Written by Kieran McLean, Certified Energy Manager, Certified Measurement & Verification Professional and Founder of EQ esco.

Every journey starts at the beginning. If you’re considering investing in energy efficiency, this is the place to start. In the next 5-10 minutes, I’ll give you the inside scoop on how things work in the energy efficiency industry. After that you’ll be able to hold your own in any energy efficiency discussion.

If you’ve passed Energy Efficiency 101 already, you can check out some of our more in-depth articles, request a quote for an energy rating or register your energy efficiency project with us.

What we are going to cover:

1. What is energy efficiency?
2. Why all the hype?
3. What's NABERS and all these other building ratings?
4. How much does energy efficiency typically cost/save?
5. What are my financing options?
6. Is Government funding available for being energy efficient?
7. How do you measure energy efficiency?
8. Are there any industry certifications to identify professionals?
9. Tips for getting quality energy efficiency services

Ready, let's jump in.

1. What is energy efficiency?

Before we get to energy efficiency, let’s start with energy

In Australia, the typical energy sources in the commercial and residential sectors are electricity and natural gas. I’m going to focus on those. Also, most of us encounter energy on our bills, so let’s start there.

An electricity bill can have 2 energy components; consumption and demand. Consumption is how much electricity we use. It’s measured in kilowatt-hours (kWh). Demand is the amount of electricity you need at a single point of time. It’s measured in kilowatts (kW). You can see how consumption is made up of how much electricity we are ‘demanding’ at any time, and how many hours we demand it for. So, if we demand 5 kW continually for 2 hours, we would consume 10 kWh (5kW x 2 Hours) of electricity.

Gas consumption is measured in Megajoules (MJ).

So, what is energy efficiency then?

Energy efficiency is using less energy than was previously required to deliver a desired outcome. For example, using less electricity to produce light in an office, or using less gas to warm a room.

Free LED lights, is that energy efficiency?

Yes, free LEDs are one energy efficient technology. However, they are only a small part of broader energy efficiency opportunities. They’ve become quite well known because of their massively reduced energy consumption compared to old halogen and fluoro lights. Additionally, companies can offer them for free, in certain circumstances, to consumers thanks to government regulation in some Australian states. That’s a story for another time though…

There are a whole range of other technologies that can deliver energy efficiency savings. A non-exhaustive list of technologies you will likely come across; lighting, heating, ventilation, and air-conditioning (HVAC) systems, variable speed drives, building management systems (BMS), power factor correction, voltage optimisation, geothermal, co and trigeneration and solar.

Don’t worry if you don’t know what all these things are, or mean. It’s just good to be aware of them.

 2. Why all the hype?

There are several different drivers that are building the momentum, or hype, about energy efficiency. Irrespective of where you fit into the picture, there’s something in energy efficiency for everyone. Whether you’re set on saving the world, or saving a dollar or two. I’ll start with what’s happening on a policy scale and work down to the facility level. Feel free to skip to the section that most resonates for you.

Australia’s Response to the Paris Climate Change Agreement

Recently, the Australian Government committed to reducing our greenhouse gas emissions by 26-28% based on 2005 levels by 2030. This is Australia’s Intended Nationally Determined Contribution to the Paris Climate Change Agreement. What’s this got to do with energy efficiency? Well, the Abbott/Turnbull Federal Government has said we’ll achieve the bulk of this target through the energy efficiency measures identified in the National Energy Productivity Plan in conjunction with the Emission Reduction Fund Safeguard Mechanism (a cap-and-trade scheme that snuck into legislation).

Why energy efficiency though? It’s the cheapest way to achieve emission reductions.

Corporate Social Responsibility

Increasingly organisations are becoming conscious of their responsibilities beyond purely financial returns. That is, they are focusing more and more on the social and environmental impacts of their business activities. Employees want to work for, and clients want to work with, organisations that are contributing positively to society. To achieve these means, a lot of organisations are reducing their carbon emissions, and energy efficiency is a cheap and effective way of doing this.

Rising Energy Costs and Changing Energy Network

There’s a lot happening in the energy market in Australia at the moment. Whether it’s the impact of gas export markets on gas (and electricity) prices or decarbonisation of the electricity generators. The energy market is in a state of transition and decentralisation (i.e. locally generating energy (solar mostly)). Add in the uncertain policy at State and Federal Government levels and it can be a murky crystal ball to the future.

There is at least one certainty though. If you use less energy, your energy costs are going to be lower than if you were using more energy. Energy efficiency is emerging as a common-sense approach for mitigating the risks of rising energy costs.

Government Legislation and Disclosing Energy Performance

If you’re selling, leasing, or sub-leasing a commercial property over 2,000m2 then you’ll be required to comply with the Building Energy Efficiency Disclosure Act 2010. This means you must produce a valid Building Energy Efficiency Certificate (BEEC) which provides a rating of your building’s efficiency (NABERS rating) and an assessment of the lighting conditions. Rather than advertise a poor energy rating, building owners are undertaking energy efficiency upgrades to help attract tenants. Also, as of 1 July 2017 this threshold for the Act will drop to 1,000m2. Additionally, for Government tenants buildings must meet a minimum energy efficiency rating.

 Is anyone else doing this?

Definitely. Organisations with a strong sustainability and corporate social responsibility charter have taken to energy efficiency in a big way. They’re not the only ones though. Check out the case studies below from 20 small to medium office buildings in Victoria that are reaping the benefits of energy efficiency. The data shows an average payback period of under 3 years, energy savings of 29% and a 1 star NABERS improvement.*

3. What’s NABERS and all these other building ratings?


The National Australian Built Environment Rating System (NABERS) is a 6-star rating scale that measures the environmental performance of buildings. It uses your energy consumption per floor area and converts them to a rating from 1 to 6 stars for your building, tenancy or home. A 2.5 Star rating is considered an 'average' building for your state. A NABERS rating is valid for 12 months from the time of certification and must be carried out be a certified NABERS assessor.

Tenancy Lighting Assessment

A Tenancy Lighting Assessment (TLA) is a survey of your existing lighting system and any lighting control system. The TLA provides a measurement of power density for your given space and compares this to industry benchmarks. TLAs are important because they form a part of ....

.. Building Energy Efficiency Certificates (BEEC)

A valid BEEC is required for commercial office spaces over 2,000 square meters that are being sold, leased or subleased, to meet legal obligations under the Building Energy Efficiency Disclosure Act 2010. The BEEC consists of two parts; a valid NABERS rating and a valid Tenancy Lighting Assessment. The NABERS rating must be for the base or whole building whilst the Tenancy Lighting Assessment must be for the area of the building that is being leased, sold or subleased. Note: from 1 July 2017 the threshold for BEEC will reduce to 1,000 square meters.

A BEEC must also be provided by a certified assessor.

Green Star

Green Star is primarily a rating tool for the design and construction of new buildings and communities. It also has a separate rating tool for building operation, but it’s not as common as NABERS. Green Star encompasses water, material and energy efficiency, as well as indoor environment quality, management, transport and innovation among other components. Again, it is a one to six-star rating system.

A quick word on WELL

The WELL Building Standard provides a method for determining a buildings impact on the health and well-being of its occupants. It’s in its infancy in Australia at the moment but it’s good to be aware of.

As you can see there are a lot of tools out there to benchmark your buildings performance.

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4. How much does an energy efficiency upgrade typically cost/save?

Depending on the age & condition of your facility, the level of savings you can achieve will vary. Recently, 20 office buildings in Victoria of varying age and size undertook energy efficiency upgrades. From the results below, you can see some of the facilities were achieving up to 60% energy saving.

*Data adapted from Sustainability Victoria Energy Efficient Office Buildings: Transforming the Mid-tier Sector. Used under Creative Commons Attribution 4.0 Australia License (https://creativecommons.org/licenses/by/4.0/)

Across these 20 buildings an average 29% energy saving was achieved within a 3 year payback. But you will also notice the results vary across the facilities. For this reason, the most important part of an energy efficiency project is starting. It’s only by starting that the energy efficiency potential in your facility can be uncovered. We highly recommend setting an energy efficiency goal as a first step. They commonly will fall into the following categories:

  • NABERS Rating Improvement
  • % energy or emission reduction
  • Payback period
  • Budget

Don’t worry too much about getting your goal ‘perfect’. As you learn more about energy efficiency and your facility, and with our help, your goal can be refined. The hardest part is starting, so think about what you want to achieve, set a goal, and start! Because there is so much choice it can be overwhelming to get started. To help we classify projects into 3 broad groups:

Minor Improvement
The 'Low-Hanging' Fruit
Small NABERS improvement

1 - 4 year simple payback

25 - 100% Return on Investment

Energy Saving up to 10%

Technology: LED Lighting, BMS Tuning, Variable Speed Drives, Power Factor Correction

Moderate Improvement
Some Asset Renewal
Moderate NABERS improvement

5 - 7 year simple payback

14 - 20% Return on Investment

Energy Saving up to 20%

Technology: As for minor upgrade plus Solar, Minor HVAC Upgrades, Voltage Optimisation

Major Improvement
Major Asset Renewal
Sale/lease or end of life upgrade

8+ year simple payback

Up to 12.5% Return on Investment

Energy Saving above 30%

Technology: As for moderate upgrade plus Major HVAC Upgrades, On-site Generation

But isn’t it better to run my equipment until it breaks, then replace it?

Sometime energy efficiency only comes to mind because a piece of equipment has failed or nearing the end of its useful life. At this point it’s a good opportunity to select a replacement that has a lower ongoing operating cost (i.e. that is energy efficient). Is it a better to wait for this to happen to think about it though? It’s only ‘better’ in the sense it’s a ‘future you’ problem.

This approach creates two issues. Firstly, inefficient equipment has a higher running cost, so it’s not necessarily ‘better’ from a financial sense. Secondly, when your equipment does break, it’s going to be a great panic to get it replaced. This means you’ll take whatever equipment that’s available to get back up and running. The ‘whatever is available’ approach isn’t really ‘better’ either.

5. What are my financing options?

The major financial institutions are now openly supporting investment in energy efficient technology. Commonwealth Bank, National Australia Bank and Westpac all offer specific products investing in these projects. Often with a discounted interest rate for energy efficient equipment compared to standard equipment financing.

Local councils are also getting in on the action, facilitating energy efficiency financing via a product called an Environmental Upgrade Agreement (EUA). An EUA is a loan that is secured against a property, rather than a business, and repaid through a council environmental upgrade charge. EUAs also offer a way to accept tenant co-contributions to your upgrade. Not all Local Councils are offering EUAs at this stage, so check here to see if your local council does.

There’s also financing available directly from the Clean Energy Finance Corporation (CEFC). The CEFC finances low carbon projects in community housing, local governments, the property sector, the transport sector and universities.

Feel free to ask us, or your energy services contractor about available finance options for your project. If you’re keen to learn more yourself, I highly recommend reading the New South Wales Government's Energy Efficiency and Renewables Finance Guide, available here.

6. Is Government funding available for being energy efficient?

There are several Government regulations and policies in Australia that are providing financial support for energy efficiency. Depending on where you’re located, and the size and type of your project, you may be able to access further incentives to be energy efficient. Here’s a list of some of the current initiatives that are available. If you don’t want to deep-dive into each of them, just ask us or your energy services contractor to see if your project is eligible.

GovernmentIncentive Program
VictoriaVictorian Energy Efficiency Target (VEET) – the VEET scheme provides certificates (VEECs) for the installation of energy efficient products. The certificates can then be sold to liable parties who must meet a quota of certificates each year. This is how LEDs can be free (in some instances).
Sustainability Victoria – offer grants and co-contributions for energy audits and upgrades.
New South WalesEnergy Savings Scheme (ESS) – similar scheme to the VEET.
South AustraliaRetailer Energy Efficiency Scheme (REES) – similar scheme to the VEET
Australian Capital TerritoryEnergy Efficiency Improvement Scheme – similar scheme to the VEET
QueenslandLimited programs offered through Ergon and Energex
FederalEmission Reduction Fund – there’s limited opportunity for energy efficiency projects, unless they are on a large scale.

7. How do you measure energy efficiency?

There is a fundamental difference between measuring energy efficiency and other energy resources, even renewable energy. When investing in renewable energy, we measure how much electricity is produced, which is then converted into a dollar amount. As we’ve discussed, energy efficiency is the absence of energy being used. So, how do you measure how much energy is absent?

Comparing Utility Bills

The simplest consideration is looking at two utility bills, one from before and one from after implementing an energy efficiency project. Compare how much electricity or gas was used in each case, the difference is the savings achieved. Easy! However, this approach is far too simple. If the first bill was for summer and the second for winter, then this may not be a fair comparison. Likewise, if in the first period a building was only half occupied and in the second period fully occupied.

So, there’s a need to understand what influences your energy consumption in the first place. Weather and occupancy, among other factors, can influence energy usage. The trick is to find which elements have the most significant relationship with your energy consumption. Unfortunately, the simplicity of comparing utility bills has well and truly departed and we are now into some specialised statistical analysis. But fear not, there is good news ahead.

Industry Protocol and Certification

The international energy efficiency community has tackled this problem for you via a process called Measurement & Verification (M&V). The M&V process is designed to create uniformity and certainty in measuring energy savings. M&V specialists are accredited as Certified Measurement and Verification Professionals (CMVP) and abide by the tongue-twisting International Performance Measurement and Verification Protocol (IPMVP).

By understanding what influences your energy consumption in the first place, certified professionals can determine how much of an energy reduction is due to your energy efficiency upgrade, and how much is due to variations in weather, occupancy or production. That way you can accurately measure how much energy you saved, even if it doesn’t exist.

8. Are there certifications for energy efficiency professionals?

The main industry bodies in Australia are the Energy Efficiency Council and the Green Building Council of Australia (GBCA). Globally, the Association of Energy Engineers (AEE) and the Efficiency Valuation Organisation (EVO). These bodies accredit professionals with the following certifications and maintain active lists of qualified professionals:

CertificationAccrediting Body
Certified Energy ManagerAssociation of Energy Engineers
Certified Measurement & Verification ProfessionalAssociation of Energy Engineers & the Efficiency Valuation Organisation
NABERS AssessorNSW Office of Environment & Heritage
CBD AssessorNSW Office of Environment & Heritage on behalf of the Australian Government
Green Star AssessorGreen Building Council of Australia
Certified Energy Efficiency Specialist/LeaderEnergy Efficiency Council

9. Tips for getting quality energy efficiency services

In the energy efficiency industry, there are opportunists who are making a few quick dollars in the name of ‘sustainability’, ‘green’, ‘energy efficiency’ at the expense of consumers (this is not an issue exclusive to energy efficiency either!). Some of these opportunists are simply repeating to consumers what they’ve been told by a supplier whom they’ve trusted and believed. At least, that’s my positive point of view on the matter!

Nonetheless, paying for a product that doesn’t deliver the energy savings you were promised is a real kick in the guts. Here are a few tips from my experience that may help you avoid that horrible feeling.

Check for Compliance

This isn’t energy efficiency specific, but make sure that any products are compliant with Australian Standards (particularly electrical safety). Ask what warranties are available from the manufacturer and the supplier.

Measurement & Verification

Ask your supplier for a Measurement & Verification (M&V) plan. In short, a M&V plan details how the supplier is going to prove the energy savings that their product achieves. If they don’t know what a M&V plan is, and aren’t familiar with the international protocol on how to prove energy savings (remember IPMVP), alarm bells should be ringing.

In the era of “Big Data”, there’s no excuse not to have data that proves energy savings in real terms.

Start Small

If you’re unsure about a product, ask for a free trial or free (or at least heavily discounted) installation in a small area of your building. Put the product through the rigours of day-to-day use, ask your tenants if they’ve had any issues since the product was installed. Get the supplier to measure and verify the savings.

Ask for real case studies

If there are no case studies, real results or previous customers that you can call, you’d have to assume you’re either the first customer, or their previous results have been underwhelming. Let’s stay on the positive side of the fence and assume you’re their first customer. Ask for a heavy discount (or free!) in exchange for being their first customer/case study/opportunity to get real results.

Google it!

A little bit of background research can go a long way. There are several electrician and HVAC technician forums where discussions are often “Does PRODUCT actually work?”

Consult an expert

If you don’t want to risk it, we can help you Launch, Develop and Deliver your energy efficiency project.

Next Step

Congratulations! You now know more about energy efficiency than most, well done! The next step is to set yourself an energy efficiency goal and get started. We can help you start with getting a Building Energy Rating (NABERS, BEEC etc) upgrading your building or any bespoke energy consulting services. 

If you have any further questions about energy efficiency send me an email.

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