Sunday, September 4, 2011

Calls for national energy scheme

AGL Energy and Origin Energy have called for a national energy saving scheme to slash the costs they face to comply with fragmented state-based schemes.

The nation's two biggest energy retailers have also renewed calls for an end to government control of retail power prices.

The companies have told a review, ordered by the Ministerial Council on Energy in response to increasing demand for power, that they are being saddled with compliance costs because of the lack of a national energy efficiency scheme.

Victoria, South Australia and NSW operate separate schemes that require energy and gas retailers to purchase and surrender energy efficiency certificates. In Queensland, a parliamentary committee has recommended consideration of a scheme.

The schemes are expected to grow as the carbon tax is due to start next year and electricity prices are forecast to rise.

AGL Energy is seeking a national scheme that would include access to cheaper capital for energy efficiency projects by commercial and industrial energy users.

"Owing to either the insignificant cost savings (Australia's electricity prices are still some of the lowest in the OECD), or the requirement to reserve capital for the most productive uses, it is frequently difficult for an energy efficiency project to gain financial support within an organisation," AGL says.

"Required payback periods, combined with internal hurdle rates in the order of 15 per cent or more, result in many energy efficiency projects being shelved."

Origin has echoed the concern, saying business users will not undertake projects with payback periods longer than three to four years.

The review is being conducted by the Australian Energy Market Commission, which will release a discussion paper in November. It was ordered because demand for peak power -- most commonly on summer days when air-conditioning use soars -- is growing faster than normal demand, requiring multi-billion-dollar investments in energy infrastructure that is used only for a few hours a year.

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