Smart air conditioners could reduce energy bills for consumers

Australian consumers could make significant savings on their household heating and cooling bills by switching to smarter, more efficient electric reverse cycle air conditioners (RCACs).

At the moment, air conditioning products sold in Australia are required to meet minimum efficiency standards, but not minimum smarts. As increasing numbers of homes electrify their heating to reduce their energy bills and lower their emissions, ensuring that RCACs can be used as flexible demand will be an important way to help lower costs for consumers, improve the operation of the electricity grid, and reduce emissions.

IEEFA recommends that governments in Australia establish standards that require new RCAC systems to be ‘smart’ – enabling their energy use to be dynamically managed. In addition, governments should consider subsidising availability of add-on sensors and devices to make existing RCAC units smart.

Heating and cooling accounts for about 40% of an average Australian home’s energy use. RCACs are the most commonly installed cooling technology in Australian home; they are also the most energy-efficient heater and cooler of all types, irrespective of fuel source. According to the CHOICE database, the majority of air conditioners available today have Wi-Fi control, as standard or optional.

Two of the largest energy retailers in Australia are already offering opportunities for households with smart meters to earn rewards for voluntarily flexing their electricity use at times of peak demand. As well as reducing household energy costs, demand flexibility can help to minimise whole-of-system costs, which will become increasingly important as Australia transitions to greater levels of variable renewable energy generation.

In addition, many existing RCAC units can be managed remotely through the addition of relatively inexpensive smart thermostats. Government schemes to encourage take-up of these devices would further expand the flexible demand potential from electrified heating and cooling.

These are all relatively low-cost measures. The technology required to make a new or existing RCAC smart is cheap, while for energy suppliers, the development of platforms to reward demand flexibility is inexpensive compared to the costs of building new electricity generation and network infrastructure.

Overseas there are a number of current and planned moves towards ‘smart appliances’, with new standards coming into force in the US, the UK and Europe. As a result of these international trends, we can expect to see an increasing number of smart appliances, including RCACs, available for import into Australia.

The direction of travel internationally is clear: towards smart AC. Therefore it is critical to have the right standards in place as soon as possible. The public appetite to reduce bills through flexible demand exists. It is up to Australian governments to make it easier for consumers by normalising the sale of smart, efficient heating and cooling technology.