Policies that have lowered Australia’s electricity consumption – part 1

Bruce Rowse

Since 2008 electricity generation in Australia’s National Electricity Market (NEM) has declined. The graphs below, showing generation from the two most populous states in the NEM – N.S.W. and Victoria – illustrate the extent of the decline.


This sustained decline has never occurred before in Australia’s history.

This post has a focus on the state of Victoria, and looks at the contribution the national Renewable Energy Target (RET) – aided by the state Feed in Tariff -  and the Victorian Energy Efficiency Target scheme have had to reducing electricity consumption. Both these schemes require electricity retailers to purchase and surrender a prescribed number of certificates each year.

Renewable Energy Target

Since 2011 the RET has had two types of certificates, Large Generation Certificates (LGCs) and Small Technology Certificates (STCs). For electricity generation LGCs represent generation plants in excess of 100 kW, with these generators joining the NEM. They are therefore already accounted for in the generation figures graphed above. Well over 80% of STCs have come from solar PV systems.

STCs enable an upfront discount by deeming the forward generation by 15 years. Taking this into account, by analysing the data in the REC registery, the amount of actual electricity generation each year from solar PV in Victoria is graphed below from 2004 to 2012. (2013 data not yet finalised).


The rapid decline in the installed cost of PV in Australia, supported by the RET and the Victorian Feed in Tariff, has caused a rapid growth in the number of PV systems installed, so much so that by 2012 small scale PV contributed to slightly more than 2% of state electricity generation.

The RET had a stimulatory multiplier attached to it for systems under 5 kW in size up until June 2013. Similarly Victoria’s feed in tariff’s started off high, then have twice dropped substantially. Once complete 2013 STC data is available I will preparing a post which examines the impact of the RET and the FIT policies in detail and examines their efficiency and effectiveness.

Victorian Energy Efficiency Target (VEET) Scheme

The VEET white certificate scheme has been in place since January 2009. By analysing the data in the VEET registry the amount of electricity saved as a result of the VEET scheme is graphed below.


Whilst there is reasonably high certainty of the amount of electricity generated by a PV system, there is generally less certainty about the savings achieved by energy efficiency measures. The key technology that has produced the greatest number of certificates in the VEET scheme has been Standby Power Controllers, for which I believe that the deeming values used have been excessively high.

Nonetheless, even if the VEET scheme has only achieved half the savings it has deemed to, it has also contributed to reducing Victoria’s electricity consumption by more than 2% since it started in 2009. In another post I’ll be examining the effectiveness of the VEET scheme in more detail.

Together the REC certificates (with feed in tariff support) and energy efficiency white certificates in Victoria appear to have reduced electricity consumption by over 2,000,000 MWh. However with 2013 electricity consumption around 4,000,000 MWh lower than in 2008, and around 8,000,000 MWh lower than had the increasing trend of 2004 to 2008 remained, there have clearly been other factors that have contributed to Victoria’s declining electricity consumption.

These include national equipment energy efficiency standards, building efficiency standards and carbon pricing. Additionally increases in electricity costs may have driven voluntary decreases in electricity consumption, as would have the gradual decline of Victoria’s manufacturing sector. These will be examined in the next part of this discussion on policies that have lowered Australia’s electricity consumption.