ComCom 'should give priority to energy efficiency'
- silvereyecomms
- Aug 5, 2024
- 3 min read
Updated: Aug 21
ComCom 'should give priority to energy efficiency'
Ian Llewellyn | Mon, 05 Aug 2024
Installing energy-efficient light bulbs could reduce evening peak load by more than 300MW.
A greater focus on energy efficiency from the Commerce Commission’s regulation of electricity lines companies could reduce pressure on generation and networks and save households money, says an energy efficiency company.
Ecobulb managing director Chris Mardon has been urging the commission (ComCom) to adjust the allowable regulated expenditure of the lines companies so they can invest in things such as energy-efficient light bulbs.
As part of cost savings, $178.5 million was cut from the Energy Efficiency and Conservation
Authority’s funding.
The resulting spending reductions included discontinuing new elements of the Warmer Kiwi Homes programme and other EECA spending, including funding for water heating, low-cost
energy-efficiency measures, an LED lighting scheme, a community-focused outreach programme to target hard-to-reach households, and the Low Emissions Transport Fund Freight Decarbonisation Grants programme.
Mardon said this had left a hole that lines companies could help fill if they were allowed to.
Final decisions ComCom is moving towards finalising the price paths for regulated lines companies. This outlines how much they can charge for their monopoly services and what they can spend the money on.
Part of this is the commission’s “Innovation and Non-Traditional Solutions Allowance”, otherwise known as Intsa.
This currently sits at 0.6% of maximum allowable revenue, but the commission has suggested this could possibly be higher, with a top end of 5% suggested.
To put this in perspective, total lines companies’ spending will be about $12 billion in 2025-30, according to ComCom’s draft decision.
At the lower level of 0.6%, that is $75m, and at 5%, that is $600m for Intsa over five years.
Ecobulb is advocating for the top end, with half of this ring-fenced for energy efficiency.
Mardon wants the ring fence because it is likely lines companies will apply spending to other
innovations and non-traditional technology. This would include things like batteries and new tech to control demand, particularly during peak periods.
Ecobulb says this would make sense for lines companies, the wider electricity sector and households. Increasing demand from electrification of the economy meant new generation was being built and the lines and transmission networks will have to spend billions to keep the lights on.
Currently, the system is struggling to manage peak demand periods, while power bills are increasing. Cheaper to reduce than build Mardon argues that New Zealand has an energy-efficiency opportunity equal to 15% of electricity generation, which can be delivered at less cost than building new renewable capacity.
Simple things like energy-efficient light bulbs would help considerably with winter evening peak demand. One study said that if 29 million efficient light bulbs were installed, evening peak load could be reduced by about 340 megawatts, or about the peak load of Hamilton, for about a tenth of the price of building new generation.
Ecobulb has submitted that existing policy on climate change and energy does little to promote energy efficiency because it cannot be delivered solely by market-based mechanisms.
One submission also argues ComCom is ignoring its own governing legislation – the Commerce Act - that requires the regulator to incentivise lines companies to invest in or promote energy-efficiency activities.
To fulfil this obligation, ComCom would have to change the rules, or at least how they were
interpreted, to allow energy efficiency spending.
Multibillion-dollar opportunity Said Mardon: “The commission doesn’t allow lines companies to recover any money spent in the short term on energy efficiency. Similarly, it doesn’t allow lines companies to include energy efficiency in regulated asset bases and therefore recover spending over the long term.
“If I had 30 seconds in the elevator with the minister, I'd be saying right now,
'You've got this multibillion-dollar opportunity for energy efficiency that can help improve security of supply and help improve access to the affordability and nothing's happening in this space.'”
Ecobulb was born out of Energy Mad, a company founded in 2004 by Tom Mackenzie and Mardon. It was listed in 2011. Mardon said the experience was not a good one, with the listing bringing plenty of compliance costs and offering very little in return.
After its less-than-successful foray into the NZX, Mardon bought out the company in 2018 and changed the name to Ecobulb.
ABOUT THE AUTHOR
Ian Llewellyn
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