded asset risks to consumers or taxpayers as the gas networks enter an inevitable phase-down of their operations.
Although energy costs are exacerbating the cost-of-living crisis in NSW, the state has access to a well-equipped toolbox of policies that could be deployed to reduce energy bills in the long-term. The NSW government must also engage with federal energy policies to ensure that national initiatives deliver the best outcomes for its consumers. IEEFA recommends a number of steps the NSW government should take:
- Implement or push for standards to ensure gas appliances are replaced by efficient electric appliances at end-of-life.
- Implement or push for standards to ensure inefficient (resistive) electric appliances are replaced by heat pump-based appliances at end-of-life.
- Introduce minimum energy efficiency standards for rental properties, and update the Energy Savings Scheme and/or Peak Demand Reduction Scheme to provide rebates for thermal efficiency upgrades.
- Require new electric hot water systems (including heat pumps) installed in NSW to be equipped with timers or other smart controls, to enable their use as a flexible load.
- Implement measures to accelerate uptake of rooftop solar and household batteries for all consumers.
- Ensure current and future sources of electricity demand make smart, efficient use of the free capacity in electricity distribution networks; and work with the Australian Energy Regulator (AER) to reduce network supernormal profits to reasonable levels.
- Ensure all new buildings are all-electric, to prevent continued growth of stranded gas assets.
- Work with the federal government and the AER to plan for the equitable phase-down of its gas distribution network.
Mr Gordon adds: “NSW sits ready to embark on a transition to efficient, all-electric homes, but state and federal policies are not yet setup to deliver the best outcomes for consumers. These eight steps outline the critical role that the NSW government could take to support its consumers to access lasting reductions in energy bills.”
Read the report: Eight ways NSW could cut energy bills during the cost-of-living crisis, and beyond
Media contact: Amy Leiper [email protected] +61 (0) 414 643 446
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (ieefa.org)
