Recommendations for NZ’s Second Emissions Reduction Plan

16 August 2024

ECOBULB®

Recommendations for NZ’s Second Emissions Reduction Plan

New Zealand has an abundant energy efficiency opportunity equating to about 15 percent of New Zealand’s electricity generation, delivered at less cost than building new renewable generation capacity.

Source: “Energy Efficiency First, The Electricity Story”, Overview Report, EECA, July 2019.

1. SUMMARY OF OUR SUBMISSION

The Ministry for the Environment is seeking feedback on New Zealand’s Second Emission’s Reduction Plan. It is with pleasure that Ecobulb Limited submits its feedback on this consultation.

We would welcome the opportunity to discuss our feedback in person or provide further

information that might be required by the Ministry.

Contact details are:

Dr Chris Mardon, Managing Director, Ecobulb Limited

Email: chris.mardon@energymad.com

Mobile: 021 041 2981.

Ecobulb has in the past two decades delivered 107 Ecobulb and energy efficiency projects with government, energy trusts, lines companies and electricity retailers in New Zealand, Australia, the United States and Germany. We have approximately 25 million Ecobulb energy saving light bulbs installed in an estimated 3.4 million New Zealand, Australian and United States homes, plus have completed energy assessments and various other energy efficiency upgrades in 44,500 New Zealand homes.

New Zealand has an abundant low hanging fruit energy efficiency opportunity equating to about 15 percent of New Zealand electricity generation, which can be delivered at less cost than building new renewable generation capacity and deliver significant carbon dioxide emission reductions.

For example, replacing all 29 million inefficient light bulbs in New Zealand homes with LEDs would reduce 5.425 million tonnes of carbon dioxide emissions by 2040.

Unfortunately the current coalition Government has cancelled half a billion dollars of Energy Efficiency and Conservation Authority funding for residential and commercial energy efficiency.

Furthermore, the Government’s new climate strategy does not include a pillar for energy efficiency, or even a reference to it under one of the five pillars. There is also very little reference to energy efficiency in the proposed Second Emissions Reduction Plan, despite the clear proven potential for energy efficiency to contribute significantly to reducing carbon dioxide emissions in New Zealand.

Ecobulb is committed to working with the Government to help increase energy efficiency for homes and businesses. This will reduce carbon dioxide emissions, lower peak electricity demand, displace expensive investment in new generation and distribution, and reduce power bills. We have three practical recommendations that would reduce emissions while improving the security of supply and affordability.

Ecobulb’s three recommendations for New Zealand’s Second Emissions Reductions Plan are:

1. The Government creates a new version of the co-investment model to incentivise

consumers to invest in energy efficiency, in particular high-efficiency LEDs, hot-water heat

pumps, and shower heads.

2. The Commerce Commission obligates and incentivises electricity distribution businesses

to invest in or promote energy efficiency activities, as required by Section 54Q of the

Commerce Act.

3. Electricity retailers are obligated and incentivised to fund energy efficiency initiatives in

low and middle-income homes. This could be an extension in size and tenure of the

successful but limited Low Fixed Charge Power Credits Scheme.

2. LARGE CARBON REDUCTION ENERGY EFFICIENCY OPPORTUNITY

This section outlines the large potential for energy efficiency upgrades in New Zealand residential and commercial buildings.

In July 2019 the Energy Efficiency and Conservation Authority (EECA) published its overview report “Energy Efficiency First, The Electricity Story1”.

Its key findings included:

1. New Zealand energy consumers have a greater opportunity to improve the efficiency of energy

use than those in many other countries because New Zealanders do not use energy very

efficiently2.

2. A focus in modelling on three technologies: LED lights; heat pumps for water and space heating; and more efficient electric motors. All these energy-efficient technologies provide the same or better functionality as less-efficient technologies they replace, and so meet the energy needs of users with less electricity.

3. Implementation times for switching to LEDs, heat-pumps or more efficient motors are short relative to building renewable generation, which means that electricity efficiency measures could be deployed quickly, allowing emissions reductions to be achieved earlier. New Zealand’s emissions target under the Paris Agreement is a reduction of total emissions between 2021 and 2030, so rapidly deployable interventions are especially valuable in meeting that target.

4. Figure 1 below illustrates the cumulative 5,981 GWh3 annual electricity saving potential from LED lighting4, hot water heating, space heating and electric motors in New Zealand homes and businesses – and the levelised cost per MWh of electricity saved for each of these opportunities.

5. Figure 2 below illustrates that the average generation equivalent cost of implementing these electricity efficiency measures is significantly lower than the cheapest currently available renewable generation technologies, with electricity efficiency measures costing $15–50/MWh compared to new generation at $60–75/MWh5.

6. Efficient technologies are being adopted, but at a slower rate than one would expect based on the cost-versus benefit analysis. As an example, based on the data Ecobulb has gathered from its recent LED projects, there are an estimated 29 million inefficient light bulbs in New Zealand homes. While the percentage share of LEDs is expected to grow, 35% of installed lighting is expected to be inefficient incandescent and halogen light bulbs in 20306.

7. A 2019 study for EECA by Concept Consulting7 found that residential lighting and space

heating are largely responsible for the winter peak in electricity demand (see Figure 3) and much fossil fuel generation. Capturing the full technical potential of peak-related electricity efficiency could reduce electricity emissions by about 1.7 million tonnes per year, Concept said.

Ecobulb commissioned Concept Consulting to “undertake an independent review and evaluate the proposal from Ecobulb for the Government to fund the provision of highly efficient lightbulbs to New Zealand homes during 2023”.

Concept’s evaluation10 calculated a 5.425 million tonne carbon dioxide emission reduction to 2040 from replacing all 29 million inefficient light bulbs in New Zealand homes with Ecobulb LEDs (Figure 4).

Concept calculated a 340MW network peak winter load reduction from replacing these 29 million light bulbs. New Zealand residential consumers would also save $176 million per year11 on their power bills.

Figure 4: Concept Consulting Evaluation: 5.425 million tonne carbon reduction to 2040

10 “Evaluation of the economic and environmental benefits of a programme of significant LED uptake proposed by Ecobulb”, Concept Consulting, February 2023 update.

11 690GWh per year electricity savings multiplied by an average electricity price of $0.255 / kWh.

3. THREE RECOMMENDATIONS FOR THE 2ND EMISSION REDUCTIONS PLAN

New Zealand has an abundant low hanging fruit energy efficiency opportunity.

Unfortunately one of the current coalition Government’s first targets for saving money involved axing the one-billion-dollar GIDI fund, which included cancelling $330 million of funding for efficient lighting, heating, and electric motors for commercial buildings.

This was compounded by the Government cancelling EECA’s remaining $156 million funding for residential LEDs, low-cost energy efficiency measures and heat pump water heaters.

This leaves Government funding for EECA’s Warmer Kiwi Homes Programme, which only provides subsided insulation and heating for less than five percent of New Zealand homes (with no funding for the other high “bang for buck” low-cost energy efficiency measures).

The Energy Minister says he prefers market-based approaches to energy policy as the best means of achieving social, economic and environmental goals in the energy system. He wants to “mobilise private capital and leverage the energy efficiency regulatory regime12” to enable energy efficiency gains.

The Government also wants the Emissions Trading Scheme to do the heavy lifting in encouraging business to stop burning fossil fuels. Unfortunately, the Emissions Trading Scheme does not provide any incentive for residential and commercial lighting and other energy efficiency upgrades for homes and the vast majority of businesses in New Zealand.

We also note that the Government’s new climate strategy does not include a pillar for energy efficiency, or even a reference to it under one of the five pillars. This is a serious omission.

Further we note there is very little reference to energy efficiency in the proposed Second Emissions Reduction Plan, despite the clear proven potential for energy efficiency to contribute significantly to reducing carbon dioxide emissions in New Zealand.

Ecobulb is committed to working with the Government to assist increasing the energy efficiency co-investment for homes and businesses, in order to reduce carbon dioxide emissions, lower peak electricity demand, displace expensive investment in new generation and distribution, and reduce power bills. We have three practical recommendations that would reduce emissions while improving the security of supply and affordability.

Ecobulb’s three recommendations for New Zealand’s Second Emissions Reductions Plan are:

1. The Government creates a new version of the co-investment model to incentivise

consumers to invest in energy efficiency, in particular high-efficiency LEDs, hot-water heat

pumps, and shower heads.

2. The Commerce Commission obligates and incentivises electricity distribution businesses

to invest in or promote energy efficiency activities, as required by Section 54Q of the

Commerce Act.

3. Electricity retailers are obligated and incentivised to fund energy efficiency initiatives in

low and middle-income homes. This could be an extension in size and tenure of the

successful but limited Low Fixed Charge Power Credits Scheme.

1 “Energy Efficiency First, The Electricity Story”, Overview Report, EECA, July 2019.

2 It is Ecobulb’s opinion that this statement holds true in 2024.

3 5,981GWh is about 15 percent of New Zealand electricity generation (after line losses) of 39.4 TWh a year.

4 Ecobulb’s methods for delivering mass market residential LED rollouts result in residential LED lighting upgrades

providing the largest and lowest cost per MW reduction and GWh savings potential of the energy efficiency options.

More detail about this potential is provided later in this section.

5 This cost of new generation has increased significantly since 2019.

6 Forecast of Business-as-Usual New Zealand Residential Lighting Stock, Beletich, 2019.

7 “What is the case for electricity efficiency initiatives?”, Concept Consulting, March 2018 report for EECA.

Ecobulb Limited Submission on NZs Second Emissions Reduction Plan 160824.pdf

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