Monday, July 07, 2008

Building Energy Efficiency Strategy for Australia

In answer to a parliamentary question about the National Framework for Energy Efficiency (NFEE) a brief list of changes which could be made to Australian buildings to make them more energy efficient was provided. This is a good, short and conservative view of the area.


Note prepared for Department of Environment and Water

by Energy Strategies

22 March 2007


The quantitative estimated of emissions savings potential should be read with considerable caution, for the following reasons

  • The feasibility of all types of technology upgrade, retrofit and replacement programs to and in existing buildings (as opposed to equipment installed in new buildings) depends on the characteristics of the existing stock of buildings and equipment. This data has never been systematically collected in Australia, to the information needed to make assessments of abatement potential is mainly confined to fragmentary case studies.
  • As is well known, there are also a wide variety of less tangible, but nonetheless very real and very important, obstacles to greater uptake of energy efficiency options that appear technically attractive.
  • The behaviour of individual occupants of residential and non-residential buildings alike varies widely and has a large effect on the consumption savings that may result from individual technology changes.

In general, the following estimates represent the technical potential of the various efficiency measures, and can therefore be thought of assuming the support of vigorous, comprehensive and effective energy efficiency programs to overcome the various barriers and influence changes in behaviour.

That said, all the following abatement estimates should be viewed as having error margins of at least ± 25%.



The availability of appliance ownership data from regular ABS household surveys, together with sales and market share data from BIS-Schrapnel, means that there is better baseline data about residential water heating that about almost any other category of Australian energy use. These and other data were used in a detailed modelling study undertaken for the AGO in 2005 by Energy Partners. The results of that study lead to the following conclusions.

  • Total emissions associated with residential water heating are currently estimated to be about 23 Mt CO2-e.
  • Major emissions savings will result from a strategic phase out of existing electric storage systems (offpeak ahead of on-demand, pre MEPS ahead of MEPS 1999):
    • if 5 star gas replaces electric storage in all households (except for the NT and Tasmania, and units of less than 50L), abatement = 11 Mt CO2-e /yr, or
    • if solar electric boost replaces electric storage in all medium and large households Australia-wide, abatement = 11 Mt CO2-e/yr.
    • There are net present cost savings (using a discount rate of 5% real) to a consumer if 5 star gas or solar replaces electric storage systems in all states except in NSW and Queensland, where off-peak electric systems are most attractive because of very low offpeak tariffs.

Realising these savings will require a whole of system approach, including: efficiency of hot water end uses (e.g appliance performance) and behavioural change.

There is currently a complex, inconsistent and frequently changing mix of national and State/Territory-specific mix of incentives and regulations (RECs, GGAS, state rebates, building regulations) to promote the adoption of low emission residential water heating technologies. Rationalisation of these arrangements to reduce this complexity would help to reduce confusion and misunderstanding son the part of both final consumers and market intermediaries. Any new arrangements should encourage all low greenhouse intensity systems, including both solar and 5 star gas (instantaneous and/or storage), consistent with the above modelling results. There are a number of different ways in which such incentives could be structured.


It is estimated that commercial and industrial amenity hot water accounts for 9% of non-industrial process hot water emissions (Big Switch Projects, 2005). There are no reliable data on how this is distributed between different types of commercial buildings or different sectors of economic activity within the commercial and services sector. However, it seems likely that a significant proportion of total hot water consumption will be in large to very large systems, for example at hospitals, hotels and commercial laundries. At the other end of the scale, there will be a very large number of very small, mainly electric water heaters in offices, shops and similar types of business. There will also be a number of intermediate size systems in businesses such as restaurants and small hotels. Clearly, quite different types of strategy would be applicable to the different sizes of system.

For large systems, there are potentially important options involving major changes to technology, such as cogeneration, solar heating (as pre-heater with boosting), and solar boosted heat pumps. Heat pump water heating is particularly applicable to somewhat smaller systems and can also be used where her are opportunities for waste heat recovery, e.g. kitchen exhausts. For small systems, regulatory measures such as MEPS, which are used in the residential sector, are applicable and are being introduced In new buildings, more radical strategies to improve hot water performance in new commercial buildings , such as encouraging centralised cogeneration and/or solar water heating, may be applicable. In existing buildings, however, retrofitting to replace small electric systems with gas or centralised systems (requiring extra plumbing) can be difficult and costly.

Possible actions are as follows.

  • Conduct a comprehensive survey to determine the number and nature of large hot water using facilities and their hot water consumption patterns and technology types, so as to identify potential opportunities for cogeneration and solar heating.
  • Establish, possibly in collaboration with water supply organisations, a program to encourage retrofitting of water efficient end use appliances and fittings (shower heads, taps etc) in existing commercial buildings and their use in new buildings.

In the absence of more detailed data on commercial sector water heating, it is not possible to quantify the emissions savings potential. If it is assumed that the proportion of gas and electric water heating is the same in the commercial sector as in the residential (for which there is no evidence), then total emissions are approximately 2.3 Mt CO2-e (10% of residential water heating emissions). The emissions savings potential is likely to be less than in the residential sector, because there are fewer opportunities for fuel switching. Hence maximum potential savings are likely to be less than 1 Mt CO2-e.


This theme is concerned with the building fabric and envelope (both physical design and materials used) as determinants of building energy use.

Circumstances and opportunities are very different in residential and non-residential buildings. Therefore this theme should be divided into two sub-themes.


This theme relates mainly to improvements which reduce energy consumed for space heating and cooling, since the other residential sector opportunities – hot water, appliances – and lighting, are covered by other programs and themes. Because heating and cooling energy varies with climate, the savings potential and, to some extent, the types of improvement that deliver the biggest energy saving, will also vary with climate. Energy used for heating is considerably greater than energy used for cooling, so the largest savings opportunities are in cool climate areas. However, the difference in abatement potential is somewhat less, because the majority of heating energy is supplied by gas. The following conclusions and recommendations are largely based on the experience of Energy Partners undertaking a very large amount of residential building thermal modelling for the AGO and other clients, and from the experience of Energy Strategies in delivering household energy audit and energy advisory services on behalf of the ACT government.

  • The most effective measures in all climate areas are installation (or upgrading) of ceiling and wall insulation.
  • In areas with climates requiring significant winter heating (inland NSW and the ACT, Victoria, Tasmania, parts of SA), other measures include, in rough decreasing order of cost effectiveness:
    • weather stripping of windows and doors,
    • lagging of hot water pipes and central heating ductwork,
    • improved curtains and pelmets over windows,
    • upgrade heating systems, particularly replace electric resistance heating with 5 star gas or heat pump (reverse cycle air conditioning),
    • external shading of windows on north and west (for summer),
    • double glazing of windows on south and east.
  • In other climates, external shading is the most important additional measure not requiring major changes to the building fabric; it will be applicable to all sides of the house in the tropics.
  • Taking into account current levels of wall insulation and assuming no improvement to roof insulation is needed, i.e. assuming existing ceiling insulation is optimal in every one of the 94%+ of houses which claim to have ceiling insulation) – would yield abatement of about 3 Mt CO2-e pa. Improvement to heating and cooling systems, double glazing and heat exchange ventilation could double this abatement figure.
  • Some considerations for program design include the following:
    • because bigger savings are available in cooler climate areas, these should be the priority areas,
    • a further refinement of targeting would be to identify households with particularly high energy consumption (through collaboration with energy retailers) and houses without ceiling insulation (identifiable by aerial infra-red photographic analysis to show heat losses through poorly insulated rooves),
    • low income households should also be targeted, not only because they typically spend a higher proportion of the day in their house, thereby incurring higher energy consumption and associated costs, but also because there will be significant additional health and societal benefits,
    • it is crucial to target decisions being made by households at the time renovations and installations are being undertaken,
    • there is an opportunity and a need for much better coordination between purchase decisions relating to heating and air conditioning systems and the condition of the house in which the systems will be installed, to ensure both optimum sizing of systems and optimum building envelope thermal performance,
    • allowance must also be made for the very large effect of variations in behaviour between households.


This theme is concerned with improvements to the base building energy efficiency, i.e. excluding tenant light and power, of all types of commercial buildings. This means that it is essentially directed towards reducing the energy used in heating, cooling and ventilating the building. Two types of opportunity are considered: refurbishments to upgrade the building fabric and cogeneration. There may also be opportunities in relation to other mechanical services (mainly lifts and escalators), but we have not been able to consider those.

In general, energy efficiency improvements in the commercial buildings sector will have particularly large emission reduction benefits, because the commercial and services sector is more electricity intensive than any other major sector of the economy.

    Refurbishment upgrade base building energy efficiency

Refurbishment is normally the occasion for major changes or replacement of HVAC, lighting and mechanical services (the fourth largest category of energy use in non-residential buildings). It can also include changes to glazing, window treatments and building envelope insulation, all of which affect energy consumption for HVAC and lighting.

Building fabric and envelope have a smaller effect on energy use for HVAC and lighting than they do for residential buildings, mainly because of the lower surface area to volume ratio of most commercial buildings. Specific opportunities for improvement include improved glazing and window treatments and insulation upgrading. Significant changes to the fabric of non-residential buildings can normally only occur in conjunction with building refurbishment; indeed, changing fabric is by definition a refurbishment. However, at present building refurbishment does not necessarily include any particular effort to improve energy efficiency.

Total emissions attributable to building heating and cooling is currently of the order of 25 Mt, mostly from electricity and some from gas. This figure is derived mainly from data collected by a survey of a very large representative sample of all types of commercial buildings in the Sydney CBD, undertaken for the NSW Planning Department’s Demand Management Planning Project. In estimating the potential abatement from upgrading the energy performance of existing buildings, it is not possible to separate the abatement that could result from the building envelope upgrades alone, because it is so closely linked to HVAC performance and to the heat generated by lighting and office equipment. The following estimates are concerned with base building energy performance, not tenant light and power. They do not explicitly account for additional savings in HVAC energy requirements that will result from improvements in tenant light and power. On the other hand, there is some overlap with the savings estimated for the separate commercial HVAC theme, considered below.

A conservative estimate based on upgrading Property Council member office floor area (mainly in CBDs) from BAU to 4.5 star ABGR rating results in 0.97 Mt CO2-e pa saving (Pacific & Australia Consulting Engineers, 2006). Expanding this estimate to total commercial floor area (excluding industrial and infrastructure) of Property Council members gives savings of 2.5 Mt CO2-e pa. The total floor are of buildings from which this figure is derived is estimated to be approximately 50 million m2. There are no reliable estimates of total commercial and service industry property that is aid conditioned, but it has been suggested that there could be at least 100 million m2 of air conditioned non-industrial commercial floor area (Energy Strategies, 2006). This total includes service sector buildings such as hospitals, schools and universities, public buildings, and office and retail buildings outside major commercial centres, Property Council members’ buildings tend to be concentrated. Doubling the above estimate gives a savings potential of about 5 Mt CO2-e pa.


Commercial building cogeneration with absorption chillers is a technology that has been known for many years, and used in occasional projects. However, improvements in technology, including control systems, together with the changing policy environment, are responsible for a strong renewal of interest in commercial building cogeneration. There are a number of companies now operating in Australia with the capability and experience to build such systems. We have reviewed basic design specifications of three projects currently being installed in Sydney, with financial assistance from the NSW Planning Department’s Demand Management Planning Project (two in office buildings and one in a high rise apartment building), using reciprocating gas engines and absorption chillers. The data suggest that these projects could reduce total emissions to about half current levels, by replacing more than half currently grid-supplied electricity (in net terms) by cogenerated electricity and waste heat from the gas engines.

In the absence of a detailed, city by city review of opportunities for such projects, it is not possible to quantify the overall potential energy savings from commercial building cogeneration in any meaningful way. Classes of buildings where cogeneration may be applicable include office buildings, hospitals, large hotels, large apartment buildings, shopping malls, and some educational institutions and public buildings. Only a very small number of buildings of this type around Australia currently have cogeneration installations (and some of these have been decommissioned or are not working).

If, for the sake of argument alone, it is assumed that 10% of all commercial and services sector electricity consumption, totalling 169 PJ in 2004-05 according to ABARE, is in buildings which would be suitable sites for a cogeneration plant, total electricity savings may be of the order of 10 PJ p.a., with emissions savings of around 2.5 Mt p.a.. If there is a higher proportion of suitable sites, savings would be proportionately higher.


The installed base of non-residential HVAC systems in Australia are estimated to:

  • Consume 9% of electricity produced in Australia and responsible for about 25 Mt CO2-e p.a., which is more than 4% of total Australian emissions;
  • Depending on the building type and use, be responsible for between 40% and 60% of all energy used in non-residential buildings;
  • On average create more than 55% of electrical demand recorded in CBD buildings during peak demand periods;
  • Involve cooling towers that consume possibly 5 billion litres of water per annum across Australia;
  • Service approximately 120 million m2 of buildings, and support an industry worth about $7 billion per annum and employing at least 95,000 people.

The AGO has developed an HVAC High Efficiency Strategy which is proposing 23 significant, individual but closely related measures over a 10 year period to achieve optimal energy performance from non-residential HVAC systems. In developing the Strategy it was found that energy use is poorly related to the theoretical energy performance of the building design. There are multiple factors contributing to poor performance from design, construction, commissioning through to handover and building management. The HVAC High Efficiency Strategy therefore addresses these multiple aspects. It is estimated that the Strategy could deliver as much as 4 Mt of CO2-e reductions per annum and provide $350 million in annual energy cost savings.

Most of the measures in the strategy are concerned with improved commissioning and operation of HVAC systems, and do not include major changes in HVAC equipment and technologies, as were considered above under building upgrades. For example, more regular cleaning of dirty filters and heat transfer surfaces alone is estimated to account for 1 MtCO2-e of the above abatement potential. The strategy takes a systems approach addressing issues from design, construction, operation and maintenance through to regulation, technical guidance and training.


A variety of estimates of the proportion of non-residential building electricity consumption attributable to lighting put the figure at about 20%. Since total emissions attributable to electricity consumption in the commercial and services sectors is currently about 50 Mt CO2-e p.a., it follows that lighting in non-residential buildings currently accounts for about 10 Mt CO2-e p.a. emissions. It is estimated that public lighting (mainly street lighting) accounts for a further 1.2 Mt CO2-e p.a. (Kevin Poulton & Associates et al., 2005). Measures relating to each of these sectors are considered in turn.


A comprehensive approach to improving the efficiency of commercial lighting involves a variety different actions, some of which require an upgrade/refurbishment of the whole system, and other of which can be undertaken incrementally. Actions include use of tri-phosphor fluorescent tubes, electronic ballasts, high efficiency reflectors and diffusers, dimming and occupancy controls, delamping, relamping (to lower wattage lamps), dimming and use of time or occupancy based control systems. ECS, an energy efficiency performance contracting business, specialising in lighting systems, estimates the average efficiency improvement potential to be about 30%. Notwithstanding the activities of ECS and several other businesses doing similar work, the penetration of high efficiency lighting remains very low. A potential saving of 30% of current lighting energy use equates to about 3 Mt CO2-e p.a..

PUBLIC LIGHTING (not traffic lights)

The following estimates of abatement potential are taken from a report prepared for the AGO by Kevin Poulton & Associates et al. (2005). Measures considered in the study include replacement of existing mercury vapour lamps on minor roads with high efficiency T5 fluorescent lamps, as existing lamps reach the end of their operating life, accelerated replacement of mercury vapour lamps with high pressure sodium vapour lamps on major roads, more efficient ballasts for high intensity discharge (sodium and mercury vapour lamps), use of more efficient photo-switches, and use of automatic dimming controls to ensure that lamps deliver only their design level illumination. The study estimates that the technical potential savings from complete implementation of all these approaches is 734 kt CO2-e p.a., which is equal to 63% of total public lighting emissions.


The most energy intensive sectors of the economy are those which involve the thermal, chemical and mechanical transformation of bulk materials, commonly termed the process industries. Process industry facilities typically involve an interlinked series of energy flows, involving heat, mechanical drives (powered by electric motors) or both. It is frequently the case that such facilities are not designed comprehensively as a coherent whole, with a view to overall optimisation, but express a history of incremental growth, with consequent less than optimally efficient inter-relationships between individual processes. Even at modern facilities that have been designed with overall process efficiency optimisation in mind, it is found that in practice the structure and behaviour of management, often with conflicting individual performance objectives, results in overall facility operation that is far from optimal.

Over the years, a variety of different approaches to studying process optimisation have all concluded that overall system optimisation has the potential to yield substantial efficiency gains. However, every process industry site, even in the same industry, is different, with its individual combination of equipment and specific process components. It is therefore not possible to make generic estimates of the potential efficiency gains and energy savings through industrial process optimisation. Some insights into the types of opportunities were gained through some of the studies undertaken in the later years of the former Energy Efficiency Best Practice Program. It is possible that more comprehensive information will, over time, become available through the Energy Efficiency Opportunities program.


Energy Strategies, 2006. HVAC High efficiency systems strategy, Report prepared for the Australian Greenhouse Office o behalf of the Equipment Energy Efficiency committee, Canberra.

Kevin Poulton and Associates, Genesis Automation, and Deni Greene Consulting Services, 2005. Public Lighting in Australia –Energy Efficiency Challenges and Opportunities, report for the Australian Greenhouse Office, Canberra.

Pacific and Australia Consulting Engineers Pty Ltd, 2006. 4½ Star Offices - Benefits and indicative costs, Report for Australian Greenhouse Office, Canberra.

Sinclair Knight Merz, 2006. Identification and Investigation of Peak Demand Reduction Opportunities – Sydney CBD Area: Roll-up Report, Demand Management & Planning Project, NSW Department of Planning, North Sydney.

From: Outcome: Question No: 74, Industry Communities and Energy Division, Hansard Page ECITA: page 77 (22/05/07) in reply to Senator ALLISON at the Senate Standing Committee on the Environment, Communications, Information Technology & the Arts, ANSWERS TO QUESTIONS ON NOTICE, Environment and Water Resources, Budget Estimates 2007-2008, May 2007

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