IPART have announced changes to the commercial lighting methodology under the NSW Energy Savings Scheme (ESS) that will come into effect on 1 November 2018.
The purpose of the ESS is to incentivise businesses to invest in energy efficiency through projects such as commercial LED lighting upgrades. By participating in energy saving activities, businesses in NSW become eligible for Energy Saving Certificates (ESCs).
How do you claim Energy Saving Certificates (ESCs)?
- Businesses invest in an energy savings activity (such as upgrading to LED lighting) to reduce their energy use.
- Cherry Energy Solutions calculate the reduction in energy use and the number of certificates the business is eligible for. Our Accredited Certificate Provider, Wattly, process and obtain the ESCs on behalf of our customers.
- Parties liable for their emissions, such as electricity retailers, buy the ESCs from our Accredited Provider at prices set in response to the market supply and demand for certificates.
- The price obtained for the ESCs by the Accredited Provider is returned to the business that generates them via an upfront discount on the total cost of the upgrade project.
When calculating how many certificates an activity generates, IPART use the following calculation:
The Early Replacement Period is the time frame during which the existing lighting would have been in place without the ESS. The Remaining Life Period is the time period between the point when the existing lights would have been replaced without the ESS, and the end of life of the ESS Lighting Upgrade, which is determined by the particular asset's estimated lifetime.
Commercial LED lighting upgrades are happening at a faster rate than anticipated, so ESS have adjusted their Early Replacement Period to account for lighting retrofits that would have happened regardless of the subsidy scheme.
Changes to NSW commercial lighting methodology explained
The important takeaway from the upcoming changes is that regional areas undertaking industrial retrofits (eg. upgrading warehouse lights to LED high bays) will benefit the most from subsidies increasing by as much as 20%. However, subsidies will be reduced in metro areas (eg. upgrading office tube lights) by a similar percent.
A high bay in a retail space is currently eligible for 10 years of ESCs, however from 1 November, high bays will only be eligible for 10 years of ESCs in regional areas and 7.4 years in metro locations.
In addition, the eligibility threshold for small businesses under the Home Energy Efficiency Retrofit (HEER) program has changed to be based on electricity consumption. This is favourable for small businesses who will now be eligible for subsidies under HEER.
If you are a business with large warehouse space or energy expenditure on lighting in regional NSW, it is a great time to consider a lighting upgrade. Conversely, if you are a business in a metro area with old metal halide high bays, there is still time to replace them before subsidies are reduced on 1 November.
Get in touch today for more information on claiming government subsidies for energy efficiency projects.