Modelling the future VEET
certificate market for
residential-type measures
Department of Economic Development,
Jobs, Transport and Resources
Modelling the future VEET certificate market for residential-type
measures
Table of contents
1.
2.
3.
4.
5.
6.
7.
7.1.
7.1.1.
7.1.2.
7.1.3.
7.2.
7.2.1.
7.2.2.
7.2.3.
8.
3
Overview ...................................................................................................... 4
How the residential model works .............................................................. 5
Revision of the energy saving estimates for energy efficiency measures
Establishing the VEET targets to model .................................................. 9
Outputs from the residential model ........................................................ 10
Rebound assumptions ............................................................................. 11
Worked examples ..................................................................................... 14
Low flow shower rose ................................................................................. 14
Base data .................................................................................................... 14
Calculation of consumer incentive – for the 2016 year .............................. 15
Calculation of uptake rate and certificates generated – for the 2016 year . 15
Gas ducted heater upgrade ........................................................................ 15
Base data .................................................................................................... 15
Calculation of consumer incentive – for the 2016 year .............................. 15
Calculation of uptake rate and certificates generated – for the 2016 year . 16
Measure input assumptions .................................................................... 17
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Modelling the future VEET certificate market for residential-type
measures
1.
Overview
Sustainability Victoria developed a spreadsheet model to predict the future behaviour of the VEET
certificate market for residential-type measures under a range of target scenarios. The model was
developed initially for the VEET Business Impact Assessment (2007) and has been updated and
improved for subsequent modelling exercises undertaken in 2011 and 2013 to support the
preparation of VEET Regulation Impact Statements, as well as for the current modelling exercise.
The VEET Regulations currently have 27 Schedules which set out eligible energy efficiency measures
which can generate certificates at residential premises. Most of these measures can also be
undertaken at non-residential premises, although in this case the same number of certificates is
generated as in a residential installation, even though the energy savings might be larger. Only a
small proportion of the certificates for these residential-type measures are generated in nonresidential premises, as shown by Table 1 below.
Table 1: Percentage of VEET activities undertaken in non-residential premises in 2014
Type of Activity
Water Heating
Space Heating / Cooling
Building Shell Upgrades
Lighting
Appliances
Energy Saving Devices
Total
Certificates created in nonresidential premises
(% of activity total)
4.7%
1.9%
0.0%
5.0%
0.4%
0.0%
4.4%
Unique installations
(% of activity total)
2.7%
0.5%
0.0%
2.2%
0.5%
0.1%
1.5%
The current version of the model covers the residential-type measures which can be undertaken at
both residential and non-residential premises. In addition to the existing VEET measures, the model
includes a number of possible new measures 1 as well as variations to some existing measures:

A new measure was included which would generate certificates related to the heating and cooling
energy savings for new houses built to exceed the current minimum 6 Star NatHERS rating –
separate measures for 7 and 8 Star houses have been included in the model;

A new measure was included for new dwellings which have lighting installations which are
significantly more efficient than the minimum requirements set out in the National Construction
Code. Separate measures for class 1 and class 2 dwellings have been included in the model;

A new measure was included which covers the installation of wall insulation into an existing
uninsulated external wall cavity;

Existing measures which cover the installation of high efficiency gas heaters (Schedule 9) and
high efficiency reverse-cycle air conditioners (Schedule 10) were assumed to be split into two
new measures (e.g. 9A and 9B) where the number of certificates generated depends on whether
the existing heater being replaced is a an electric heater, gas heater or reverse-cycle air
conditioner. It was also assumed that the eligibility criteria for Schedule 10 was relaxed that that
this was no longer limited to only non-gas reticulated areas.
1
Note that the inclusion of new or varied measures in the modelling does not necessarily mean that these will be
adopted in the VEET Regulations in future.
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Modelling the future VEET certificate market for residential-type
measures
Two versions of the model were developed, one for a three-year VEET phase implemented from 2016
to 2018, and one for a five-year VEET phase implemented from 2016 to 2020.
2.
How the residential model works
The model estimates the likely uptake of the various residential-type energy efficiency measures in
each year of the 3- or 5- year VEET phases based on a certain marginal certificate price, and
therefore also estimates the number of certificates generated for each measure and the total number
of certificates generated in the VEET scheme. In addition to this, the model estimates the financial
contribution from consumers required for the energy efficiency measures to be carried out, as well as
the total annual electricity and gas savings generated over the lifetime of the implemented measures.
The model contains a number of key input parameters, and in most cases the input assumptions
depend on the specific energy efficiency measure being modelled. The key input parameters used in
the model are described in Table 2.
Table 2: Key inputs to the residential model
Input
parameter
Pool of
opportunity
Description
The estimated total number of times a measure could be implemented in the
context of the VEET market, based on the expected situation at the end of 2015.
For example, this could be the total number of houses with uninsulated ceilings
or the total number of halogen downlights installed in houses. In the case of
high efficiency appliances, it represents the estimated total sales of the
appliance over the 3- or 5-year phase being modelled, taking account of whether
the measure targets the replacement market (e.g. existing gas ducted heaters)
or overall sales (e.g. televisions). Estimates of the pool of opportunity are based
on a range of data sources including Australian Bureau of Statistics reports, GfK
Australia appliance sales data, BIS Shrapnel reports and reports by the
Equipment Energy Efficiency Committee.
Where different VEET measures target the same energy end-use (e.g. measures
targeting different electric water heaters or measures targeting different halogen
downlights) the pool of opportunity for the different measures is adjusted to
ensure that there is no double counting.
Maximum
uptake rate
In most cases the pool of opportunity is around 20% less than the total energy
efficiency potential for the measure in question, because 100% uptake of any
measure is very unlikely.
The estimated maximum number of installations of the measure which would
take place in a year if the VEET incentive to the consumer provides a full
subsidy, e.g. where the installation of the measure is free to the consumer.
Where possible, the maximum uptake rate assumptions contained in the current
version of the model are based on rates observed previously in the VEET scheme
and/or have been tuned2 so that they reflect the level of activity observed in the
VEET market in 2014.
2
A version of the model was created for the 2014 year, and the maximum uptake rates adjusted so that the
modelled results matched the actual level of activity observed in the VEET market.
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Modelling the future VEET certificate market for residential-type
measures
Profiling factor
Annual
electricity and
gas savings
Measure
lifetime
Greenhouse
coefficients
Total additional
cost
Uptake Rate
Function
This factor, set between 0 and 1, has been introduced in to the new version of
the model so that there is the flexibility to modify the maximum uptake rate for
each measure over the 3- or 5-year phase being modelled.
In some cases the historical VEET installation data suggests that a certain
measure has reached market saturation (e.g. low flow shower rose) and that the
maximum uptake rate is likely to decline in coming years. In other cases (e.g.
halogen downlight replacements) we anticipate that the measure will reach
saturation during the next VEET phase. In addition to this, the profiling factor
allows the gradual ramping up of any new measures which are assumed to be
introduced into the scheme (e.g. wall insulation).
The estimated average annual electricity and gas savings (in MJ/yr) each time
that a particular measure is implemented.
It has been assumed that the energy efficiency benchmarks which are used as
the basis for calculating the number of certificates generated for each measure
have been updated to reflect increases in energy efficiency since 2008, or more
recent data on energy end use. In many cases this means that a particular
energy efficiency measure generates lower annual energy savings than was
previously assumed. See below for further discussion.
The assumed lifetime of a particular energy efficiency measure in years.
The coefficients used are those which are currently used as the basis of the
VEET certificate generation algorithms: electricity – 0.963 kgCO2-e/kWh; gas –
0.0573 kgCO2-e/MJ.
The estimated average additional cost of implementing the specific energy
efficiency measure compared to business-as-usual. In the case of high efficiency
appliances this is the differential cost between the high efficiency appliance and
the market average appliance which is currently sold.
This is a non-linear function which describes the relationship between the VEET
consumer financial incentive, expressed as a percentage of the total differential
cost of a particular measure, and the maximum uptake rate. See below for
further discussion.
The key driver of the residential model is the VEET consumer financial incentive, which is expressed
as a percentage of the total additional cost of a specific measure. Figure 1 is a schematic diagram
which shows how the model calculates the financial incentive available to the consumer for each
energy efficiency measure. The annual energy savings, multiplied by the measure lifetime, multiplied
by the relevant greenhouse coefficients gives the average number of VEET certificates which are
created every time the measure is implemented. The VEET certificate (or VEEC) price, expressed in $
per certificate, is an independent variable which can be input into the model. This is reduced by the
$1 registration fee which is payable to the Essential Services Commission, and by a further 10%
which is assumed to be held by the Accredited Party (AP) and not passed on to the consumer. The
remainder is multiplied by the average number of certificates created when the measure is
implemented to estimate the financial incentive available to the consumer to motivate them to take
up the measure. In some cases this will cover the entire cost of the measure and it will be offered as
a free installation to consumers. In other cases it will represent a subsidy which the AP could provide
to the consumer for undertaking the energy efficiency measure.
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Modelling the future VEET certificate market for residential-type
measures
Figure 1: Calculation of the consumer financial incentive
Figure 2 shows how the model estimates the annual uptake rate of each energy efficiency measure
for a given certificate price. The consumer financial incentive depends on the certificate price entered
into the model and the characteristics of the particular energy efficiency measure in question (see
Figure 1). The consumer incentive is divided by the total additional cost of the measure and
expressed as a percentage of the total additional cost (in our experience most consumers are not
motivated by payback periods – in many cases they simply cannot calculate them – but are motivated
by the size of the incentive they will receive in relation to the total outlay required). This percentage
is used as an input to the Uptake Rate Function. The function returns a number between 0 and 1,
which is multiplied by the maximum uptake rate to determine the uptake rate in a given year. If the
output of the function is 0 there will be no uptake of the measure. If it is 1, the uptake of the
measure will be at the maximum uptake rate. The pool of opportunity is updated from year-to-year to
reflect the uptake of a given measure in the previous year. When the pool of opportunity for a
particular measure is exhausted that measure will see no further uptake in the model.
Figure 2: Estimation of the annual uptake rate
The Uptake Rate Function is based on the observed experience of implementing energy efficiency
rebate programs. There is usually little or no uptake of an energy efficiency measure when the rebate
is only a small proportion of the total cost to the consumer (say 10 to 20%) but the uptake ramps up
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Modelling the future VEET certificate market for residential-type
measures
rapidly as the rebate approaches a 100% subsidy. For simplicity, the model uses just one Uptake
Rate Function (see Figure 3 below) for all energy efficiency measures modelled.
Figure 3: Uptake rate function used in VEET residential model
The key input assumptions used for each energy efficiency activity in the residential model are
provided in Table 4. The Profiling Factors which have been used are provided in Table 5.
3.
Revision of the energy saving estimates for energy
efficiency measures
VEET is a “benchmark and credit” scheme. The certificate creation algorithms which are used to
calculate the number of certificates generated by a certain energy efficiency measure calculate an
energy saving in relation to an energy efficiency benchmark, and are based on an assumed energy
usage profile3. With the exception of SPCs4, these energy efficiency benchmarks and assumed usage
profiles were established in 2008, prior to the commencement of the VEET Scheme, and have not
been updated since.
Over time there has been an increase in the energy efficiency business-as-usual benchmarks for
many of the measures which have been included in the VEET scheme. This has been due to increases
in the minimum energy performance standards (MEPS) which apply to the sale of certain residential
appliances5, the introduction of MEPS for new appliance types 6 and changes in building standards7. It
has also been due to general increases in the energy efficiency of some new products as a result of
energy labelling schemes and rising energy prices, as well as technological improvement 8. In addition
3
This might be an assumed heating and cooling load for building shell upgrades, and assumed hot water task for
water heating upgrades, and assumed annual operating hours or load cycles for an appliance.
4 The number of certificates allocated to standby power controllers (SPCs) was reduced in 2013 following the
VEET Review.
5 MEPS levels for residential air conditioners have been increased several times since the commencement of
VEET, and the MEPS levels for TVs have been substantially increased since high efficiency TVs became an eligible
measure.
6 MEPS have been introduced for incandescent light globes, halogen downlight lamps and gas water heaters
since the commencement of VEET.
7 The minimum standard for new houses has increased to 6 Stars since the commencement of VEET.
8 The average energy efficiency of new TVs sold has increased dramatically, due partly to MEPS, partly to the
energy labelling scheme and partly due to technological changes.
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Modelling the future VEET certificate market for residential-type
measures
to this, changing patterns of appliance use, changes in the mix of heating and cooling appliances
used in Victorian homes, different water heating appliances and better information in some areas
suggests that some of the assumptions used in the VEET certificate algorithms require updating.
A detailed review of the VEET residential certificate creation algorithms was undertaken by
Sustainability Victoria, with input from Energy Efficient Strategies, as part of the 2013 VEET impact
review. This work identified changes which were required for many of the existing certificate creation
algorithms. In most cases this would mean that the energy savings, and therefore the certificates,
allocated to a particular energy efficiency measure would be reduced.
For this current modelling exercise, based on advice from the Department of Economic Development,
Jobs, Transport and Resources (DEDJTR), it was assumed that in the next phase of VEET the
certificate creation algorithms would be updated from 2017 in a way which is consistent with the
findings of the 2013 VEET Review. In the model it has been assumed that in 2016 there have been
no changes to the certificate creation algorithms – in this case the number of certificates allocated to
each energy efficiency measure is consistent with the current algorithms. However, the energy
savings which have been attributed to the different measures have been held constant throughout
the entire 3- and 5-year phases modelled, and have been updated to recognise that the energy
efficiency benchmarks have increased since 2008 and that some assumptions require updating in light
of more recent and better information. This ensures that the model does not overestimate the energy
savings which are likely to be achieved. From 2017 it has been assumed that revised certificate
creation algorithms have been introduced so that the number of certificates allocated in many cases
has been reduced.
In the model it is assumed that the certificate creation algorithms are adjusted from 2017 by applying
a multiplier to the VEET certificates generated in 2016. The relationship between the average number
of certificates generated in 2016 and from 2017 onwards, and the multiplier used in 2016, is shown in
Table 6.
4.
Establishing the VEET targets to model
The model can be used to generate certificate price curves for the residential-type measures. These
show the estimated number of certificates generated annually from the residential-type measures for
each year of the phases modelled. Figure 4 shows the residential certificate price curve for the 5-year
scenario9.
It is evident from Figure 4 that significantly more certificates are generated at any certificate price in
2016 than in any subsequent year. This is a direct result of the assumption that from 2017 the
certificate creation algorithms for many residential measures will be revised to reflect the changes in
energy efficiency benchmarks which have occurred since 2008. It is also evident that there is a
progressive decline in the number of certificates generated at any given price from 2017 to 2020.
This is because it is expected that a number of the lower cost energy efficiency measures either have
reached, or will reach, market saturation and so the number of certificates which can be generated at
the lower end of the cost curve will decline (see Table 5). In particular, it is the assumption that the
market for halogen downlight replacement will start to become saturated from 2017 which is
responsible for this progressive decline.
9
9
Note that the certificate price curves for the first 3 years are the same as for the 3-year scenario.
Modelling the future VEET certificate market for residential-type
measures
Figure 4: Certificate cost curve for 5-year version of the residential model
The certificate cost curves for the residential-type measures and the business measures 10 were
combined to produce comprehensive cost curves, and these were used by DEDJTR to identify a
number of target scenarios to model. The different target scenarios corresponded with certain VEET
certificate prices. Due to the nature of the cost curves for both the residential and business sectors,
different certificate prices were generally required in different years to achieve a certain annual target
(e.g. 5.4 million certificates).
5.
Outputs from the residential model
The certificate prices which corresponded to the target scenarios to be modelled were used as an
input into the residential model to produce a range of outputs used in the subsequent energy market
modelling and cost-benefit analysis. The key outputs from the model include:

The number of installations of each energy efficiency measure in each year of the 3- or 5-year
phases modelled;

The number of certificates generated by each energy efficiency measure, and the total number of
certificates generated, in each year of the 3- or 5-year phases modelled;

The cost of generating the certificates in each year and the cost of any consumer contribution to
generating the certificates, in each year of the 3- or 5-year phases modelled;

The annual electricity and gas savings generated by each energy efficiency measure, and the total
annual electricity and gas savings generated over the lifetime of the energy efficiency measures
implemented11. The VEET measures have lifetimes of between 5 and 25 years.
10
Business sector modelling was undertaken by Energetics.
Note that in the first year of each cohort of measures it is assumed that only half of the annual savings are
achieved – these savings are added back at the end of the lifetime of the cohort’s energy savings. This
recognises the fact that in any year the VEET measures will be implemented throughout the year.
11
10
Modelling the future VEET certificate market for residential-type
measures
Table 3 shows the VEET certificate prices and the total number of VEET certificates generated in each
year for the different target scenarios.
Table 3: Certificate prices and residential certificates generated for different target scenarios
Option
Annual Certificate
Target (Million)
1
5.4 (3-yr)
2
5.8 (3-yr)
3
5.8 (5-yr)
4
6.2 (3-yr)
Input / Output
2016
2017
2018
2019
2020
Cert. Price
Certificates (M)
Cert. Price
Certificates (M)
Cert. Price
Certificates (M)
Cert. Price
Certificates (M)
$19.53
4.42
$23.30
4.63
$23.30
4.63
$30.77
5.00
$30.73
3.15
$37.04
3.40
$37.04
3.40
$44.15
3.61
$27.04
2.63
$28.56
2.71
$28.56
2.71
$30.26
2.80
NA
NA
NA
NA
$28.41
2.30
NA
NA
NA
NA
NA
NA
$54.47
2.86
NA
NA
It is important to note that the certificate prices used in the modelling are ‘marginal’ prices, and
represent the highest certificate price which is required to generate the target which is being
modelled in any given year. In practice the certificate price is likely to vary throughout the year, and
may not always be as high as the marginal certificate price. This means that the average certificate
price in any given year is likely to be less than the marginal certificate price. Basing the total cost of
generating the certificates on the marginal certificate price is likely to over-estimate the total cost to
some extent.
6.
Rebound assumptions
Some economists argue that energy efficiency measures such as lighting retrofits result in lower
energy savings than expected (10 to 50% less), because consumers choose to take some of the
energy savings as a higher level of energy service. This is referred to as the rebound or take-back
effect. For example, the Productivity Commission12 has argued that “energy efficiency makes energy
appear cheaper relative to other items as less money is required to purchase the same energy
services. Consequently, the household will tend to use more energy …”.
There have been very few Australian studies of the rebound effect. A number of recent studies which
have been completed by Sustainability Victoria shed some light on the extent to which the rebound
effect applies to energy efficiency upgrades undertaken in Victorian houses. These studies have
involved monitoring energy usage in Victorian houses before and after energy efficiency retrofits were
undertaken.
In the Halogen Downlight Retrofit Trial a total of 12 houses had 12 volt halogen downlight lamps in
the main living areas of their homes replaced with 12 volt LED lamps. In the context of these lighting
retrofits, a rebound effect would exist if the households used their lighting for longer periods after the
lighting retrofits than before, therefore reducing the energy savings which could be achieved. Very
significant lighting energy savings were achieved – Figure 5 shows the average daily load profile of
the downlights in all houses before and after the retrofits. Lighting energy savings of 80% were
achieved in practice, exactly matching the expected level of energy savings.
12
The Private Cost Effectiveness of Improving Energy Efficiency, Productivity Commission Inquiry, No. 36, 31
August 2005.
11
Modelling the future VEET certificate market for residential-type
measures
Figure 5: Average daily load profile of downlights before and after retrofits
Figure 6 compares the average daily operating time of the downlights before and after the retrofits
were undertaken. The profile after the retrofits is almost an exact match for the profile before the
retrofits, indicating that overall there has been essentially no change in the way the more efficient
lighting is used compared to the original inefficient lighting. The average operating times of the
lighting before and after the retrofit were calculated, taking into account the variation in the seasons
over the trial period. While there was some variation across the 12 houses, with some increasing
lighting usage slightly, some staying the same and some decreasing lighting usage slightly the overall
result was no net change in the operating time of the lighting. This suggests that there was no net
rebound effect resulting from this retrofit. This is a significant result, as halogen downlight retrofits
are expected to play a very significant role in the next phase of the VEET scheme.
12
Modelling the future VEET certificate market for residential-type
measures
Figure 6: Average daily usage profile of downlights before and after retrofits13
In the Comprehensive Draught Sealing Trial a total of 16 Victorian houses had a comprehensive
package of draught sealing measures applied, which approximately halved the air leakage rate of the
houses – the natural air leakage rate of the houses was reduced from an average of 1.80 air changes
per hour14 to 0.97 air changes per hour. The draught sealing made the building shell of the houses
more efficient and reduced their heating requirements. Average heating energy savings of 11 to 13%
were achieved by the houses which participated in this trial.
In the context of the draught sealing trial, the rebound effect would mean that either the heating was
operated for longer periods after the retrofits and/or was operated at a higher thermostat setting.
Temperatures in the heated areas of the houses were monitored before and after the retrofits. Figure
7 compares the average daily temperature profile of the houses which participated in this trial on the
days on which the heating was operated before and after the retrofits. The profiles are a very close
match, although in some cases the average internal temperatures after the retrofits are slightly
higher than before the retrofits. If all this increase is all interpreted as being the impact of the
rebound effect, this would correspond to a reduction in the expected energy saving of only 0.8%.
However, as the weather was generally a bit warmer during the post-retrofit period compared to the
pre-retrofit period and heating energy use is concentrated in the morning and evening periods, higher
temperatures during the day simply reflect warmer external temperatures to some extent.
Again, this work in existing Victorian houses suggests that there is little, if any, rebound effect
occuring.
13
The daily usage profile shows the total number of seconds the lighting was operating over the 10-minute
sampling interval used in the trial. An operating time of 600 seconds would indicate that the lighting had
operated continuously for the whole 10 minutes.
14 This refers to the total number of times in an hour that the volume of air inside the house is replaced by
outside air. In winter, warm air is lost and is replaced by colder external air which has to be re-heated.
13
Modelling the future VEET certificate market for residential-type
measures
Figure 7: Average daily usage profile of downlights before and after retrofits
In general, the energy saving estimates which have been used in the residential model do not include
a discount for any potential rebound. The exception is the building shell upgrade measures, which
incorporate a discount of 10%.
7.
Worked examples
7.1. Low flow shower rose
7.1.1. Base data

Existing VEET measure (Schedule 17)

Pool of opportunity at end 2015 – 784,080 non-low flow shower roses

Maximum uptake rate – 56,429, based on tuning model to 2014 market data

Profiling Factor – 0.5, based on declining installations during 2014. This gives an effective
maximum uptake rate in 2016 of 28,214

Assumed life of measure – 10 years

Energy saving estimates are based on the recommendation of the VEET 2013 Review15.

Average electricity saving – 194 MJ/yr

Average gas saving – 458 MJ/yr

Average installation cost - $30 per shower rose

Average number of certificates per installation – 0.781

Certificate multiplier for 2016 – 2.94
15
The energy saving estimate was reduced for two main reasons: (1) the original VEET algorithms were based
on household level savings but in practice have been allocated to a single shower rose retrofit. It is estimated
that there are 1.45 shower roses per house; (2) End-use metering studies by Yarra Valley Water show that
shower flow rates in houses with non-low flow shower roses are lower than expected, due to self-limiting of the
flow rates by householders. This means that the hot water savings are lower than would be expected from the
rated flow rates of the shower roses.
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Modelling the future VEET certificate market for residential-type
measures

Average number of certificates per installation in 2016 = 0.781 x 2.94 = 2.30
7.1.2. Calculation of consumer incentive – for the 2016 year

Assumed certificate price - $20

Certificate registration fee - $1

Proportion of fee held by AP – 10%

Certificate price remaining for incentive = (20 – 1) x 0.9 = $17.1

Consumer financial incentive = 17.1 x 2.3 = $39.3
7.1.3. Calculation of uptake rate and certificates generated – for the 2016
year

Consumer incentive as percentage of additional cost = 39.3/30 =131%

Output of Uptake Rate Function = 1.0

Estimated annual uptake = 56,429 x 0.5 x 1 = 28,214.5 shower rose retrofits

Total certificates generated = 28,214.5 x 2.30 = 64,893
7.2. Gas ducted heater upgrade
7.2.1. Base data

Existing VEET measure (Schedule 17)

Pool of opportunity at end 2015 – 795,300

Maximum uptake rate – 23,815, based on tuning model to 2014 market data

Profiling Factor – 1

Assumed life of measure – 14 years

Energy saving estimates (no changes from current algorithms)

Average electricity saving – 0 MJ/yr

Average gas saving – 16,704 MJ/yr

Average additional cost - $1,200 compared to market average unit

Average number of certificates per installation – 13.4

Certificate multiplier for 2016 – 1

Average number of certificates per installation in 2016 = 13.4 x 1 = 13.4
7.2.2. Calculation of consumer incentive – for the 2016 year

Assumed certificate price - $20

Certificate registration fee - $1

Proportion of fee held by AP – 10%

Certificate price remaining for incentive = (20 – 1) x 0.9 = $17.1

Consumer financial incentive = 17.1 x 13.4 = $229.14
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Modelling the future VEET certificate market for residential-type
measures
7.2.3. Calculation of uptake rate and certificates generated – for the 2016
year

Consumer incentive as percentage of additional cost = 229.14/1,200 =19.1%

Output of Uptake Rate Function = 0.038

Estimated annual uptake = 23,815 x 1 x 0.038 = 905 gas ducted heater replacements

Total certificates generated = 905 x 13.4 = 12,127
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Modelling the future VEET certificate market for residential-type measures
8.
Measure input assumptions
Table 4: Modelling assumptions used for energy efficiency measures included in the 3-year residential model16
VEET Measure
Status
Pool of
Opportunity
Estimated
Max Uptake
Rate (installs
p.a.)
Assumed
life (Yrs)
Av Energy
Saving Elec
(MJ/yr)
Av Energy
Saving - Gas
(MJ/yr)
Total
Differential
Cost ($)
17. Install low flow shower rose
Existing
784,080
56,429
10
194
458
$30
1A/B. HE gas replaces elec water heater
1C/E. Solar-elec or heat pump replaces
elec water heater
2. Solar retrofit kit for existing elec water
heater
1 D/F. Solar-gas replaces elec water
heater
3. Solar-gas replaces gas water heater
4. Solar pre-heater for existing gas
Existing
Existing
219,300
157,168
8,420
12,885
12
15
12,524
8,573
-14,598
0
$950
$1,915
Existing
21,800
1,000
6.5
12,252
0
$3,300
Existing
67,156
4,010
15
12,399
-4,828
$3,762
Existing
Existing
1,372,602
62,400
94,910
3,000
15
6
-198
-48
9,799
15,086
$3,776
$2,640
Existing
795,300
23,815
14
0
Existing
57,600
12,293
14
0
Water Heating Measures
Space Heating / Cooling Measures
5. HE gas ducted replaces existing gas
ducted heating
20. HE gas ducted heating in new home
16
16,704
6,083
$1,200
$960
Note that the majority of the assumptions are the same for the 5-year model. However for the measures targeting new appliances and new dwellings the pool of
opportunity is slightly bigger because there will be more sales of appliances/buildings over a 5 year period.
17
Modelling the future VEET certificate market for residential-type measures
VEET Measure
Status
Pool of
Opportunity
Assumed
life (Yrs)
288,000
Estimated
Max Uptake
Rate (installs
p.a.)
546
Av Energy
Saving - Gas
(MJ/yr)
Total
Differential
Cost ($)
14
Av Energy
Saving Elec
(MJ/yr)
0
28. Ductwork upgrade for existing gas
ducted heating system
6. HE gas ducted replaces existing
central elec heating
8. HE ducted RAC replaces existing
central elec heating
7. HE ducted RAC replaces existing
ducted RAC
9a. Install HE gas room heater to replace
existing gas room heater
9b. Install HE gas room heater to replace
existing electric heater
10a. Install HE RAC to replace existing
RAC
10b. Install HE RAC to replace existing
electric heater
Existing
15,425
$2,530
Existing
6,666
246
14
65,957
-88,534
$3,528
Existing
7,004
82
13
38,676
0
$6,000
Existing
5,340
410
13
1,582
0
$1,200
Modified
existing
Modified
existing
Modified
existing
Modified
existing
250,000
16,646
14
0
2,557
$307
39,600
1,980
14
15,289
-19,602
$1,840
50,336
4,195
12
655
0
$200
66,000
3,300
12
9,527
0
$2,419
Existing currently
suspended
Existing
110,000
11,000
25
1,919
15,402
$1,760
600,000
10,000
25
204
3,528
$1,995
New
550,000
Building Shell Upgrades
11. Installation of ceiling insulation to
uninsulated ceiling
12. Installation of underfloor insulation
to uninsulated floor
Installation of insulation to an
uninsulated existing wall cavity
18
2,000
25
209
7,001
$4,167
Modelling the future VEET certificate market for residential-type measures
VEET Measure
Status
Pool of
Opportunity
Assumed
life (Yrs)
197,000
Estimated
Max Uptake
Rate (installs
p.a.)
2,000
Av Energy
Saving - Gas
(MJ/yr)
Total
Differential
Cost ($)
25
Av Energy
Saving Elec
(MJ/yr)
477
13. Replace existing windows with new
double-glazed windows
14A. Retrofit extra pane of glass to
existing single glazed window
14B. Retrofit insulating window film to
existing single glazed window
15A-E. General air sealing - All Sch 15
except chimney balloons
15F. Air Sealing - Chimney balloons
Existing
3,510
$11,800
Existing
394,000
10,000
15
428
3,160
$7,000
Existing
394,000
20,000
5
428
3,160
$960
Existing
1,088,000
215,000
10
136
1,263
$25
Existing
140,000
17,200
5
440
4,272
$60
Existing
3,413,200
699,132
27
74.2
0
$4
Existing
2,205,000
271,662
27
100.1
0
$20
Existing
16,740,000
3,406,718
27
85.8
0
$14
19. Removal & destruction of a pre-1996
refrigerator
22. Purchase of HE refrigerator
24. Purchase of HE television
Existing
572,850
10,300
7
1,247
0
$55
Existing
Existing
261,000
1,574,400
23,925
25,376
17
16
536
172.2
0
0
$500
$159
26. Purchase of HE pool pump
Existing
46,800
6,349
7
5,228
0
$1,200
Lighting
21A. Replace incandescent lamp with
CFL
21D. Convert existing halogen downlight
fitting into 240 volt low energy fitting
21C. Replace existing 12V halogen
downlight with a 12V low energy light
(LED)
Appliances
19
Modelling the future VEET certificate market for residential-type measures
VEET Measure
Status
Pool of
Opportunity
Assumed
life (Yrs)
156,816
Estimated
Max Uptake
Rate (installs
p.a.)
5,227
Av Energy
Saving - Gas
(MJ/yr)
Total
Differential
Cost ($)
12
Av Energy
Saving Elec
(MJ/yr)
1,121
25A. Purchase of HE heat pump clothes
dryer
25B. Installation of gas clothes dryer
Existing
0
$1,171
Existing
17,424
5,808
12
1,409
-1,695
$1,384
Existing
646,800
9,900
10
749
0
$24
Existing
379,300
255
10
374
0
$12
Existing
1,035,000
54,722
5
1,570
0
$61
New
50,400
16,800
40
159
3,877
$2,200
New
21,600
7,200
40
336
9,602
$11,280
New
63,000
21,000
20
920
0
$390
New
18,000
6,000
20
545
0
$234
Energy Saving Devices
29B. Installation of Standby Power
Controller (SPC) - AV
29A. Installation of Standby Power
Controller (SPC) - IT
30. Installation of In-Home Display (IHD)
New Measures for new houses
New class 1A house with at least 7 star
building shell - 7 Star
New class 1A house with at least 7 star
building shell - 8 Star
New dwelling with low energy lighting
system - other (< 3 W/m2 )
New dwelling with low energy lighting
system - class 1A (< 3 W/m2)
20
Modelling the future VEET certificate market for residential-type measures
Table 5: Profiling Factors used for the 3- and 5- year models
VEET Measure
Profiling Factor
Comments
2016
2017
2018
2019
2020
0.5
0.5
0.5
0.5
0.5
1A/B. HE gas replaces electric water heater
1
1
1
1
1
1C/E. Solar-electric or heat pump replaces electric water
heater
2. Solar retrofit kit for existing electric water heater
1
1
1
1
1
1
1
1
1
1
1 D/F. Solar-gas replaces electric water heater
3. Solar-gas replaces gas water heater
1
1
1
1
1
1
1
1
1
1
4. Solar pre-heater for existing gas
1
1
1
1
1
5. HE gas ducted replaces existing gas ducted heating
1
1
1
1
1
20. HE gas ducted heating in new home
1
1
1
1
1
28. Ductwork upgrade for existing gas ducted heating system
1
1
1
1
1
6. HE gas ducted replaces existing central electric heating
1
1
1
1
1
8. HE ducted RAC replaces existing central electric heating
1
1
1
1
1
7. HE ducted RAC replaces existing ducted RAC
1
1
1
1
1
9a. Install HE gas room heater to replace existing gas room
heater
9b. Install HE gas room heater to replace existing electric
heater
1
1
1
1
1
1
1
1
1
1
Water Heating Measures
17. Install low flow shower rose
Space Heating / Cooling Measures
21
During 2014 there was a declining installation trend
which suggests uptake would be around 50% lower
in 2015 - apply profiling factor of 0.5.
Modelling the future VEET certificate market for residential-type measures
VEET Measure
Profiling Factor
Comments
2016
2017
2018
2019
2020
10a. Install HE RAC to replace existing RAC
1
1
1
1
1
10b. Install HE RAC to replace existing electric heater
1
1
1
1
1
11. Installation of ceiling insulation to uninsulated ceiling
12. Installation of underfloor insulation to uninsulated floor
1
1
1
1
1
1
1
1
1
1
Installation of insulation to an uninsulated existing wall cavity
0
0.5
0.75
1
1
13. Replace existing windows with new double-glazed
windows
14A. Retrofit extra pane of glass to existing single glazed
window
14B. Retrofit insulating window film to existing single glazed
window
15A-E. General air sealing - All Sch 15 except chimney
balloons
15F. Air Sealing - Chimney balloons
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
0.5
0.3
0.2
0.1
0.05
0.5
0.3
0.2
0.1
0.05
0.6
0.5
0.3
0.2
0.1
1
0.95
0.85
0.7
0.55
1
0.95
0.85
0.7
0.55
Building Shell Upgrades
This would be a new activity and current industry
capacity to service demand is fairly low. Expect that
it would ramp up over time if introduced.
Installation data suggests that this measure is on a
downward trend.
Installation data suggests that this measure is on a
downward trend.
Lighting
21A. Replace incandescent lamp with CFL
21D. Convert existing halogen downlight fitting into 240 volt
low energy fitting
21C. Replace existing 12V halogen downlight with a 12V low
energy light (LED)
22
Installation data suggests that this measure is on a
downward trend.
Expect that the market for this measure will start to
saturate from 2017.
Expect that the market for this measure will start to
saturate from 2017.
Modelling the future VEET certificate market for residential-type measures
VEET Measure
Profiling Factor
Comments
2016
2017
2018
2019
2020
19. Removal & destruction of a pre-1996 refrigerator
1
1
1
1
1
22. Purchase of HE refrigerator
1
1
1
1
1
24. Purchase of HE television
1
1
1
1
1
26. Purchase of HE pool pump
1
1
1
1
1
25A. Purchase of HE heat pump clothes dryer
1
1
1
1
1
25B. Installation of gas clothes dryer
1
1
1
1
1
29B. Installation of Standby Power Controller (SPC) - AV
0.5
0.4
0.3
0.2
0.1
29A. Installation of Standby Power Controller (SPC) - IT
0.5
0.4
0.3
0.2
0.1
1
1
1
1
1
New class 1A house with at least 7 star building shell - 7 Star
0
0.3
0.7
1
1
New measure which is likely to take time to ramp up
New class 1A house with at least 7 star building shell - 8 Star
0
0.3
0.7
1
1
New measure which is likely to take time to ramp up
New dwelling with low energy lighting system - class 1A (< 3
W/m2)
New dwelling with low energy lighting system - class 1A (< 3
W/m2)
0
0.3
0.7
1
1
New measure which is likely to take time to ramp up
0
0.3
0.7
1
1
New measure which is likely to take time to ramp up
Appliances
Energy Saving Devices
30. Installation of In-Home Display (IHD)
2014 installation data suggests a continued decline in
rate of installation of SPCs
2015 installation data suggests a continued decline in
rate of installation of SPCs
New Measures for new houses
23
Modelling the future VEET certificate market for residential-type measures
Table 6: Relationship between average certificates in 2016 and subsequent years
VEET Measure
Av no of certificates created
2016
2017 onwards
Multiplier
2.30
40.6
39.9
21.3
60.4
10.4
7.0
0.78
30.16
34.40
21.30
45.60
7.63
5.11
2.94
1.35
1.16
1.00
1.32
1.37
1.37
13.4
6.1
12.4
238.6
152.5
5.8
7.79
7.79
2.92
2.92
13.40
4.88
12.37
175.99
134.50
5.50
2.05
41.53
2.10
30.58
1.00
1.25
1.00
1.36
1.13
1.05
1.00
1.00
1.00
1.00
32.70
34.90
0.94
Water Heating Measures
17. Install low flow shower rose
1A/B. HE gas replaces electric water heater
1C/E. Solar-electric or heat pump replaces electric water heater
2. Solar retrofit kit for existing electric water heater
1 D/F. Solar-gas replaces electric water heater
3. Solar-gas replaces gas water heater
4. Solar pre-heater for existing gas water heater
Space Heating / Cooling Measures
5. HE gas ducted replaces existing gas ducted heating
20. HE gas ducted heating in new home
28. Ductwork upgrade for existing gas ducted heating system
6. HE gas ducted replaces existing central electric heating
8. HE ducted RAC replaces existing central electric heating
7. HE ducted RAC replaces existing ducted RAC
9a. Install HE gas room heater to replace existing gas room heater
9b. Install HE gas room heater to replace existing electric heater
10a. Install HE RAC to replace existing RAC
10b. Install HE RAC to replace existing electric heater
Building Shell Upgrades
11. Installation of ceiling insulation to uninsulated ceiling
24
Modelling the future VEET certificate market for residential-type measures
VEET Measure
12. Installation of underfloor insulation to uninsulated floor
Installation of insulation to an uninsulated existing wall cavity
13. Replace existing windows with new double-glazed windows
14A. Retrofit extra pane of glass to existing single glazed window
14B. Retrofit insulating window film to existing single glazed window
15A-E. General air sealing - All Sch 15 except chimney balloons
15F. Air Sealing - Chimney balloons
Av no of certificates created
2016
10.94
NA
7.78
4.20
1.40
1.1
7.9
2017 onwards
6.42
11.43
8.22
4.43
1.48
1.09
1.81
Multiplier
1.70
1.00
0.95
0.95
0.95
0.98
4.35
0.95
1.22
0.87
0.54
0.72
0.62
1.77
1.69
1.41
4.29
1.60
5.20
8.20
3.70
3.36
2.34
2.44
0.74
9.79
3.60
3.36
1.84
0.66
7.06
0.84
1.03
1.00
2.00
1.00
2.10
2.00
1.00
2.10
1.00
1.00
1.00
NA
10.59
1.00
Lighting
21A. Replace incandescent lamp with CFL
21D. Convert existing halogen downlight fitting into 240 volt low energy fitting
21C. Replace existing 12V halogen downlight with a 12V low energy light (LED)
Appliances
19. Removal & destruction of a pre-1996 refrigerator
22. Purchase of HE refrigerator
24. Purchase of HE television
26. Purchase of HE pool pump
25A. Purchase of HE heat pump clothes dryer
25B. Installation of gas clothes dryer
Energy Saving Devices
29B. Installation of Standby Power Controller (SPC) - AV
29A. Installation of Standby Power Controller (SPC) - IT
30. Installation of In-Home Display (IHD)
New Measures for new houses
New class 1A house with at least 7 star building shell - 7 Star
25
Modelling the future VEET certificate market for residential-type measures
VEET Measure
New class 1A house with at least 7 star building shell - 8 Star
New dwelling with low energy lighting system - other (< 3 W/m2 vs 5 W/m2)
New dwelling with low energy lighting system - class 1A (< 3 W/m2 vs 5 W/m2)
Av no of certificates created
2016
NA
NA
NA
2017 onwards
25.60
4.92
2.92
Multiplier
1.00
1.00
1.00
Department of Economic Development, Jobs, Transport and Resources
1 Spring Street Melbourne Victoria 3000
Telephone (03) 9208 3333
© Copyright State of Victoria,
Department of Economic Development, Jobs, Transport and Resources 2015
Except for any logos, emblems, trademarks, artwork and photography this document is made available under the terms of the Creative Commons
Attribution 3.0 Australia license.
This document is also available in an accessible format at economicdevelopment.vic.gov.au
26