Industry Search Australia Trusted by 600,000+ buyers

Demand management can save billions on nation's electricity bills

01 August, 2013

A more cooperative approach to saving energy by government regulators and private networks could cut billions of dollars from the nation's electricity bills, according to a study commissioned by the Clean Energy Finance Corporation (CEFC).

The study, published by the UTS Institute for Sustainable Futures (ISF), has found that electricity network businesses could become the source of big energy savings for households and business by increasing their investment in demand management projects such as energy efficiency and distributed generation.

Demand management has significant potential to reduce carbon emissions from the electricity system and provide cost savings of up to $1900 per household by deferring the need for expensive new supply infrastructure, said research director at ISF and the study's lead author Chris Dunstan.

"Half of an average person's electricity bill will cover electricity network charges, and recent power bill increases are mainly driven by a massive increase in electricity grid infrastructure spending," Dunstan said.

"More than $40 billion is currently being invested on electricity distribution and transmission networks – that's larger than the National Broadband Network (NBN) and warrants a greater level of scrutiny.

"However, to capture these savings requires a more collaborative approach, rather than a reliance on more regulation," Dunstan said.

While historically underutilised in Australia, the report suggested the CEFC could support demand management by making finance available to invest in energy savings for network customers, while collaborative efforts by government and regulators could see policies that support targets for network businesses to reduce demand and lower consumer costs.

Crucial to this approach would be the Australian Energy Regulator allowing network businesses to share in the future savings of avoided network infrastructure so they could recover their investment in demand management projects.

Dunstan said that such collaborative approaches have been applied successfully in Ontario Canada, California and Queensland.

CEFC CEO Oliver Yates welcomed the report, noting that clean energy should be about delivering economic as well as environmental benefits to Australia. 

"This scoping study provides a vision for a win-win outcome for energy customers, and for network businesses and their shareholders. The CEFC stands ready to invest in initiatives to help achieve this, but we recognise that policy makers and regulators also have a crucial role to play," said Yates.

 "The CEFC commissioned this study to explore ways the CEFC could help improve efficiency and provide more economically optimal alternatives such as investing in demand management, rather than ever more infrastructure to deal with growing demand."

Emerging clean, decentralised energy technologies and business models present opportunities for the CEFC  to play its role in helping accelerate the market uptake of clean energy technologies  including solar PV and battery storage, advanced meters and time of use pricing, electric vehicle infrastructure and smart energy management and energy efficient products.