Proposed Activity Regulation Changes - October 2015

Victorian Energy Efficiency Target (VEET)

Victorian Energy Efficiency Target (VEET)

Proposed Activity Regulation Changes - October 2015

Table of contents

1.Introduction

2.Stakeholder input

3.Greenhouse abatement coefficients

4.Overview of proposed amendments

4.1.Schedules 7, 8, 9 and 10 – Space heating

4.1.1Schedule 7 – High Efficiency Ducted Reverse-Cycle Air-Conditioner Replacing Existing Unit

4.1.2Schedule Schedule 8 – High Efficiency Ducted Reverse-Cycle Heating Replacing Central Electric Resistance Heater

4.1.3Schedule 9 – Gas or Liquefied Petroleum Gas Space Heater

4.1.4Schedule 10 – Space Air to Air Heat Pump

4.2.Schedule 21 - Incandescent Lighting

4.2.1Schedule 21A - Installation of low energy GLS in place of mains voltage GLS

4.2.2Schedule 21C – Installation of low energy 12 volt lamp to replace 12 volt halogen

4.2.3Schedule 21D – Installation of mains voltage low energy downlight in place of existing 12 volt halogen downlight

4.2.4Schedule 21E – Installation of mains voltage low energy downlight with GU10 base in place of existing halogen downlight with GU10 base.

4.3Schedule 31 - High Efficiency Motor Replacing An Electric Motor

4.4Schedule 32 - High Efficiency Refrigerated Display Cabinet Replacing A Refrigerated Display Cabinet

4.5Schedule 33 - Refrigeration Fan Replacement

4.6Schedule 34 - Commercial lighting

1.Introduction

As part of the ongoing process of strengthening the Victorian Energy Efficiency Target (VEET) scheme, the Victorian Government is seeking your input on a number of changes to the VEET Regulations 2008. These changes aim to improve access to existing energy saving activities and to ensure that all activities are correctly rewarded.

Activities have been targeted because they are:

Activities that have had little uptake to date, and have an obvious barrier to uptake. For these activities, a limiting barrier is being removed.
Activities that have undergone significant market or technological change. For these activities, the baseline is being updated.

The VEET scheme is a baseline and credit scheme. Credit is awarded in the form of certificates when activities are undertaken that reduce energy consumption more than would be achieved under business as usual conditions (the baseline). As the market and technologies change, including changes in the stringency of minimum energy performance standards (MEPS), the baseline needs to be adjusted to ensure that activities are being correctly rewarded.

We will consider your feedback on these changes before any Regulation amendments are made.

We intend to make these proposed regulatory amendments ahead of adding any new VEET activities. We currently have a separate consultation process underway on introducing project-based methodologies to the scheme. Please seeenergyandresources.vic.gov.au/esi for further information and timings.

2.Stakeholder input

We are currently seeking your feedback on our proposed regulatory changes designed to continue making the VEET scheme stronger.

The Victorian Government is determined that this scheme provide even greater support to delivering energy efficiency improvements for Victorians, and your feedback on how we achieve this is welcome.

A summary of the changes to each activity is described below. Stakeholders should also consult the relevant sections of the proposed Regulations. These are available online at:energyandresources.vic.gov.au/esi

For each activity, please provide feedback on the following questions, where relevant:

Do you have any comment on the proposed amendments?
Is the timing of the proposed Regulation amendments appropriate? Why/why not?
Do the changes remove the appropriate barriers to uptake? Why/why not?
Are any other changes warranted? Please provide details.

Responses should clearly state the issue and, where relevant, reference specific sections of the Regulations.

Submissions may be emailed to .

Please reply with subject: Proposed VEET Activity Regulation Changes October 2015

Alternatively responses may be provided in writing to:

Proposed VEET Activity Regulation Changes October2015

Energy Policy and Programs

Department of Economic Development, Jobs, Transport and Resources

GPO Box 4509

Melbourne VIC 3001

Activity / Timing
Submissions close for consultation on Proposed Activity Regulation Changes October 2015 / Please see energyandresources.vic.gov.au/esi
Proposed changes to Schedules 7, 8, 9, 10, 31, 32, 33 and 34 come into effect / 1 January 2016
Proposed changes to Schedule 21 come into effect / 1 March 2016

3.Greenhouse gas abatement coefficients

We propose to update the coefficients used in calculating the greenhouse gas abatement of each activity, so that they reflect the latest available information.

Recent modelling by Jacobs Group Australia found that the marginal greenhouse gas coefficient for electricity use avoided by VEET (ex-generator) is 1.03 kg CO2-e/kWh.

As this value is ex-generator, the impact of transmission and distribution losses needs to be incorporated to create an end-use abatement coefficient. (The process of transmitting and distributing electricity results in power being lost over the journey. This should be accounted for as part of the emissions reductions achieved through VEET activities). The statewide loss factor is assumed to be 1.06, leading to an overall greenhouse coefficient for electricity of 1.095 kg CO2-e/kWh. The coefficient value previously used was 0.963 kg CO2-e/kWh.

As power often has to travel further to reach regional areas, losses are generally greater than in metropolitan areas. As a result, a regional loss factor is applied, with a multiplier of 1.04 for regional areas and 0.98 for metropolitan areas.

The abatement value for natural gas is based on the National Greenhouse Accounts Factors December 2014, incorporating scope 1 and scope 3 emissions and is 55.23 kg CO2-e/GJ. The current abatement value for natural gas is 57.3 kg CO2-e/GJ.

In the absence of any other regulatory changes, the overall impact of these changes will be that electricity savings delivered through the scheme will create slightly more certificates, while gas savings will create slightly less certificates. The recently announced VEET scheme targets take this increase into account.The revised coefficients will be incorporated into other activities as they are updated.

4.Overview of proposed amendments

4.1.Schedules 7, 8, 9 and 10 – Space heating

The primary change proposed for space heating activities (7, 8 and 10) is to remove the restriction which prevents certificates being awarded in postcodes with access to a natural gas connection. This change is proposed because high performance heat pumps now have similar greenhouse gas abatement and energy efficiency performance to high efficiency gas heaters. These heatersare increasingly being chosen by households as a main form of heating and are a viable alternative across Victoria. In addition the basis of the calculations and minimum eligibility requirements have been updated to reflect increases in the average energy efficiency of reverse-cycle air conditioners.

The abatement factors and regional factors will be updated in Schedules 7, 8, 9 and 10. The regional factors take account of increased electricity distribution losses outside metropolitan Melbourne, as well as different climate types. For schedules 9 and 10 these factors also take into account the mix of existing heater types installed in regional and metropolitan areas. These proposed changes are based on the latest available information on the penetrationof different heater types.

4.1.1Schedule 7 – High Efficiency Ducted Air To Air Heat Pump Replacing A Ducted Air To Air Heat Pump

We propose increasing the minimum required performance for ducted reverse-cycle air-conditioning, given the significant increase in the market average performance since we introduced these the activities in 2008.The proposed regulations also update references to the current relevant standards.

The impact of the proposed changes is that the certificate allocation is reduced. The certificate allocation is based on the difference in energy consumption between the high-efficiency unit to be installed (in defined bands) and the average efficiency of new units currently available on the market. As the average efficiency of available units has risen, the abatement achieved by replacing the average unit with a higher-efficiency unit has reduced.

These changes are proposed to commence on 1 January 2016.

Note that in the tables below, CoP refers to coefficient of performance, and ACOP refers to annual coefficient of performance as defined in AS3823.2:2013.

Certificates for activity = Abatement Factor x Regional Factor

The appropriate regional factor is determined from a postcode lookup table in the Regulations

Table 1.Current certificate allocation forSchedule 7 – High Efficiency Ducted Air To Air Heat Pump Replacing A Ducted Air To Air Heat Pump

System size / Abatement Factor
CoP - 3.5 to 3.99 / CoP - 4.0 to 4.49 / CoP - 4.5 to 4.99 / CoP - 5+
Small (10 - 18 kW) / 3.22 / 8.45 / 12.51 / 15.77
Medium (18.1 - 28 kW) / 4.07 / 10.68 / 15.83 / 19.94
Large (> 28 kW) / 5.08 / 13.33 / 19.75 / 24.88
Location / Climate / Regional Factor
Melbourne / Mild / 1.00
Regional Victoria / Mild / 1.06
Regional Victoria / Cold / 1.71
Regional Victoria / Hot / 0.74

Table 2. Revised certificate allocation for Schedule 7 – High Efficiency Ducted Air To Air Heat Pump Replacing A Ducted Air To Air Heat Pump

System Size / Abatement Factor
ACOP - 3.7 to 3.99 / ACOP - 4.0 to 4.29 / ACOP - 4.3 to 4.59 / ACOP - 4.6 +
Small (10 to 18 kW) / 1.25 / 4.62 / 7.52 / 10.04
Medium (>18 to 28 kW) / 3.25 / 7.51 / 11.18 / 14.37
Large (> 28 kW) / 6.26 / 11.58 / 16.15 / 20.13
Location / Climate / Regional Factor
Melbourne / Mild / 1.00
Regional Victoria / Mild / 1.06
Regional Victoria / Cold / 1.72
Regional Victoria / Hot / 0.75

How are certificates for this activity affected?

In general, the number of certificates per air-conditioner installed will be lower because the market average performance of new ducted reverse-cycle air conditioners has improved since 2008.

Example:

Regional Victoria/Cold, ACOP 4.2 (CoP 4.0 to 4.9), Medium size

Previous certificates = 10.68 x 1.71 = 18.26 certificates

Revised certificates = 7.51 x 1.72 = 12.9 certificates

What equipment specification changes are proposed?

We propose increasing the minimum performance of installed ducted reverse cycle air-conditioner units to an ACOP of 3.7.This is expressed as an annual coefficient of performance in compliance with Minimum Energy Performance Standards (MEPS) and AS3823.2:2013

What does the gas-reticulation limitation change mean?

Under the proposed changes, VEET incentives for installing ducted reverse-cycle air-conditioningwill no longer be limited to areas that do not have reticulated mains gas. This activity is proposed to be eligible across Victoria.

4.1.2Schedule 8 – High Efficiency Ducted Air To Air Heat Pump Replacing Central Electric Resistance Heater

It is proposed that the abatement calculations are updated, incorporating changed assumptions in the cooling performance of the ducted air conditioner to reflect the latest available information, adjusting the assumed cooling load to reflect a change in the understanding of the way cooling is used and also taking into account the duct losses which had previously not been taken into consideration.

These changes are proposed to commence on 1 January 2016.

Certificates for activity = Abatement Factor x Regional Factor

The appropriate regional factor is determined from a postcode lookup table in the Regulations

Table 3. Current certificate allocation for Schedule 8 – High Efficiency Ducted Air To Air Heat Pump Replacing Central Electric Resistance Heater

System size / Abatement Factor
CoP - 3.5 to 3.99 / CoP - 4.0 to 4.49 / CoP - 4.5 to 4.99 / CoP - 5+
Small (10 - 18 kW) / 98.0 / 104.2 / 108.9 / 112.7
Medium (18.1 - 28 kW) / 124.1 / 131.9 / 137.9 / 142.7
Large (> 28 kW) / 156.6 / 166.1 / 173.4 / 179.2
Location / Climate / Regional factor
Melbourne / Mild / 1.00
Regional Victoria / Mild / 1.06
Regional Victoria / Cold / 1.75
Regional Victoria / Hot / 0.67

Table 4. Revised certificate allocation certificate allocation for Schedule 8 – High Efficiency Ducted Air To Air Heat Pump Replacing Central Electric Resistance Heater

RAC / House size / Abatement Factor
ACOP - 3.7 to 3.99 / ACOP - 4.0 to 4.29 / ACOP - 4.3 to 4.59 / ACOP - 4.6 +
Small (10 to 18 kW) / 102.0 / 107.0 / 111.2 / 114.8
Medium (18 to 28 kW) / 129.9 / 136.0 / 141.2 / 145.8
Large (28 kW +) / 165.4 / 172.7 / 179.0 / 184.5
Location / Climate / Regional Factor
Melbourne /Mild / 1.00
Regional Victoria / Mild / 1.06
Regional Victoria / Cold / 1.79
Regional Victoria / Hot / 0.61

How are certificates for this activity affected?

In general, the number of certificates per installation will be slightly higher because of an increase in the underlying greenhouse gas abatement factor for electricity and the net impact of the other changes made to the calculation algorithms. Changes to the regional factor will tend to make certificates lower in the Regional Victoria/Hot climate area.

Example:

Regional Victoria/Hot, ACOP 4.2 (CoP 4.0 to 4.9), Medium size

Previous certificates = 131.9 x 0.67 = 88.4 certificates

Revised certificates = 136.0 x 0.61 = 83 certificates

What equipment specification changes are proposed?:

We propose increasing the minimum performance of installed ducted reverse cycle air conditioner units to an ACOP of 3.7. ACOP is the annual coefficient of performance defined in AS3823.2:2013

What does the gas-reticulation limitation change mean?

Under the proposed changes, this activity will no longer be limited to areas that do not have reticulated mains gas. This activity is proposed to be eligible across Victoria.

4.1.3Schedule 9 – Gas or Liquefied Petroleum Gas Space Heater

It is proposed that the abatement calculations are updated to incorporate changed assumptions, based on the latest available information, about the mix of installed heating in houses in Melbourne and regional Victoria and the efficiencies of these heaters. In addition, the greenhouse coefficients have been updated.

These changes are proposed to commence on 1 January 2016.

Certificates for activity = Abatement Factor x Regional Factor

The appropriate regional factor is determined from a postcode lookup table in the regulations

Table 5. Current certificate allocation for Schedule 9 – Gas or Liquefied Petroleum Gas Space Heater

System size / Abatement Factor
4.0 to 4.9 Stars / 5.0 Stars +
Small (2 - 3 kW) / 4.32 / 4.83
Medium (3.1 - 6.0 kW) / 8.19 / 9.17
Large (> 6 kW) / 10.22 / 11.44
Location / Climate / Regional factor
4.0 to 4.9 Stars / 5.0 Stars +
Melbourne / Mild / 1.00 / 1.00
Regional Victoria / Mild / 0.32 / 0.39
Regional Victoria / Cold / 0.51 / 0.63
Regional Victoria / Hot / 0.22 / 0.27

Table 6. Revised certificate allocation for Schedule 9 – Gas or Liquefied Petroleum Gas Space Heater

System size / Abatement Factor
4.0 to 4.9 Stars / 5 Stars +
Small (2 to 3 kW) / 5.36 / 5.86
Medium (3.1 to 6 kW) / 9.61 / 10.55
Large (6 kW +) / 13.22 / 14.39
Location / Climate / Regional Factor
4.0 to 4.9 Stars / 5 Stars +
Melbourne / Mild / 1.00 / 1.00
Regional Victoria / Mild / 0.22 / 0.29
Regional Victoria / Cold / 0.36 / 0.46
Regional Victoria / Hot / 0.15 / 0.20

How are certificates for this activity affected?

For this activity the change in certificates generated will vary depending on where the heater is installed. In Melbourne, certificates will increase slightly, while in other areas they will fall.

This reflects the higher incidence of electric heating in Melbourne compared to Regional Victoria.

Example:

Regional Victoria/Mild, 5 stars, Medium size

Previous certificates = 9.17 x 0.39 = 3.6 certificates

Revised certificates = 10.55 x 0.29 = 3.1 certificates

What equipment specification changes are proposed?

There are no proposed changes to equipment requirements.

4.1.4Schedule 10 – Space Air to Air Heat Pump

We propose increasing the minimum required performance for reverse-cycle air-conditioning, given the significant increase in the market average performance since we introduced these the activities in 2008.The proposed regulations also update references to the current relevant standards.

Changes are proposed to the abatement calculations, incorporating changed assumptions in the cooling performance of air conditioners to reflect latest available information and adjusting the assumed cooling load to reflect a change in the understanding of the way cooling is used.

These changes are proposed to commence on 1 January 2016.

Certificates for activity = Abatement Factor x Regional Factor

The appropriate regional factor is determined from a postcode lookup table in the Regulations

Table 7. Current certificate allocation Schedule 10 – for Space Air to Air Heat Pump

System size / Abatement Factor
CoP - 3.5 to 3.99 / CoP - 4.0 to 4.49 / CoP - 4.5 to 4.99 / CoP - 5+
Small (2 - 3 kW) / 5.21 / 6.13 / 6.85 / 7.42
Medium (3.1 - 6.0 kW) / 9.89 / 11.65 / 13.01 / 14.09
Large (> 6 kW) / 12.55 / 14.68 / 16.33 / 17.65
Location / Climate / Regional factor
CoP - 3.5 to 3.99 / CoP - 4.0 to 4.49 / CoP - 4.5 to 4.99 / CoP - 5+
Melbourne / Mild / 1.00 / 1.00 / 1.00 / 1.00
Regional Victoria / Mild / 0.07 / 0.22 / 0.34 / 0.44
Regional Victoria / Cold / 0.18 / 0.39 / 0.58 / 0.72
Regional Victoria / Hot / 0.00* / 0.09 / 0.20 / 0.29

* No net greenhouse saving is generated in this case

Table 7. Revised certificate allocationcertificate allocation Schedule 10 – for Space Air to Air Heat Pump.

RAC / House size / Abatement Factor
ACOP 4.0 to 4.49 / ACOP 4.5 to 4.99 / ACOP 5.0 to 5.49 / ACOP 5.5 +
Small (2 to 3 kW) / 4.64 / 5.48 / 6.14 / 6.69
Medium (3.1 to 6.0 kW) / 8.33 / 9.91 / 11.17 / 12.20
Large (6.0 kW +) / 11.51 / 13.42 / 14.95 / 16.20
Location / Climate / Regional Factor
ACOP 4.0 to 4.49 / ACOP 4.5 to 4.99 / ACOP 5.0 to 5.49 / ACOP 5.5 +
Melbourne / 1.00 / 1.00 / 1.00 / 1.00
Regional - mild / 0.12 / 0.27 / 0.39 / 0.50
Regional - cold / 0.24 / 0.44 / 0.63 / 0.79
Regional - hot / 0.02 / 0.16 / 0.29 / 0.38

How are certificates for this activity affected?

In general, the number of certificates per installation will be lower for the same equipment because the market average performance of new room reverse-cycle air conditionershas increased.

Example:

Melbourne, ACOP 4.2 (CoP 4.0 to 4.49), Medium size

Previous certificates = 11.65 x 1.0 = 11.65 certificates

Revised certificates = 8.33 x1.0 = 8.33 certificates

What equipment specification changes are proposed?

The proposed changes will increase the minimum performance of reverse cycle air-conditioner units in line with greater market availability of high-performance units and increased MEPS (Minimum Energy Performance Standard) levels. The proposed minimum is an ACOP of 4.0. Performance will be expressed as annual coefficient of performance in compliance with MEPS and AS3823.2:2013.

What does the gas-reticulation limitation change mean?

Under the proposed changes, this activity will no longer be limited to areas that do not have reticulated mains gas. This activity is proposed to be eligible across Victoria.

4.2.Schedule 21 - Incandescent Lighting

We propose several changes for this activity, to update it in line with recent improvements in lighting technologyand to account for the implementation of MEPS for incandescent and extra low voltage (12 volt) lighting since the commencement of the VEET.

Abatement factors are proposed to be revised to reflect changes in business as usual performance of the lamp being replaced. This is based on changes in the market penetration of pre- and post-MEPS lamps assumed in the calculations and an increase in the assumed rate of business as usual replacement of the existing lamps with low energy lamp types.
We propose to update the minimum performance criteria for lighting equipment so they reflect improvements in equipmentlighting technology, especially LED lighting.
Schedule 21B will be removed, lighting technology development has meant that there is no longer a need in the market for this activity.
Schedule 21E will be introduced to allow the replacement of mains voltage halogen lamps with GU10 bases with a low energy alternative.

The regional factor and PF (Power Factor) factor for all aspects of Schedule 21 remain unchanged.As with the other revised measures the new, higher, greenhouse coefficient for electricity will be used when calculating the number of certificates allocated.

Recognising the potential lead time for procuring and testing new lamps, we propose that these amendments come into effect on 1 March 2016.

4.2.1Schedule 21A - Installation of low energy GLS in place of mains voltage GLS

Certificates for activity = Abatement Factor x Regional Factor x PF factor

Table 8. Current certificate allocation for Schedule 21A - Installation of low energy GLS in place of mains voltage GLS

Rated Life of Low Energy Lamp (Hrs) / Abatement Factor
Minimum Efficiency / High Efficiency 1 / High Efficiency 2
8,000 to < 10,000 / 0.25 / 0.27 / 0.29
10,000 to < 12,000 / 0.32 / 0.34 / 0.36
12,000 to < 15,000 / 0.38 / 0.41 / 0.43
15,000 to 20,000 / 0.47 / 0.51 / 0.54
20,000+ / 0.63 / 0.69 / 0.72

Table 8. Revised certificate allocation for Schedule 21A - Installation of low energy GLS in place of mains voltage GLS