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ENERGY EFFICIENCY ENABLES AFFORDABLE AND RELIABLE ENERGY SYSTEMS

The energy system of the future must be affordable and reliable. Enter energy management.

In the space of 30 years, Australia is seeking to rebuild its entire energy system. If we embrace energy efficiency and energy management, we will lower the costs of this rebuild and make ourselves more resilient to future global energy shocks.

Right now, a huge amount of investment goes into making sure there’s enough energy supply to meet periods of ‘peak demand’ – severe heatwaves or cold snaps when thousands of households are running energy-intensive appliances like air conditioners and heaters at the same time.

But as modern appliances and better performing buildings require less energy to keep us comfortable, we can help to transform the energy grid by reducing the amount of energy needed, even in those periods of peak demand.

As efficient buildings and industrial energy management practices reduce the amount of energy our networks need to supply, the size – and cost – of the entire system can be lowered, and we can begin to reimagine how to make the best use of Australia’s energy resources.

Partly, this will be necessary because fossil-based energy sources tend to be more ‘dispatchable’ than renewable energy, meaning that power output is often set to meet demand.

As the lowest cost renewable sources of energy like solar and wind are more variable, energy efficiency and energy management will be an important factor in helping smooth the transition to a decarbonised energy system, as well as managing its long-term performance. Working with energy storage solutions such as pumped hydro and batteries to help ensure there is always enough supply to meet demand is integral to supporting a variable renewable electricity grid. But energy storage can’t solve the problem on its own. Matching investments in storage with investments in energy efficiency and demand flexibility is essential to operating our future energy system, as it reduces the need for supply from renewables and storage, and the associated network infrastructure.

Doing more with less

Over the past 20 years, countries that are part of the International Energy Agency have made a sustained effort to implement energy efficiency measures across the buildings, industry and transport sectors. The gains have been significant.

While the economies of the group grew by 40 per cent in real terms during this time, the amount of energy demand has remained the same. This means pressure to grow the size of supply – or generation – in our energy systems has been largely offset through efficiency-related measures. This has saved billions of dollars of investment in generation and network upgrades.

IEA 2022, Energy Efficiency 2022.

Rolling out energy efficiency as soon as possible will also help ensure the reliability of the grid, as old fossil fuel generators are progressively turned off and new renewables come online. To put this into context, our homes are a particularly important piece of the puzzle. At home, most of our energy use – running our appliances, hot water systems and heaters – happens early in the morning and at night: times when there’s minimal low-cost solar power in the system.

As Australian homes become more energy efficient and improve their thermal performance – through measures such as insulation, double-glazing and draft-proofing – they can make better use of smart electric appliances, including pre-heating and -cooling buildings to make the most of low-cost solar generation during the day.

Smart appliances include heating and cooling systems and whitegoods such as washing machines that can switch on and off depending on when energy is cheapest. These appliances can help to reduce demand during critical periods. Smart electric vehicle chargers can do the same by altering charging times to access different prices – for example, based on how much surplus solar energy is being produced if there is a solar PV system installed. Through more efficient homes and smarter appliances, we can reduce the amount we need to spend on electricity network infrastructure, helping to keep costs down for everyone. Managing demand in this way is especially critical in this decade, when energy storage is still relatively expensive.⁵⁸

The challenges associated with transforming and strengthening our energy system are big, but not impossible. Through the coordinated efforts of communities, industry, governments and finance providers, we can overcome these issues and create exciting opportunities to ensure that as we cut emissions to transform the energy sector to net zero, we keep costs down and ensure reliable supply for everyone.

We use more energy when there is more energy supply, such as during the day when the sun is shining.