Complementary Measures
There are a number of barriers that can restrict investment in energy efficiency, conservation and renewable energy. These include:18
- Lack of information
- Weak price signals
- Access to capital
- Split incentives
Energy efficiency measures complement economic and regulatory instruments by slowing demand growth, and can defer the need for new generation investment. Energy efficiency also mitigates the impact of rising energy prices on consumers and can generate co-benefits – e.g. improving insulation makes homes warmer and healthier.
Costs are the investments required to achieve efficiency gains, and any operating costs associated with programme delivery, e.g. administrative costs to government. More detail on the analysis of these programmes is contained within the NZECCS and the Benefit-Cost Analysis of the New Zealand Energy Strategy.
It should be noted that the generic programmes assessed in the benefit cost analysis do not necessarily represent those set out in the NZEECS, which have been refined to reflect government priorities and stakeholder views. Rather, this analysis was undertaken to supplement other analyses on the potential for energy efficiency improvements in New Zealand.
More detailed analysis of the net benefits of individual programmes will continue to be undertaken by EECA, and other relevant agencies, through development and implementation of the NZEECS.
Residential energy efficiency
The New Zealand housing stock is not very energy efficient. The reasons for this are historically low energy prices – households could keep warm by using lots of energy – and that the Building Code did not require insulation in new houses until 1978.
The government has implemented a range of actions to improve the efficiency of the existing housing stock, and reduce the energy needs of new dwellings. These measures will also serve to improve health outcomes for occupants.
Analysis shows that these programmes have the potential to reduce energy use in households by around 1.3PJs per annum by 2025, compared with business as usual.
Products programme
Energy use by products currently equates to around 77PJs per annum. EECA's products programme has the potential to reduce energy use by products by around 12PJs per annum by 2025, compared with business as usual.
Buildings
There is work underway to reduce energy consumption and increase business productivity in commercial buildings by designing, building and refurbishing them with energy use in mind. This would be achieved through changes to the Building Code to increase the energy efficiency requirements for new and existing buildings.
The activities in this area are:
- Increased Building Code requirements for lighting in new buildings, which would also be applied retrospectively to existing buildings at time of sale/lease.
- Increased Building Code requirements for heating, ventilation and air conditioning (HVAC) in all buildings; applied at time of construction and/or 3 yearly inspections.
It is estimated that cost effective savings of around 9 PJ per annum could be achieved by 2020.19 However, the costs and effectiveness of measures in this area are highly uncertain, and there has been limited analysis of technical options in New Zealand.
Industry efficiency programme
EECA provides grants and interest free loans to promote industrial and business sector investment in energy management and new technologies that reduce energy consumption and emissions while increasing productivity and profitability.
In 2006 industrial and commercial use accounted for 39.1% of New Zealand's total consumer energy demand.20 The NZEECS has identified increased energy productivity in industry as a priority, and proposes actions to improve profitability, and reduce industrial energy use and greenhouse gas emissions. By building on the existing programme, there is scope to further improve technology choices and energy management practices in industry, especially within the top 300 energy consuming sites and in sectors where energy represents more than 5% of business costs.
The energy efficiency in industry programme has achieved annual energy savings of 2.8 PJs. SEVP shows that further cost effective annual savings of 1.3 PJ could be achieved by 2010, and 3 PJ by 2020.
Electricity Commission draft potentials study
The Electricity Commission's draft electricity efficiency potentials report21 estimates that the achievable potential22 for electricity efficiency improvements is up to 5% of projected base 2016 energy usage.
Technical potential23 in the residential sector is 45% of projected base 2016 residential energy usage. This gap between achievable and technical potential suggests that significant further efficiency gains will be realisable in the longer term as technology costs come down and as other barriers such as consumer awareness are reduced.
For the commercial sector, around half of achievable potential is in indoor lighting, mostly attributable to replacing incandescent lightbulbs with CFLs, with the remainder made up of improved heating, ventilation and air-conditioning systems and refrigeration.
For industry, most achievable potential relates to motor-driven systems such as pumps, fans, drives and compressed air.
Overview of results
Consistent with findings in other jurisdictions, modelling shows substantial scope for cost effective improvements in energy efficiency in New Zealand.
The cost effectiveness of various measures in terms of the cost per tonne of greenhouse gas emissions reductions varies. Overall, the majority of efficiency gains can be achieved at below the long-run marginal cost of new generation capacity.
Further detail on the costs and benefits of each of the efficiency programmes modelled can be found in the document Benefit-Cost Analysis of the New Zealand Energy Strategy.
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