12 October 2011| REF: J/N 109680
Department of Resources, Energy and
Tourism
Energy and Environment Division
Revision of AS/NZS 3598 Energy
Audits
Implementation Plan
REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
Project Details
RET Contact
Energetics Contact
UNSW Contact
Rare Consulting
Contact
Belinda Fraser
Gordon Weiss
Professor Deo Prasad
Mark McKenzie
Description
Prepared By
Reviewed By
Approved By
Approval Date
Version 2
Mark McKenzie
Gordon Weiss
Gordon Weiss
7 August 2011
Version 3
Energetics/RET
Energetics
Gordon Weiss
12 October 2011
About Energetics
Energetics is a specialist management consultancy in the business of climate change. In partnership with our clients, we help
them transition to a carbon-constrained environment by managing risks, achieving cost reductions and identifying new
opportunities. For over 25 years, Energetics has been providing clients with competitive advantage from the top to the bottom
line.
About UNSW
The University of New South Wales (UNSW) is one of Australia's leading research intensive universities and has the largest
concentration of climate change and renewable energy expertise of any Australian university. The UNSW Global is a wholly
owned enterprise of UNSW with over 230 full-time staff and an annual turnover in excess of $90 million. UNSW Global offers a
single point of entry to intellectual resources within UNSW for international donor agencies, regional government agencies and
private companies. As such it is one of Australia’s leading consultancy providers, managing over 1,600 consulting and
contracted research projects each year.
About Rare Consulting
Rare Consulting is a national consultancy specialising in the provision of services in the area of transport and the environment
with a major focus on transport technologies, transport energy use, and greenhouse strategy. Originally founded as Abbott
Consulting Group (a wholly owned subsidiary of Abbott Tout Lawyers) the firm was reconstituted as Rare Consulting in August
2005 and has since grown to become as one of the leading providers of environmental and energy strategy services to the
Australian transport sector.
Disclaimer
Where conclusions have been drawn based upon information provided to Energetics by the recipient of this report, Energetics
has relied upon the accuracy of the information provided.
To the extent that this report contains prospective financial information, that information has been based on current expectations
about future events and is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from
the expectations described in such prospective financial information.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
Table of Contents
1.
Executive summary ................................................................................................................ 1
2.
Strategic Context .................................................................................................................... 3
2.1.
Substantial evolution of the energy efficiency agenda since 2000 .................................... 3
2.2.
Expansion of the energy efficiency agenda beyond traditional focus areas ..................... 4
2.3.
Differences in sector motivations for energy efficiency improvements .............................. 4
2.5
Link between energy efficiency and GHG emissions reporting ......................................... 5
3.
Nature of the review ............................................................................................................... 6
3.1.
Objectives of the review ..................................................................................................... 6
3.2.
Scope of the review ........................................................................................................... 6
3.3.
Methodology ...................................................................................................................... 7
3.4.
Steering Group................................................................................................................... 9
Suggested improvements – architecture of the revised standard........................................ 10
4.
4.1.
Objectives of the standard ............................................................................................... 10
4.2.
Target audience ............................................................................................................... 12
4.3.
Scope ............................................................................................................................... 13
5.
Content of the revised standard ........................................................................................... 16
5.1.
Outcomes-driven generic approach with specific sectoral focus ..................................... 16
5.2.
Inclusion of technology specific guidelines ...................................................................... 20
5.3.
Modification of audit levels to improve energy user guidance ......................................... 21
5.4.
Inclusion of greater guidance on auditor competencies .................................................. 24
5.5.
Energy audit, energy assessment or energy review? ..................................................... 25
6.
Net benefits of a revised Energy Audit Standard ................................................................. 27
7.
The Standards development process .................................................................................. 29
7.1.
Complete a project proposal form (Step 1) ...................................................................... 29
7.2.
Development of a project plan and negotiate approval of the project with Standards
Australia (Step 2) ............................................................................................................................ 30
7.3.
Reconstitute the Technical Committee and revise the standard (Step 3) ....................... 30
Appendix A Steering Group .............................................................................................................. 32
Appendix B Possible models for the structure of the revised standard ............................................. 33
Figures
Figure 1: An ISO50001 Energy Management System. ......................................................................... 14
Figure 2: Recommended structure of AS/NZS 3598 ............................................................................. 17
Figure 3: Summary of the development process for the revised Energy Audit Standard ..................... 31
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
1.
Executive summary
In October 2008, the Council of Australian Governments (COAG) agreed to develop a National
Strategy on Energy Efficiency (NSEE) with the stated aim of accelerating Australia’s energy efficiency
efforts and streamlining the activities of Australian and New Zealand governments in this area. The
strategy identified the development of enhanced knowledge and skills in energy auditing and energy
assessments as a priority – with specific mention made of the need for the conduct of a review into
the adequacy or otherwise of current Australian / New Zealand Standards on energy auditing.
Accordingly, the Australian Department of Resources Energy and Tourism (RET) was tasked to
conduct a review of AS/NZS 3598 Energy Audits (2000). Technical and consultative components of
this task were outsourced to a consortium led by Energetics and comprising the University of New
South Wales and Rare Consulting. A Steering Group comprising relevant government and industry
representatives was formed to provide oversight and ensure that key issues were considered. See
Appendix A for a list of Steering Group members.
This paper discusses the findings of the review. It is intended to provide RET and key stakeholders in
the NSEE with specific guidance in respect of the:

need for revision of the current standard based incorporating feedback from a comprehensive
consultation with key stakeholders in Australia and New Zealand;

key areas of potential improvement of the existing standard;

degree to which the identified improvements are (a) likely to strengthen Australian and New
Zealand capability in energy auditing and energy assessments, and (b) accommodate the
evolving needs of business and industry in respect of securing energy efficiency
improvements;

likely key areas of contestability, complexity, and continuing uncertainty; and

key implementation considerations and suggested future actions.
At the centre of the review was a consultation with key industry stakeholders. The consultation
addressed a range of questions posed in a discussion paper (see Appendix B), and the outcomes
were distilled into a set of solutions which inform the next stage of the review of AS/NZS 3598 - this
Implementation Plan. The objectives of the Implementation Plan are to explain the requirement for a
new version of AS/NZS 3598; to outline the proposed scope and structure for the revised Standard,
based on industry feedback; and to propose the next steps required to make it happen.
Analysis of the strategic context, business needs and stakeholder feedback revealed that there is a
need for a comprehensive overhaul of the existing standard. The potential improvements can be
summarised in two principal areas, namely:

Architecture of the revised standard – improvements relating to the overall purpose of the
standard in terms of the desired objectives, the scope of the standard, and the nature of the target
audience, and

Content of the revised standard – improvements required to address specific aspects of energy
auditing processes.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
The stakeholder consultation proposed that the overarching objective of the Standard is to set the
expectations relating to the outcomes from, and minimum audit process and reporting requirements
for, energy audits conducted by competent energy auditors. (See Section 4.1)
The Standard should complement existing systems standards. In particular, the Standard should be
consistent with the provisions of the ISO 50001 Energy Management Systems standard and the
International Measurement and Verification Standards. It should also align with the Energy Efficiency
Opportunities (EEO) Assessment Framework (See Section 4.3).
The Standard is proposed as an outcomes-driven standard which defines a “generic” audit, intended
to suit all sectors and large, medium and small organisations, excluding residential housing.
Underneath the umbrella ‘generic’ standard will be three instances of the generic standard that
address the specific data measurement and analysis needs of the industrial sector, the commercial
buildings sector and the transport sector (See Section 5.1).
To increase the flexibility, relevance and responsiveness of the revised Standard to the needs of
business, revision of the current audit level model is recommended. Comments from stakeholders and
the views of the Expert Group favoured a structure built around the key audit stages of data definition,
data analysis, opportunities identification, opportunities evaluation and business case development. A
range of audit levels are required, as is the case with the current standard. Some stakeholders
favoured retaining the current three levels, and including recognition that the recommended depth of
analysis at each level should depend upon the size of the business undertaking the review. There
was general agreement that energy users should be free to select from elements at different levels
across the five stages of the audit to customise the level of audit suited to their business needs (see
Section 5.3). This area of the Implementation Plan was one where a consensus or even a majority
view did not emerge from the consultation process, and it is recommended that the drafters of the new
standard undertake another round of consultation to further refine the audit level structure of the
revised standard.
To address some of the specific needs of business, the revised Standard should provide guidance on
the development of business cases and on the required competencies of energy auditors (see
Section 5.4).
And in keeping with the view to align with ISO50001, it is proposed here that the term audit be
changed to review (see Section 5.5).
It is envisaged that, subject to formal consideration of the recommendations contained in this paper,
that the Energy Efficiency Working Group (on behalf of NFEE) commence formal discussions with
Standards Australia to initiate a formal revision of AS/NZS 3598 Energy Audits (2000) (see Section 7).
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2.
Strategic Context
A high level examination of the current national energy efficiency agenda in Australia and New
Zealand supports the business case for revising the current energy audit standard
(AS/NZS 3598:2000). While the study team (comprising Energetics, University of NSW, and Rare
Consulting) was careful not to let these insights prejudice the final outcomes of the review, the
insights largely informed the design and conduct of the review process.
A brief discussion of these strategic insights is provided below.
2.1.
Substantial evolution of the energy efficiency agenda since 2000
Perhaps the single biggest argument for the revision of the current energy audit standard is the fact
that the national energy efficiency agenda has grown markedly in sophistication over the decade
since this standard was published.
In 2006, the Australian Government introduced national legislation requiring that large energy users
(>0.5PJ of energy consumption per year) conduct an assessment of energy use to identify
opportunities to improve energy efficiency. This legislation, the national Energy Efficiency
Opportunities Act (2006) and associated regulations, places the onus on large energy using
businesses to analyse their energy use, identify and evaluate opportunities to improve their energy
consumption over time, and report publicly on the outcomes. As part of the program’s implementation,
the Government reviewed AS/NZS 3598:2000 and concluded that it did not provide a suitable
framework for industrial businesses to conduct assessments that would result in the identification and
implementation of opportunities. A separate Assessment Framework was developed that took on the
key elements of successful business improvement owned by the business and successful data
analysis techniques of auditors to achieve more business relevant energy savings. It placed the
responsibility on the energy using corporation, not the auditor, and recognised that barriers to
improvements in energy efficiency were organisational and behavioural, as well as technical. It was
envisaged that the key elements of the Assessment Framework, which reflected the partnership
required between the energy auditor and the business, be incorporated in future updates of the audit
standard.
The passing of the National Greenhouse and Energy Reporting Scheme (2007) resulted in the
introduction of a national framework to report GHG emissions and energy use. While not primarily
focussed on energy efficiency, this legislation introduced sliding thresholds on Australian businesses
for the reporting of GHG emissions and energy consumption. The thresholds for reporting under
NGERS are lower than for EEO and so this legislation effectively increased the number of Australian
businesses that were required to undertake some form of annual energy reporting.
The period since 2000 also saw the emergence of several state based schemes that require energy
audits, and which refer to AS/NZS 3598. New South Wales required large users of electricity or
natural gas to prepare Energy Saving Action Plans (ESAPs). The preparation of an ESAP required a
technical assessment to the standard of a level 3 audit so that investment decisions could be made.
The Victorian EPA requires large energy and water users to prepare Energy and Resource Efficiency
Plans (EREP). A Resource Efficiency Site Assessment (RESA) is required during the preparation of
an EREP, and the requirements of these RESAs are based on the AS/NZS3598:2000 approach.
Finally, the Queensland Smart Energy Savings Program (SESP) calls for participants to assess
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energy use in a manner that, at a minimum, complies with a Level 2 energy audit according to
AS/NZS3598:2000.
Substantial developments have also occurred in respect of the New Zealand Energy Efficiency
agenda since 2000. In 2000, the New Zealand Government passed the Energy Efficiency and
Conservation Act which resulted in the establishment of the Energy Efficiency and Conservation
Authority which administers key elements of the act.
Within its broad remit to promote energy efficiency and the use of renewable energy, EECA provides
a range of services to business. The objectives of the EECA Business program include working with
businesses to identify energy management opportunities and develop energy management action
plans. Energy audit grants support this objective. The audits funded through the program must comply
with AS/NZS 3598:2000 and be performed by an accredited energy auditor. Accreditation of auditors
is provided by the Energy Management Association of New Zealand (EMANZ). Demonstrating
knowledge of energy auditing, as defined in AS/NZS 3598:2000, is necessary to achieve EMANZ
accreditation. EECA has also developed an Energy Audit Manual as a complementary document to
AS/NZS 3598:2000 to aid those carrying out energy audits.
National policy developments in Australia and New Zealand have also seen the formulation of
national strategies and frameworks that seek to promote improvements in energy efficiency. These
agendas include the 2007 New Zealand Energy Efficiency and Conservation Strategy, and the
Australian National Strategy on Energy Efficiency which was enacted in 2009.
The net upshot of these legislative changes and national strategies has been to raise the strategic
importance of national energy efficiency action in both Australia and New Zealand and increase the
requirements for energy audits and energy assessments amongst business and industry. Given that
the current Energy Audit standard was developed prior to these developments, it is highly likely that
the current standard does not provide business and industry with the higher order skills and
knowledge required to meet new energy efficiency assessment and reporting requirements.
2.2.
Expansion of the energy efficiency agenda beyond traditional focus
areas
The language of the current standard is largely focussed on processes most commonly found in
commercial buildings and small manufacturing sites.
The expansion of the energy efficiency agenda to incorporate large industrial businesses, mining
activities, and transport has required development of energy efficiency skills in non-traditional sectors
– with a commensurate requirement for skills development in these industries.
Past experience with the conduct of energy audits in sectors such as mining and transport reveals
that there is a need to expand the scope of current guidance to incorporate sector specific guidance in
areas not easily accommodated by traditional practices.
2.3.
Differences in sector motivations for energy efficiency improvements
Analysis of past energy efficiency actions by industry sector reveals that the motivations for securing
energy efficiency improvements varies across sectors. In high energy use manufacturing
environments, for example, the link between commercial viability and energy use in the face of rising
energy costs is readily understood. As a consequence, the manufacturing sector tends to be quite
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pre-disposed to investment in the conduct of quality energy audits as a basis for managing the risks
associated with rising production costs and/or improving market competitiveness.
Conversely, the ability to pass through increased fuel costs to freight customers in the national road
freight industry has tended to reduce the motivation for investment in energy audits within the
transport sector. Accordingly, anecdotal experience suggests that this sector is simply seeking to
conduct energy audits for compliance purposes only and is often reluctant to invest in the conduct of
comprehensive energy audits. This may be partly due to the absence of a specific standard for
transport operations.
In the case of the commercial buildings sector, the opportunities for realisation of commercial returns
from energy efficiency investment have tended to be modest (albeit better than in the transport sector)
and consequently, the willingness in previous years to invest in quality energy audits has also been
modest. This has been exacerbated due to split incentive issues. The introduction of NABERS, and
the emerging demands of tenants to lease buildings or tenancies that exceed a minimum NABERS
rating will now provide building owners with a greater incentive to improve the energy performance of
their buildings and generate a demand for energy auditing services.
Given the above, there appears to be a need to revise the existing standard to provide better
guidance to businesses on the type of audit (in terms of both the detail of the investigation and target
outcomes) that is best suited to their specific industry sector.
2.5
Link between energy efficiency and GHG emissions reporting
Another significant development that has occurred in the ten years since the development of the
Energy Audit Standard has been the emergence of the carbon accounting agenda. In preparation for
carbon pricing, large energy using businesses are now required to report their annual GHG emissions
in addition to their annual energy consumption.
Accordingly, any future review of the current energy audit standards should take advantage of
synergies between the conduct of an energy audit, the reporting of energy consumption and carbon
accounting protocols – thereby seeking to minimise the administrative burden for businesses in the
future.
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3.
Nature of the review
The Implementation Plan has two objectives. Firstly, the Implementation Plan provides the Energy
Efficiency Working Group (E2WG) with a record of the outcomes of the Phase One review and
recommendations on whether the revision of AS/NZS3598 is necessary and worthy of further support.
Findings generated from Phase One will facilitate an understanding of how the proposed changes
align with the original project objectives, and how best to support the proposed next steps.
Secondly, subject to E2WG consideration, this report presents the case to Standards Australia that
AS/NZS 3598 requires revision. Further, reflecting the extensive consultation that has preceded this
Implementation Plan, the case for revision will suggest amendments based on feedback received.
The suggested amendments emerged from the consultation process and have the support of
stakeholders. The Implementation Plan outlines the suggested amendments (in the form of desired
features of the revised standard), how the consultation process came to support the amendments,
and the benefits the suggested amendments offer energy users in Australia and New Zealand.
3.1.
Objectives of the review
The principal objectives of the review of AS/NZS 3598:2000) were three-fold, namely:

To determine whether there is an identified need for revising the current Energy Audit
Standard

To provide guidance on the limitations of the current standard and the improvements that
could be pursued to redress these limitations

To outline a process for the conduct of any future revision, including commentary on likely
areas of contestability and/or complexity.
3.2.
Scope of the review
The scope of the review incorporated an analysis of all aspects of energy audits as defined by the
explicit elements of the existing standard, implicit elements of current national legislation, and
feedback from key stakeholders (i.e. the energy audit community, the training community, government
energy efficiency programs and the purchasers of energy audit services) on business needs.
In conducting the review, consideration was also given to the inherent relationship between
AS/NZS 3598, assessment and reporting requirements contained in national and state based energy
efficiency legislation, and the imminent release of the international standard for Energy Management
Systems (ISO 50001).
Research conducted by the EEO program and a review of AS/NZS 3598 conducted by NZ Energy
Efficiency and Conservation Agency was also considered.
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3.3.
Methodology
The review comprised the consideration of information collated from three principal sources as
detailed below.
The EMANZ Study
In 2010, the Energy Efficiency and Conservation Agency of New Zealand (EECA) commissioned the
Energy Management Association of New Zealand to undertake a review of AS/NZS 3598:2000. The
review concluded that the present version of AS/NZS 3598:

lacks information detailing the relationship between audits and other components of energy
management;

needs an additional level of audit below the current level 2 to address the business need for a
basic scoping audit; and

requires greater emphasis on demand management and the development of benchmarking
metrics.
EEO company research
In 2009 RET commissioned research of EEO program participants immediately following companies'
first round of energy assessments.1 This research identified a number of skill gaps and skill shortages
of EEO participants, and the consultants who advise them, that could potentially be addressed in
future revisions of the current standards, namely:

energy data collection and analysis;

the ability to develop and present a business case for energy efficiency projects (to gain
management support for the implementation of cost-effective energy efficiency actions
identified through assessments); and

the ability to integrate energy efficiency findings into cross business operational plans and
practices.
Where companies engaged external resources to assist in assessments, they sought providers with
energy expertise and knowledge that would bring alternative perspectives to the assessment process.
Importantly, the research found companies required providers with an understanding of the production
processes and business they were operating in. Concerns were raised that some Energy Service
Providers had sound knowledge on energy efficiency assessment requirements but little knowledge of
their specific industry.
The research concluded that reviewing the current standard was a critical foundation for the
improvement of skills to conduct energy efficiency assessments to an approved quality standard. The
updated standard could also form the basis for future accreditation schemes that would help to
1
Department of Resources Energy and Tourism (2010) Report for Long Term Training Strategy for the Development of Energy
Efficiency Assessment Skills
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
increase the confidence of industry when selecting consultants, or sourcing internal staff, to help
conduct energy efficiency assessments.
Stakeholder consultation process
Information on the adequacy of the existing standard was also collated via the conduct of a
consultation process in Australia and New Zealand. This consultation targeted members of the energy
efficiency community, including: energy users, energy auditors, and legislators.
Recognising that many of the issues relating to the conduct of energy audits are subject to a degree
of debate among stakeholders, a discussion paper 2 and an associated background paper 3 were
prepared to facilitate discussion in relation to a number of core considerations, including:

the adequacy of the current standard in supporting the contemporary energy efficiency
agenda and business needs of companies in Australia and New Zealand;

likely future relevance of the standard given recent developments in energy efficiency
legislation and related international standards;

principal objectives that should be addressed by the future revised version of
AS/NZS 3598:2000;

proposed scope and structure of any revised standard; and

intended target audience for the standard.
Six public stakeholder forums were held in Australia and New Zealand which attracted 130
participants. In addition, fourteen written submissions were received. A separate consultation was
held with representatives from six energy users from key industry sectors to validate feedback from
the stakeholder consultation. A Consultation Report has been prepared as a record of feedback
received. (See RET website).
Critical issues identified by the consultation process include:

The need for a stronger link between the outcomes of an AS/NZS 3598 audit and the
development of business cases for cost-effective energy efficiency improvements.

The standard provides no guidance as to the process a business should follow to explore the
feasibility of a detailed energy review to identify opportunities.

AS/NZS 3598:2000 has a bias towards energy auditing of commercial buildings. Expert users
and stakeholders believe AS/NZS 3598:2000 has no relevance to the transport sector. In
addition, strict application of the standard to industry (particularly the processing industries) is
difficult and this leads to uncertainty around the application of the energy audit levels.

The standard provides no guidance as to the competencies required of auditors.
S2 "Towards a revision of AS/NZS 3598:2000 Energy Audits. A discussion paper", Published by the Department of Resources,
Energy and Tourism, April 2011.
Available from http://www.ret.gov.au/energy/Documents/energy-efficiency/DiscussionPaperFINAL.pdf (Accessed June, 2011)
3
"Towards a revision of AS/NZS 3598:2000 Energy Audits. Background paper", Published by the Department of Resources,
Energy and Tourism, April 2011.
Available from http://www.ret.gov.au/energy/Documents/energy-efficiency/Background_PaperFINAL.pdf (Accessed June,
2011)
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
Being an outcomes driven standard, AS/NZS 3598:2000 provides only limited guidance on
how to undertake a successful energy audit, and one that leads to the implementation of
energy saving initiatives.
AS/NZS 3598:2000 is not currently seen as relevant to much of Australian business, except where the
use of this standard is driven by a government program – that is, energy users do not appear to
perceive any significant value in the Standard as currently drafted. This is particularly true of the
transport and resources sectors.
In New Zealand, the Standard is more fully integrated into Government support and accreditation
programs. New Zealand business do support improvements however to address identified
deficiencies.
The recommended amendments detailed later in this Implementation Plan address these
shortcomings and provide more indications of the problems with AS/NZS 3598:2000.
3.4.
Steering Group
The work of the consortium was overseen by a Steering Group comprising representatives of the key
stakeholders in the Australian and New Zealand Energy Efficiency community. This group also
provided guidance in respect of the high level issues that would need to be incorporated in any future
review of the current standards. Areas cited by the Steering Group included:

the failure of AS/NZS 3598:2000 to address the needs of the transport sector;

uncertainty in the application of Table 3 of AS/NZS 3598:2000 to audits in process industries;

inconsistent interpretation of the scope of work in each of the three audit levels; and

the absence of implementation guidelines to support the standard.
The members of the Steering Group are listed in Appendix A.
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Suggested improvements – architecture of the revised standard
4.
Analysis of the strategic context, business needs and stakeholder feedback revealed that there is a
need for a comprehensive overhaul of the existing standard. The potential improvements can be
summarised in two principal areas, namely:

Architecture of the revised standard – these improvements refer to the overall purpose of the
standard in terms of the desired objectives, the scope of the standard, and the nature of the target
audience; and

Content of the revised standard – these improvements refer to specific aspects of energy
auditing processes.
This section discusses the suggested improvements in the architecture of the revised standard, while
the following section discusses potential improvements in the context of the existing energy audits
standard.
4.1.
Objectives of the standard
The objectives of AS/NZS 3598:2000 are to assist energy users to decide the level of audit
appropriate to their needs; to provide a guide when commissioning energy audits; and to provide a
uniform basis for preparing and comparing energy audit proposals. The standard also aims to
establish best practice for energy auditors; support the establishment of energy management
programs; and contribute to the quality of existing energy and other management programs.
Stakeholders felt these objectives needed to be refined and expanded in several ways.
"The energy audit standard needs to define a repeatable process for capturing energy use and
quantifying the expected savings from identified opportunities."
"It should provide clarity to business around the process for assessing energy use and the
confidence that the outcomes meet a minimum standard of quality."
Participants at the Melbourne workshop
As a result the following overarching objective was proposed for the revised standard to address the
issues raised:
To set the expectations relating to the outcomes, minimum audit process and
reporting requirements for energy audits conducted by competent energy
auditors.
The proposed objective addresses several of the shortcomings identified by both the stakeholders
and the Steering Group. In particular, it emphasises the audit outcomes and the need to ensure clear
expectations of these outcomes for both energy users and auditors. Further, it references the need for
a minimum process to achieve the desired outcome. Note that the current version of the standard
also speaks of minimum requirements. In response to stakeholder feedback, the issue of auditor
competence is also highlighted, and while not endorsing a formal role for the revised standard in
defining training and accreditation schemes, both stakeholders and the Steering Group recommended
that the revised standard has a role to strengthen the capability and quality of energy auditing
and assessment services.
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While the overall focus remains on providing a framework for conducting energy audits, the review of
AS/NZS 3598:2000 highlighted several proposed changes to the existing standard. For example,
stakeholders would like audit outcomes to feed into a better definition of business cases and the
inclusion of replicable guidelines for the development of business cases.
"Reports should be presented in a fashion that enables them to be easily transferred to the
organisations business case processes"
Participant, Auckland Workshop
This perspective underpins a secondary objective that the revised standard should:
Support the integration of energy management into core business language to
inform current and future business activities.
In other words, audit outcomes must be presented in a manner capable of informing a business case
for cost effective energy efficiency and demand management opportunities. For instance,
stakeholders wished to see more transparency in how auditors obtain cost estimates and make
calculations, as well as for verification purposes. They would like the standard to include examples to
provide consistency and standardisation of audits as well as empowering clients to check for
compliance.
In addition, the review recommends a more structured approach to the participation of energy users in
the overall audit process, including implementation of audit outcomes. This recommendation informs
another proposed secondary objective of the standard, which is:
To provide guidance for both energy users and auditors (both internal and
external to the energy user) regarding responsibilities and roles.
The commitment and participation of energy users was identified as crucial to the achievement of
consistent improvements in energy management. In addition, bias towards a purely client/consultant
model is seen as too restrictive and fails to recognise in-house capabilities of many energy users.
Drawing on their own experiences, the Steering Group also strongly supported this proposed
secondary objective.
More explicit recognition of complementarity with other relevant standards, particularly the recently
released ISO50001, was identified as a major issue. The need for complementarity extends to core
government energy efficiency programs such as EEO. Hence the stakeholders and Steering Group
recommended that the revised standard be consistent with and complementary to relevant
international standards, assessment frameworks and auditing guidelines, including ISO50001
Energy Management Systems, the Energy Efficiency Opportunities Assessment Framework
and environmental auditing standards (for example ISO14000 series and ISO19011).
Neither industry stakeholders nor the Steering Group considered that the standard needed to provide
guidance to training organisations. In addition, stakeholders did not want the standard to be too
prescriptive - to allow organisations to determine the most appropriate implementation for their
organisation.
Finally, in line with the stated objectives of the NSEE, the ultimate purpose of the revised standard is
to increase the number and quality of projects identified and the rate of implementation of cost
effective energy efficiency opportunities. This is essentially a performance measure of the success
of the standard, which can be quantified in terms of MWh, tonnes CO 2 etc.
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Identifying appropriate objectives for the new standard will assist in the development of a standard
that will be broadly adopted by businesses in Australia and New Zealand, and will be used to derive
ongoing improvements in energy performance.
4.2.
Target audience
The potential target audience for the standard has three dimensions – the sectors of the economy, the
size of the business and the potential stakeholders. All were addressed during the preparation of the
discussion paper and during the stakeholder consultation. Stakeholders expressed views regarding all
three dimensions.
The current version of the standard explicitly refers to “assist[ing] energy users to decide what level of
audit is appropriate…provid[ing] a guide for energy users when commissioning energy audits…” and
“establish[ing] best practice for energy auditors…”.
Stakeholders felt the standard needed to expand its focus beyond just energy auditors, to focus on
the needs of energy users, and other stakeholders who use these services (i.e. government
programs).
"Audit providers should be the main target but energy users the main beneficiaries."
Participant, Wellington workshop
The conclusion from the stakeholder consultation was that the revised standard should address all
relevant stakeholders (i.e. energy users, energy managers, energy audit providers and government
agencies), but with a clear bias towards the needs of energy auditors and energy users. The wording
that emerged from the consultation process is as follows:
The target audience is any facility or organisation that consumes energy,
excluding the residential sector, and anyone involved in the assessment of
energy use and identification of opportunities to improve the management of
energy at the facility or within the organisation.
The Steering Group also acknowledged the importance of addressing the needs of all stakeholders
involved in an audit. However, the Steering Group along with some stakeholders felt a bias towards
the needs and the skills of energy auditors would better allow the standard to provide guidance to
auditors on the correct delivery of an audit. It would also allow for the definition of the key
competencies needed to successfully deliver an energy audit. This suggestion seeks to improve the
standard as a mechanism to deliver real energy saving outcomes to energy users through the
definition of the key competencies of an auditor and the publishing of guidelines for the delivery of an
audit. It also reinforces the role of the standard as a vehicle to standardise and strengthen the
capability and quality of energy auditing services as noted in the previous section.
The stakeholders recommended that the revised standard should accommodate both large and small
energy users, differentiated on the basis of energy consumption. Further, the consultation outcomes
recommended that the revised standard address all sectors of the economy except for the residential
sector i.e. industry, the commercial sector and the transport sector. These goals are consistent with
the intended audience outlined in AS/NZS 3598:2000, which spoke of “the public, commercial and
industrial sectors, and to a range of premises from complex industrial sites to a single small building”.
The only difference in the recommendations is a more explicit reference to the transport sector.
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Stakeholders generally agreed that the use of audit levels provides a means of addressing the range
of energy users. However, there was no clear guidance from stakeholders as to the ideal number of
levels. The Steering Group had its own views on this matter and these are presented in Section 5.3
below.
The proposed changes should also acknowledge the role of other stakeholders – for example
government agencies responsible for managing energy efficiency or demand management programs.
In summary, it is proposed that the target audience for the standard is any facility or organisation
that consumes energy, excluding the residential sector and anyone involved in the
assessment of energy use and identification of opportunities to improve the management of
energy at the facility or within the organisation. As a consequence, the revised standard should
address the business needs of:

large, medium and small energy users;

providers of audits;

energy users at different stages in the implementation of a world class energy
management system;

energy users from different sectors involving different end-use processes and
technologies. Guidance for these users would be provided by process/technology-specific
best practice guidelines consistent with the standard, as discussed in Section 5.2;

government agencies that refer to the standard in regulations or other government
programs; and

stakeholders in both Australia and New Zealand (as the standard will be adopted in
both countries).
4.3.
Scope
In this Implementation Plan, the scope refers to the role the revised standard plays in defining one
element of a broader energy management system (EnMS) namely the energy audit, and in particular
the boundaries of the energy audit. The current version of the standard places the energy audit inside
a broader energy management system (called an energy management program) and does not
attempt to specify the energy management system. AS/NZS 3598:2000 includes guidelines on energy
management programs.
Since AS/NZS 3598:2000 was released there have been several major changes in the external
environment that impact on the scope of energy audits. The most significant are the release of the
international ISO 50001 Energy Management Systems standard, and the introduction of the EEO
assessment framework in Australia. The purpose of ISO 50001 is to enable organisations to establish
the systems and processes necessary to improve energy performance. It is based on the common
elements found in all of ISO’s management system standards, ensuring a high level of compatibility
with ISO 9001 (quality management) and ISO 14001 (environmental management). ISO 50001
however, provides little guidance on energy assessments or energy reviews.
The figure below, taken largely from ISO 50001 seeks to position an energy audit within the context of
an energy management system that is compliant with ISO 50001. The indicated links to ‘Energy
Planning’ and ‘Monitoring, Measurement and Analysis’ reflect the views of the stakeholders and the
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Steering Group on the optimum relationship between an energy audit defined in the revised version of
AS/NZS 3598 and an energy management system.
Figure 1: An ISO50001 Energy Management System.
The views of the stakeholders and the Steering Group were:

guidance on energy audits through AS/NZS 3598 complements the ‘Energy Planning’
element of an EnMS; and

the importance of measurement and verification (M&V) is reflected in the ‘Monitoring,
Measurement and Analysis’ element of the EnMS.
The majority of responses agreed with the need to ensure the revised standard considers a partial or
fully implemented EnMS. However, AS/NZS 3598 should not rely on the existence of an EnMS to
provide the required outcomes to business.
There was a clear message from stakeholders, which was strongly supported by the Expert Group,
that the revised AS/NZS 3598 should address elements of M&V in a manner consistent with
international M&V protocols to increase energy users’ confidence in outcomes.
"Measurement is a critical part of the audit process. M&V should be referred to in an “Audit’ in
order to increase the end users confidence in the outcomes."
Participant, Christchurch workshop
"Measurement processes should be considered in the standard to ensure that appropriate levels
of data quality of a sufficient duration, are obtained to provide a statistically representative
analysis of the system being audited."
Written submission
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On the other hand, the majority of respondents believed the standard should not incorporate guidance
on performance contracting or energy efficiency design, as these matters are already addressed
through other frameworks and programs. Some New Zealand stakeholders have however expressed
a need for ‘design audit’ guidance in the work they are doing.
The EEO program, through the requirement for a rigorous and comprehensive energy assessment,
requires participants to address many of the elements of an energy management program. The
Steering Group recommended that the revised AS/NZS 3598 complement the EEO framework and in
particular key elements 3 and 4. As EEO will be the driver for energy assessments for larger energy
users in Australia for the next few years, the Expert Group felt the processes and systems established
by the EEO program should be integrated into the revised AS/NZS 3598. Business will not get value
from AS/NZS 3598 if it must ‘retool’ once outside the context of the EEO program.
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5.
Content of the revised standard
This section contains a listing of potential modifications/additions to the existing standard in terms of
specific content.
This area of the Implementation Plan is the most challenging. The majority of stakeholders supported
the notion of an outcomes driven standard but at the same time, wanted the revised standard to
provide clear guidance to energy users about the kind of audit they need.
The challenge is finding a means of providing guidance in the context of an outcomes driven
standard, and there may be scope to include one or more 'informative' sections in a revised standard
to address this need. This is explored further in Section 5.3.
The following sections seek to capture a range of views from stakeholders, including the User
Reference Group, the Expert Panel and the Steering Group. Not all stakeholders were comfortable
with the final outcomes of the consultation and the Steering Group recommends that an additional
round of consultation be undertaken during any drafting of a revised standard to further explore the
audit level structure of the standard.
5.1.
Outcomes-driven generic approach with specific sectoral focus
The current version of AS/NZS3598:2000 is essentially an outcomes-driven standard4, and neither the
Steering Group nor the stakeholders saw any need for change in this regard. The benefits offered by
outcomes-driven standards include enabling the evolution of techniques and the development of best
practice.
While being an outcomes-driven standard, AS/NZS 3598:2000 also seeks to define a generic audit
process that can be applied across a range of business types (industrial, commercial, transport etc).
The stakeholders held a range of views regarding the feasibility of a single generic approach to
energy auditing for all potential users. When asked to describe the shortcomings of the existing
standard, one stakeholder at the Sydney workshop commented
“(the standard is) too vague generally. Need higher level of detail as to scope, required elements
of an audit, data analysis, measurement and verification but remaining outcomes focussed”.
Additionally, a leading Australian industrial business provided the following view through a written
submission:
A generic standard is by necessity going to lack the detail necessary to achieve meaningful results
across differing sectors due to variations in methodology and interpretation that are required. A
suite of standards would allow audits to be tailored for specific sectors and produce better quality
and more relevant audit results.
Given the diversity of auditing processes across sectors, the Steering Group agreed with these views
and favoured retaining an outcomes-driven generic standard that incorporates activities common to all
energy audits, with separate parts providing context for different business sectors and reference to
relevant technology/process guidelines. Figure 2 below provides an outline of this recommended
structure.
4
Outcomes-driven standards define the outcomes that must be delivered for the audit to be compliant with the standard.
Process driven standards outline the procedures which must be followed to deliver the objective of the standard.
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The Expert Panel also notes that an outcomes driven standard can lead to uncertain results due to
the lack of general guidance. Therefore, the standard should include informative guidance on a
minimum process required to achieve the specified outcomes.
Figure 2: Recommended structure of AS/NZS 3598
Part 0 would present a generic approach to energy auditing in the form of general concepts around
the basic steps of an audit, which would include:

Data definition and measurement: This step would define the collection of energy and
related data, and may include activities such as collecting overall energy and production
data, installing sub-meters and collecting sub-meter data, measurement of trends over an
appropriate timeframe and preparation of an energy asset list.

Energy and business data analysis: Here the energy and other data collected in the first
step is analysed so as to develop an understanding of energy use and the factors that affect
energy use. This analysis could be as simple as calculating some overall key performance
indicators (KPIs). Activities of increasing complexity include energy end use breakup by
area and application to ±10%, a mass and energy balance to ±10%, and regression and
other detailed analysis.

Opportunities identification: This step is concerned with the identification and preliminary
assessment of energy saving opportunities. Different techniques could include a walk
through identification of opportunities, running an opportunities raising workshop, or relying
on expert review of unit operations to identify potential opportunities.
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
Opportunities evaluation: Following on from the identification of opportunities comes the
evaluation of opportunities. This would involve a two step process. The first may use simple
evaluation methods such as estimating savings using rules of thumb. Or it could be as
complex as using rigorous models to calculate savings and the costs. The desired level of
simplicity or complexity will be driven by the size of the organisation being audited and the
needs of that organisation.

Business case development: This is the second step in the evaluation of opportunities, and
it seeks to assess the value of the opportunity to the business by means of discounted cash
flow (DCF) or internal rate of return (IRR) analysis. It may ultimately include whole of
business analysis if the opportunity is significant enough to justify it.
The Steering Group believes that Part 0 in the recommended standard should also address the
following key activities:

Business involvement and the planning and communication aspects of the process. A
lack of business involvement in the early stages of an energy audit often leads to outcomes
that do not meet the needs of business. Any revision of the standard should provide additional
guidance in this area. This could take the form of checklists outlining the information the
business must provide to the auditor at the start of the process, and model plans for audits.

The reporting of results in a manner that is consistent with the business drivers of the
energy user. This will allow businesses to better utilise the outcomes of an energy audit. A
recurring theme through the stakeholder consultation was the need for auditors to develop
more robust and comprehensive business cases for identified opportunities. The drafters of
the revised standard could consider the following points:

o
The ‘whole of business’ approach outlined in Key Element 4 of the EEO framework
provides a good model for a generic business case.
o
Many if not most organisations have their own approach to preparing business cases
and Part 0 of the recommended structure could suggest the auditor discuss the
requirements for business cases with the energy user prior to the start of the audit.
The technical and organisational aspects of opportunity identification and evaluation,
and decision making on improvement options. Here, the Steering Group believes that
while the nature of the identified opportunities will be very different across the three sectors,
the process followed to identify opportunities is the same. The five stage approach outlined in
the EEO guidelines provides a good model. In particular, it emphasises the development of
an understanding of energy use before potential opportunities are identified, and also the
involvement of a range of people in the identification and assessment of potential
opportunities.
Parts 1, 2 and 3 of the standard would apply these general concepts of energy auditing to the
particular requirements in industry, commercial buildings and the transport sector. The Steering Group
believes that Parts 1, 2 and 3 should specifically address the technical aspects of data collection
and analysis in each of the sectors.
This model addresses perceived issues that AS/NZS 3598:2000 focuses on areas that are particularly
relevant to the auditing of energy use in commercial buildings. Industrial facilities however use a much
wider range of energy systems than most buildings and the lack of specific guidelines for these
energy systems diminishes the value of the current standard.
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In relation to the transport sector, the concept of energy auditing is relatively new when compared
with energy auditing in sectors such as manufacturing and commercial buildings. Many of the
concepts and practices applied for users of stationary energy do not translate easily to users of
transport energy. As a consequence, there is a need for more explicit guidance in respect of the
requirements of energy audits within the transport sector, the required skills of energy auditors, and
the management of key issues that are peculiar to this sector. This guidance would support both the
commercial road transport sector, and transport applications in other sectors such as mining and
construction.
The Steering Group suggests the three ‘generic’ audits would have slightly different approaches in
each sector; in particular the definition of the ‘energy baseline’ which is used to inform the
identification of opportunities. The following thoughts are put forward for consideration:

The approach to defining the energy baseline that is described in the EEO guidelines is a
good model for the generic standard for industry, and in particular those businesses that
have continuous operations. The Steering Group recommends the focus here is on the
preparation of a model (ie an energy-mass balance or equivalent) which seeks to relate
energy use with mass or material flow through each stage of the process.

AS/NZS 3598:2000 is a good model for the generic standard for the commercial sector. The
Expert Group recommends the generic process for commercial buildings considers the
detailed modelling of energy use in a building, which will include occupancy considerations.
Further, time of use is much more important in a commercial building than it is in much of
industry.

The generic standard for the transport sector will be a new document as it needs to consider
load factors, routeing and the management of the fleet, as well as the performance of an
individual vehicle.
In summary, the proposed revised standard should be an outcomes-driven standard which defines
high level general concepts common to every energy audit with separate audit considerations
for the industrial sector, the commercial sector and the transport sector.
This addresses the business community's need for an energy audit standard that recognises the
differing issues each sector of the economy faces, and allows for techniques to evolve over time while
still providing a level of guidance on the process to achieve the specified outcomes.
In adopting such a model, the Steering Group felt that businesses in each sector would immediately
see how the revised AS/NZS3598 is applicable to them and would be more likely to adopt the
standard.
To minimise the risk of failure of the audit to lead to sustained improvements in energy performance,
the revised standard should also:

Outline the roles and responsibilities of the energy user in facilitating the audit. Due to
the complexity of most energy audits, these are not tasks that can be totally outsourced.
There is a need for energy users to be involved in the audit. Specific issues that should be
addressed include:
o
the importance of senior officers of the business supporting the auditor and ensuring
business resources are made available in a timely manner; and
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o
the need for the business to provide data to the auditor. AS/NZS 3598:2000 provides
guidance on the types of data (at least for a commercial building audit) in Section
12.1.2 and Appendix C. The EEO Guidelines may also assist the drafters of the new
standard in this area.
By more clearly defining the role of the energy user in the audit, the new standard will
facilitate the translation of an energy audit to energy savings.

Provide guidance to energy users on the competence and evaluation of auditors.
Business stakeholders indicated they need a means to assess the competency of auditors.
Many companies have been frustrated by auditors that have been unable to deliver tangible
opportunities to save energy. This is particularly the case at more complex sites – large
mines, minerals processing facilities, complex multi-use commercial buildings.
AS/NZS 3598:2000 requires “..the auditor [to] have demonstrated experience, relevant to the
type of site, when carrying out any energy audit in accordance with the standard”. The
proposed revision should include additional information on competencies. Recommended
competencies are listed in Section 5.4.

Explicitly define the levels of accuracy required for various types of audits, and
indicate the types of analysis methods that need to be employed to achieve those
accuracies, and the requirements for supporting information. The latter may be
addressed through the sectoral audit considerations and the technology-specific guidelines
referenced by the standard. While requiring the definition of the required accuracy, the Expert
Panel acknowledges the difference in achievable accuracies for different technologies, and
recommends that the revised standard specify the target accuracy or the best achievable
accuracy whichever is larger.
Areas of difference with the existing standard suggested by the review include the need for greater
emphasis on the roles and responsibilities of the energy user in facilitating the audit and guidance on
the competence and evaluation of auditors. Both of these aspects are addressed in detail in the
international environmental management standards (ISO 14000 series) and auditing standard
(ISO 19011) as well as in ISO 50001. These documents can provide guidance in developing suitable
requirements for a revised version of AS/NZS 3598.
It is also relevant to note here that the EEO program emphasises the integration of leadership,
people, planning / decision making and communications as well as technical elements.
5.2.
Inclusion of technology specific guidelines
During the consultation stage, stakeholders from the business community highlighted the need for
guidance on how best to conduct an energy audit. Their need is twofold. First, it provides energy
users with a better appreciation of the scope of work for a proposed audit. Second, and more
importantly, it enables energy users to better employ internal resources to undertake energy audits
i.e. businesses can use their own technical staff rather than always requiring an external energy
auditor.
It is recommended that the revised standard reference existing process-driven technology-specific
best practice guidelines consistent with the generic approaches outlined in the standard. The Steering
Group believes a technology/process focus will support auditors and facilitate implementation. The
use of sector specific guidelines versus technology specific guidelines was canvassed during
stakeholder consultation and the views of stakeholders strongly favoured technology specific
guidelines. Reasons included facilitation of more structured audits, allowing project engineers to apply
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standards in design and increased flexibility. Business also argued that it puts the impetus on
technology laggards to improve their efficiency.
If the model above (Figure 2) is adopted, the following issues will need to be addressed in the
development of the new standard:

Development of additional guidance within the generic standard for audit process
requirements specific to the commercial, industrial and transport sectors.

Identification of which specific energy using technologies and processes warrant
referencing in the standard.

Identification of appropriate existing technology/process-specific guidelines to reference
in the standard.

Establishment of a rigorous process to develop new technology/process-specific
guidelines where required, for example in collaboration with the relevant professional and
industry associations.
The Steering Group is aware of a number of suitable technology specific guidelines that are available:

A collection of technology focused standards is published by the American Society of
Mechanical Engineers (ASME). EA-1-2009 covers process heating systems that are defined
as a group of heating equipment used for heating materials in the production of goods in an
industrial plant. Other standards cover Energy Assessment for Pumping Systems (EA-22009), Energy Assessment for Steam Systems (EA-3-2009) and Energy Assessment for
Compressed Air Systems (EA-4-2010) and have been developed along similar lines.

The American Society of Heating, Refrigerating and Air-Conditioning Engineers published
‘Procedures for Commercial Building Energy Audits’. While this covers a complete sector
(commercial buildings) its prime focus is on heating, ventilation and air conditioning.

The European Commission Reference Document on Best Available Techniques for Energy
Efficiency (February 2009) provides guidelines on areas for improvement across a wide range
of industrial technologies.
To summarise the outcomes of the review process thus far, the recommended structure of the
standard may be stated as follows:

The revised standard will apply to large, medium and small energy users and will apply to all
sectors, except for residential.

The standard will define a “generic” audit, which includes sector specific guidance relating to
the commercial, industrial and transport sectors, and references to technology/process
specific best practice standards or guidelines which are consistent with the standard. These
may be owned by the relevant industry associations.
5.3.
Modification of audit levels to improve energy user guidance
The current version of AS/NZS 3598 includes three audit levels of increasing depth of analysis and
accuracy of outcomes to address the needs of energy users across a range of circumstances,
including varying type and scale of facilities and range of detail.
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Stakeholders had strong views on the suitability of the current levels and on the need for revision. The
consultation highlighted a business need for different levels of audits to be specified in the revised
standard. Stakeholders generally agreed that the use of levels provides a means of addressing the
range of energy users. They also appreciated the simplicity of the current version of AS/NZS3598.
However, there was no clear guidance as to the ideal number of levels.
AS/NZS 3598:2000 defines three levels (1, 2 and 3) which analyse energy use at a facility to a
varying degree of detail. The three levels tie the level of detail in the energy baseline analysis with the
level of detail in the analysis of opportunities. The general concept was that a Level 1 audit is an
‘overview’ study that highlights the potential for energy savings, a Level 2 audit identifies specific
energy saving measures and a Level 3 audit develops investment grade business cases.
The view of stakeholders was that while the objective of AS/NZS 3598:2000 was commendable, the
application of the audit levels was not working for business. Hence there is a need to revisit the audit
levels. The stakeholder consultation flagged the need for differing levels of depth and accuracy.
Another clear business need to emerge was the requirement for flexibility across different
circumstances.
"The current Audit Standard AS/NZS 3598:2000 does not provide clear guidance to energy users
about the kind of audit they need. As a result, companies tend to over-specify or under-specify
audits and tend to ‘pick-and-mix’ between the current levels."
Written submission
"We should have a mechanism within a single standard that can scale so that effort and rigour is
applied depending on the complexity and risk and value of the work / project / use."
Participant, Perth workshop
The User Reference Group felt that “…an actual audit can be constructed from a collection of
elements, each offering a different level of analysis and complexity.”
A range of views emerged as to the ideal number of levels that should be provided. Some
stakeholders were happy with the current three levels while others sought additional levels to address
a greater range of businesses and to provide a greater range of flexibility. A large group of
stakeholders favoured a structure with these general characteristics:

A scoping type audit level: This level would provide a preliminary view of opportunities at a
site, looking at overall energy data and production data, overall KPI analysis (such as the
NABERS rating of a commercial building). It may not include identification of specific
opportunities but may give a view of the total savings potential based on overall energy use
figures, which could be used to prioritise further action.

A preliminary investigation level: This level would involve energy use modelling and
include preliminary identification of opportunities. Opportunities may be assessed for
budgeting purposes but not to a degree that is suitable for making large investment decisions.
Savings may be estimated using rules of thumb to no better than ±50%, and costs estimated
to -50%/+100%.

An Investment grade audit level - The final level would provide results to support
investment decisions. It would also use more systematic methods to identify opportunities to
provide a greater surety that all opportunities have been identified. This may entail the
development of a mass and energy balance as well as expert review of unit operations.
Savings would be calculated using rigorous models to better than ±20%, and costs estimated
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to -15%/+20%. This level would meet the EEO requirement for a rigorous and comprehensive
assessment, and would refer to a suite of tools to develop the business case for each
opportunity. The Expert Group felt that to specify a particular approach to assessing business
cases is not appropriate as it will be driven by the needs of the organisation being audited.
The proposed levels could be used as a stand alone 'level' system as the current system provides.
The structure could also provide some flexibility if required ie through relevant guidance it could be
possible for energy users to select elements from the different levels to customise the level of audit
suited to their business needs. Examples that demonstrate the desired flexibility are outlined below:

A business seeks to undertake a multi-site scoping audit to establish a prioritised list of
opportunities or sites for further investigation.

A business wishes to conduct a baseline energy review, and also include some initial
identification of opportunities for energy efficiency improvements (effectively a “Level 1.5”
audit under AS/NZS 3598:2000).

A business seeks the development of a rigorous energy-mass balance, plus an indication of
the potential energy savings.

A business wants a scoping study, with one quick win identified and assessed with an
investment grade business case.

A business has already completed ‘energy use modelling and preliminary identification of
opportunities’ and now seeks a 'rigorous and comprehensive assessment’ for the top two
opportunities at the large energy using unit operation. In this case, the ‘rigorous and
comprehensive assessment’ need only be carried out at the one unit operation.
A number of different models were proposed during the consultation process, which could be
considered through further industry consultation. They are provided in Appendix B.
The structure outlined above addresses a range of needs:

It proposes a similar audit level system to the existing standard which is valued for its
simplicity and ease of use.

It provides business with flexibility if required.

It also facilitates the preparation of more robust scopes of work for prospective auditors as
each level will more completely define the scope of each element and the target levels of
accuracy.

Auditors are better able to respond to requests for quotation and to conduct more informed
discussions with energy users regarding the desired scope of work.

Government can employ elements from the Standard in the regulations for programs, more
confident that the requirements for scope and accuracy will be better understood.
There is ample scope in the revised standard for the inclusion of “informative” guidance in an Annex
to the standard. This could include recommendations on the level of audit that is appropriate for
particular sizes of businesses, the scope of typical audits of model sites and also checklists for areas
to be addressed in an audit.
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While the general principles of audit structure were supported, no specific model of those proposed,
received extensive support. Further input from stakeholders is therefore required in relation to this
issue.
5.4.
Inclusion of greater guidance on auditor competencies
Stakeholders would like the revised standard to:
‘…be sympathetic to training and accreditation but not provide definitive
guidance’
In this, the stakeholders were seeking some definition of the competencies of auditors but not to the
level required to define a training and accreditation scheme. Business stakeholders saw the definition
of competencies as helpful in determining if a prospective auditor has the necessary skills.
"Scope should provide guidance on skills sets required (as well as need for specific process
expertise) so that real benefits can be identified once “low hanging fruit” picked.
Participant, Melbourne workshop
The consultation process provided no specific examples of auditor competencies and skills other than
the suggestion that the standard should provide some ‘indicators’ around the skills of an auditor.
However, feedback from energy users indicates they want greater certainty that auditors possess the
requisite competencies.
The generic competencies include:

Planning the implementation of the audit.

Collecting data (including fieldwork and measurements).

Analysing the data collected for accuracy, completeness and relevance.

Developing energy models of businesses, using techniques such as energy-mass balances,
regression analysis, energy end-use breakups, and energy use forecasting.

Identifying potential energy efficiency opportunities. Skills here include facilitating workshops
or equivalent that may be employed to identify potential opportunities.

Identifying opportunities to reduce peak demand.

Analysing saving potential and financial analysis.

Preparing the audit report and recommendations.

Preparing action plans and schedules to identify specific targets.
In each case, competence must be demonstrated for the relevant business sector i.e. an auditor
experienced in analysing data from a commercial building is not necessarily competent to do the
same for a transport business. The competency must also be demonstrated at the correct level. An
auditor who can assess the performance of a retail outlet (i.e. lighting, office equipment, standalone heating or air conditioning) is not necessarily competent to assess a 150,000 m 2 shopping
centre.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
The recommendation that the revision of AS/NZS 3598 address the competencies required by
energy auditors addresses a number of needs as outlined below.

Business can have more confidence that an auditor who can demonstrate the listed
competencies will be capable of delivering the desired outcomes of the energy audit.

Auditors can correlate their own skills against the listed competencies, and develop their
own training and development plans.

Training providers can use the listed competencies to inform the development of training
and accreditation programs.

Government can use the audit standard to define minimum standards for auditors to
deliver government programs.
It is not the intention for the standard update to include training packages or tests for competencies,
but rather simple guidelines as to the desired competencies.
5.5.
Energy audit, energy assessment or energy review?
Feedback on the use of the term ‘audit’ was mixed. There was strong support for and against
retaining the term audit or changing to the term assessment: some stakeholders preferred ‘audit’ to
keep consistency with the current standard and to give weight to the process; others preferred
‘assessment’ as it does not carry the negative connotations of ‘audit’, and because this standard is so
dissimilar to other audits. In Australia the issue is further complicated since the term energy
assessment has been associated with specific building energy rating systems (e.g. NABERS,
NatHERS), targeted government programs (e.g. EEO, NSW Energy Efficiency for Small Business
Program) and even assessments of energy production capacity (e.g. wind, solar).
Other stakeholders preferred a combination of terms to signal varying levels of detail, or aspects of
the path towards the end goal. For example, one suggestion was to have an assessment before an
audit, and a review afterwards. Another was to refer to the entire exercise as the assessment with an
audit as one component.
Clarity of definitions is a prerequisite for any discussion of a new edition of AS/NZS5398. The terms
‘audit’ and ‘assessment’ have tended to be used loosely and interchangeably in Australia, the USA,
UK and other English-speaking countries. However where the term ‘audit’ is defined at all, definitions
are typically strict and specific.
The definition of an audit given in ISO 19011 Guidelines for quality and/or environmental
management systems auditing reads:
‘systematic, independent and documented process for obtaining audit evidence and
evaluating it objectively to determine the extent to which the audit criteria are fulfilled.’
ISO 19011 defines audit criteria as ‘policies, procedures or requirements’ which are used as a
reference against which the auditor compares collected audit evidence.
The key point of differentiation between an audit and other types of investigation is not that audits rely
on the systematic collection and objective verification of evidence but that this evidence is compared
against an agreed set of audit criteria.
With this context in mind, the Steering Group believe that a change in terminology is justified.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
In keeping with the view to align with ISO 50001, it is proposed here that the term “audit” be
changed to “review”. This is also consistent with the ISO 14000 series, where an ‘initial
environmental review’ is conducted to identify the environmental aspects of an organisation’s
activities and their associated environmental impacts. However, it is proposed to retain the term
audit strictly to describe an audit of an organisation’s EnMS. This is consistent with ISO 19011
and management system auditing in general.
This change in terminology will necessitate an awareness campaign associated with the release of
the new Standard in both Australia and New Zealand. Given the other revisions recommended in this
report, the re-naming of the standard represents an opportunity to market the benefits of
standardising best practice for energy reviews in Australia and New Zealand across a range of
circumstances, including varying type and scale of facilities and range of detail.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
6.
Net benefits of a revised Energy Audit Standard
The analysis presented in this paper suggests that the revision of AS/NZS 3598:2000 holds significant
potential to deliver benefits to Australian and New Zealand businesses in general and large energy
users in particular.
The benefits that will likely accrue as a result of the potential improvements to the Energy Audit
Standard discussed in Sections 4 and 5 of this paper can be summarised as follows:

Improve the capacity of specific industry sectors (i.e. transport and commercial buildings)
to realise energy efficiency improvements within a commercial context. The current
standard provides very little guidance as to the practices that should ideally be employed by
auditors in assessing energy use and energy efficiency opportunities in the transport and
commercial buildings sector. The development of specific guidance in this area will build sector
capacity to realise energy efficiency improvements in these energy intensive sectors in the future.

Capitalise on potential government-industry synergies to realise energy efficiency
improvements. The current standard was published prior to the introduction of national energy
efficiency legislation in Australia and New Zealand. Understandably, this has resulted in
significant inconsistencies between the current standard and energy efficiency legislation due to
the obsolescence of some elements of the Standard. Stakeholders have suggested that these
inconsistencies are creating confusion and duplication of effort on energy efficiency
improvements. By aligning the Standard with the terminology and practices contained in
contemporary energy efficiency legislation, the potential for wasted effort towards energy
efficiency improvements can be minimised.

Assist governments to minimise the extent of energy price rises by assisting stakeholders
to identify cost effective demand reduction opportunities. The required investment in
transmission and distribution networks is driving power price rises in Australia, and providing
stakeholders with incentives to identify opportunities to reduce peak demand. This will support the
deferring of investment in networks and help to reduce upward pressure on electricity prices.

Provide energy users with greater understanding of the link between energy audits and the
realisation of positive commercial outcomes in energy efficiency. The proposed revision of
the various levels of energy audits, whilst contentious, is intended to provide the purchasers of
energy audit services with a greater understanding of the different outcomes that can be realised
from different levels of investment in energy auditing. Feedback from energy users to date reveals
that there is considerable confusion resulting in a reluctance to invest in energy auditing which in
turn constrains the potential realisation of energy efficiency benefits.

Facilitate a greater uptake of energy efficiency projects – There is broad consensus amongst
industry and government stakeholders that audit outcomes must integrate more effectively with
business case development processes. Proposed changes will improve the confidence
companies have in the analysis behind audit recommendations, and their translation into effective
business case proposals. This will ultimately support an increase in the number and quality of
projects identified and the rate of implementation of cost effective energy efficiency opportunities.

Provide a comprehensive framework for assessing the skill base of energy auditors. As
with any emerging discipline, part of the challenge for energy users lies in correctly assessing the
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
skill base of prospective suppliers of energy auditors. The current uncertainty also creates
significant challenges for the development of skills training and certification programmes for
energy auditors. The proposed amendments to the standard in this area will create greater
certainty in respect of provider skills in specific sectors and ensure that the value of future
investment in energy audit skills training is optimised.

Provide greater clarity within the energy efficiency community in respect of the different
terms used to refer to energy audits, energy assessments and energy reviews. The
development of recent legislation and new energy management standards (i.e. ISO 50001) has
resulted in a degree of confusion about the purpose and scope of energy auditing. The proposed
review of the Standard will seek to resolve this confusion and optimise the national resource
investment in energy efficiency improvements.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
7.
The Standards development process
The discussion presented in this paper suggests that stakeholder issues with the existing Energy
Audit Standard – AS/NZS 3598:2000 – could be resolved by a revision of the existing standard in
accordance with the discussion presented in sections 4 and 5 of this paper. This approach is
recommended in preference to either (a) commencing work on an entirely new standard, or (b)
adapting an existing international standard.
The process to modify an existing Australia Standard defines the next steps that must be followed to
initiate a revision of AS/NZS 3598:2000. The key steps of this process, as advised by Standards
Australia, are outlined below.
7.1.
Complete a project proposal form (Step 1)
The first step in the process will require that E2WG contact Standards Australia with a view to
completing a project proposal form. The key purpose of the form is to allow the proponent (in this case
E2WG) to document a case for revision of the standard. In completing this form (see Appendix E),
E2WG is required to provide the following information:

Details of the proponent: This section relates to the name of the proponent and the contact
details of the proponent’s representative.

Details of the proposal: This section requires information relating to the name of the standard,
the purpose of the standard, the type of project envisaged, and an indication of whether the
intended output is a standard (an industry guide or some other style of document), whether a
technical committee exists, details of the relevant industry sectors, and the nature of the
relationship to any relevant legislation.

Summary and demonstration of net benefit: This section requires the provision of information
demonstrating that there is a need for the proposed standard, the degree to which the new
standard will align with national policy, and the anticipated net benefits (note, the net benefits are
typically considered on a qualitative basis).

Harmonisation and alignment: This section specifically refers to the relationship between the
proposed standard and other national and international standards

Pathway for Standards Development: Information required in this area concerns whether it is
envisaged that the process will be overseen by a committee, independently resourced, or require
allocation of resources from Standards Australia.

Stakeholder support: The proponent is required to provide evidence that the request for revision
of the standard is supported by all key stakeholders, ideally as a result of the completion of a
formal consultation process.

Risks and dependencies: This final aspect pertains to any risks that are likely to be encountered
during the course of the standards development process. Information on the intended timeline
should also be included in this section.
The material presented in this Implementation Plan has been prepared with the objective of providing
all of the information necessary for E2WG to complete a formal proposal form (The only aspect that
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
would require some attention relates to the proposed timeline, as governed by E2WG consideration of
this report).
During the course of this stage, E2WG would need to determine whether the project was to be funded
directly by E2WG, funded by an external ‘industry sponsor’, or funded under the normal standards
development process (each of these options brings decreasing levels of control over the timing of
project delivery).
7.2.
Development of a project plan and negotiate approval of the project
with Standards Australia (Step 2)
The second step will involve liaison with the appropriate sector manager at Standards Australia to
seek formal approval of the project as per the completed project proposal form. Essentially, this will
require joint development of a project plan with Standards Australia and include identification of key
stakeholders and the resolution of project funding.
Preliminary inquiries with Standards Australia reveal that the contact manager for this project would
likely be Ms Rikki Pearce, National Sector Manager, Standards Australia (Contact phone 02 9237
6041, email Rikki.pearce@standards.org.au).
7.3.
Reconstitute the Technical Committee and revise the standard (Step 3)
The final step would involve the commencement of the standards development process. Given the
substantial nature of the proposed change in the scope of the existing standard, it would be prudent to
revisit membership of the technical committee that will be responsible for managing the standards
development process.
The process for development of the revised standard is shown in Figure 3 and can be summarised as
follows:

The technical committee is reconstituted and charged with oversight of the draft revised
standard. In forming the technical committee, consideration must be given to the
composition of the committee to ensure that it is represents a balance of all stakeholders.

The draft revised standard is prepared with oversight by the technical committee.

The draft standard is made available for public comment.

Following closure of the public comment period, the technical committee oversees a further
revision of the draft revised standard to incorporate valid public comment.

The draft standard is finalised and then subject to a formal ballot process amongst all
members of the technical committee.

If endorsed by the ballot process, the Standard is then finalised and published.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
Figure 3: Summary of the development process for the revised Energy Audit Standard
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
Appendix A Steering Group
Stuart Richardson, Department of Resources, Energy and Tourism
Ross Hamilton, Department of Climate Change and Energy Efficiency
John Quinn, Department of Environment and Resource Management
Rodney Pugh, Sustainability Victoria
Ross Ferrier, Department of Environment, Climate Change and Water
Vanessa Morris, ACT Planning and Land Authority
Rohan Anderson, Energy Skills Queensland
Dan Coffey, Energy Efficiency and Conservation Authority
Rob Murray Leach, Energy Efficiency Council
Ewan Gebbie, Energy Management Association of New Zealand
Jonathan Cartledge, Consult Australia
Denis Cooke, Consult Australia
Brian Green, Energy Users Association of Australia
Caroline Ostrowski, Australian Industry Group
Jane McNamara, Property Council of Australia
Stephen White, CSIRO
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
Appendix B Possible models for the structure of the revised standard
The first figure presents a process built around three audit levels. It recognises that the needs of
businesses depend upon the expenditure on energy and so proposes slightly different approaches for
the three basic levels depending upon the amount spent on energy. For instance, an investment audit
for a small business (<$100,000 pa) may use a simple payback analysis based on rules of thumb to
assess opportunities, whereas the investment audit for a large organisation may include more
rigorous NPV assessments.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
This table below is based on five ‘levels’, and presents activities at each level for consideration by the
drafters of the revised standard. Note that the activities are proposed for each of the five suggested
steps of the audit. The fifth level would be further developed to better align with the requirements for
key elements 3 and 4 of the EEO Assessment framework.
Targeted level
Data definition
Energy data
analysis
Opportunities
identification
Opportunities
evaluation
Business case
development
Scoping study
Overall energy
data.
Overall KPI
analysis.
No identification
of opportunities.
Total savings
potential based
on total energy
use
Not applicable
Not applicable
Data definition
from scoping
study
Energy data
analysis from
scoping study
Not applicable
Not applicable
Not applicable
Overall and submeter data.
Energy end use
breakup by area
and application to
±10%.
Energy data
analysis from
energy baseline
review
Walk through.
Not applicable
Simple mass and
energy balance to
±20%.
Screening using
non financial
criteria.
Savings
calculated
using rules of
thumb to no
better than
±50%. Costs
estimated to
-50%/+100%.
Savings
calculated
using rigorous
models to no
better than
±20%. Costs
estimated to
-15%/+20%.
DCF or IRR
using
parameters
from the
organisation
Savings
calculated
using rigorous
models to no
better than
±20%. Costs
estimated to
-15%/+20%.
Business cases
using
organisation’s
template
Production data.
Energy
baseline
review
Energy trends
over an
appropriate
timeframe.
Energy use
modelling and
preliminary
identification of
opportunities
Data definition
from energy
baseline review
Energy asset
list.
Opportunities
raising workshop.
KPIs at plant area
or fleet level
Energy use
modelling and
opportunities
analysis
Rigorous and
comprehensive
assessment
Data definition
from energy use
modelling
Performance
data for unit
operations or
vehicles
Data definition
from energy use
modelling
Energy data
analysis from
energy baseline
review
Mass and energy
balance to ±10%.
KPIs at unit level
Energy data
analysis from
energy use
modelling.
Predictive
modelling of
operations.
Opportunities
identification
from preliminary
identification of
opportunities
Expert review of
unit operations
Opportunities
identification
from
opportunities
analysis
Whole of
business
analysis
Regression and
other analysis.
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REVISION OF AS/NZS 3598 ENERGY AUDITS: IMPLEMENTATION PLAN
The proposed model below was presented in the discussion paper which formed part of the
consultation process. It added some additional levels to the existing standard to address business
needs which companies, particularly in New Zealand, did not feel were being adequately addressed.
Level
Comment
Outcomes
Possible
Accuracy
Business need
addressed
Example of use
0
Sometimes known as a scoping
study, this would be a desktop
study designed to understand
energy use of a large multisite
organisation and prioritise those
sites for further investigation /
auditing.
Simple KPI analysis
n/a
Understanding of an
organisation's total energy
use.
Large multisite organisation
to identify the site or sites
that should receive initial
attention in any corporate
wide energy study.
Same as the current level 1 audit
but no individual savings
opportunities identified. Estimate of
whole of site savings only. It may
involve a site visit where
benchmarks aren't available.
Energy end-use model
The aim is to provide an estimate
of savings available from
undertaking a level 2 energy audit.
No energy savings
opportunities identified.
The current level 2 audit is not cost
effective for small energy users.
The aim of this level of audit would
be to provide a cost-effective
alternative for small energy users.
Understanding of total
energy use.
Much the same as the current
standard.
Energy end-use model
1
1a
2
Potential magnitude of
savings
Prioritised list of which
sites to focus on.
Overall energy baseline
n/a
Energy baseline
Data for budgeting
purposes
Potential savings
against known
benchmarks.
Potential savings and
benefits from undertaking
a level 2 energy audit.
+/-30%
List of energy savings
opportunities
recommended for
implementation.
+/-30%
Detailed energy
baseline
4
Design audit: Review of the project
brief, and the plans throughout the
design process to ensure energy
efficiency is optimised in the final
plans and specifications.
Energy end use model.
Much the same as the current
standard.
Assessed opportunities
Much the same as a level 3 energy
audit but with far more developed
business cases for the
opportunities identified. The
business cases identified would
align with the client organisation’s
terminology and decision making
processes complete with client
IRR’s or NPV etc.
Detailed business
cases prepared in
conjunction with the
client to ensure the best
possible likelihood of
being approved for
implementation.
Understanding of
organisation's total energy
use.
Identify cost-effective
energy savings
opportunities.
Identification, evaluation
and implementation of low
cost easy wins.
Certainty as to whether to
begin detailed
assessment of costlier
opportunities
List of potential
opportunities with rough
costings
3
A site wants to improve its
energy performance, and
wants an understanding of
current energy use and an
estimate of savings
potential.
Certainty as to whether to
invest in a level 2 energy
audit.
Screened opportunities
2a
Understanding of energy
use
Smaller organisations
wishing to know what they
can do to save money
through energy efficiency
for whom level 2 audits are
not cost effective.
An energy user wants to
identify opportunities with
good potential. The Level 2
audit builds on the
outcomes of the earlier
Level 1 audit.
+/-20%
Ensure all cost-effective
energy efficient
opportunities are
incorporated into the new
build / facility.
New building or production
facility.
+/-20%
More detailed analysis of
opportunities identified
through a level 2 energy
audit complete with more
accurate costs and
savings.
Organizations seeking
more detail and verification
of savings and costs of
screened opportunities.
Sometimes known as an
“investment grade” audit.
+/-10%
An investment grade audit
with detailed business
cases to guide decisions
on major energy savings
measures.
A large site has identified a
range of opportunities that
exceed site management’s
expenditure threshold and
want detailed business
cases for the Board.
Plans and specifications
incorporate costeffective energy
efficiency features.
Energy-mass balance
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