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PROPOSAL TO REVISE ENERGY EFFICIENCY REQUIREMENTS OF THE BUILDING CODE OF AUSTRALIA FOR COMMERCIAL BUILDINGS 159
unlikely to defer significant investment in generation augmentation in this
timeframe.
Impacts on operating costs of generation
Operating costs do not fall proportionately with reductions in supply. The
impact of energy savings on the operating costs of generation businesses
cannot be estimated directly for purposes of this RIS. However, an insight
into the likely upper bound of these savings can be obtained from the
smart meters studies referred to above. In the market modelling performed
for that inquiry the highest impact scenario (in which penetration rates of
smart meters was assumed to be 35 per cent and there was high
functionality of metering combined with an element of direct load control)
maximum demand (peak demand) savings in any of the Australian
jurisdictions was calculated to be 4.2 per cent below the base case (which
involved no smart metering but included carbon pricing effects.) The
conservation effect in these studies (the impact on total consumption)
varied between 3 per cent and 7 per cent depending on functionality. (This
compares with a 2030 conservation effect of less than 0.5 per cent
estimated for the proposed BCA changes). The resulting national smart
meter – plus DLC impact on operating costs in 2030 was estimated to be a
0.73 per cent reduction below base case. The corresponding NPV of
operating cost savings was put at $381 million when calculated over the
period 2007 to 2030 with an 8 per cent discount rate.
The gains from these demand side measures arise partly from the
flattening effect on the load curve that would have a less pronounced
counterpart in the measures envisaged in the code changes although it is
not possible to compare the two directly. However, the ultimate
conservation effects relative to BAU are much stronger in the metering
modelling than in the BCA change case (up to 14 times). While the
differing impacts on load profile of the two sets of measures remains
uncertain it seems likely that, given the large end point disparity in total
conservation effects between the modelled smart meter impacts and the
BCA changes, the operating cost savings of the latter would be unlikely to
be more than 0.1 per cent. 41
41 An alternative view might be taken that operating costs are approximately 30 per
cent of unit costs of generation businesses. Assuming that average commercial tariffs
cover unit costs of generation, transmission, distribution and retail, and that the
generation sector accounts for approximately 45 per cent of total unit costs, the NPV
of generation savings evaluated in this way over the period to 2030 would yield
savings of approximately $277 million, or approximately $18 on an annualised basis.
This conclusion requires further evaluation.
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