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Energy consumption in our homes, businesses and workplaces: a future view

Mike Underhill, Chief Executive

NERI Winter Lights 2011, 16 June 2011

The global energy challenge

• Peak oil / sustainability

• Climate change

• Pollution and other environmental concerns

• Competing demand for resources (including land, water)

• More expensive oil exploration to meet demand

• Higher fuel prices

• Price on carbon to combat climate change

• Growing consumer pressure for low carbon goods

• Strong investment in renewables globally

CAUSE EFFECT

NZ – among the world’s leaders in renewable energy

Contribution of renewables to total primary energy supply (2007 OECD Statistics)

2.3% 2.9% 3.1% 3.6% 5.0% 6.0% 6.3% 6.9% 7.2% 7.2% 7.2%

16.5% 16.8%19.9%

23.2% 23.2%

30.0% 31.0%

50.4%

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Au

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Source: OECD Factbook 2009: Economic, Environmental and Social Statistics

(But renewables still very much the minority source of energy for NZ)

Where our total energy comes from

Where we use energy

Where our electricity comes from

Where we use electricity

How the sectors fare

Efficient use

Renewable, low carbon

Non efficient

Non renewable, high carbon

products

industry

homestransport

businesses

NZ’s fossil fuel exposure

• More than half of all energy is fossil fuel – much of that used in transport

• Transport fuel demand is highly inelastic – alternatives are limited

• Export economy reliant on oil (agriculture/ fishing/forestry)

• New Zealand’s distance from our export markets is a real or perceived risk (“food miles”)

• Per capita GHG emissions are high – reputational risk for 100% Pure New Zealand

The challenge

• Replace fossil fuels with renewables

• Use energy more efficiently, especially high carbon sources

Supply side opportunities – getting more renewable

Renewable electricity

• 90% by 2025

• Geothermal, wind and hydro – existing technologies

• Marine, biomass, solar – developing technologies

Renewable heat

• Wood energy a cost-effective and viable replacement for coal

Renewable transport

• Electric vehicles and first generation biofuels – viable now but price is a barrier

• Advanced biofuels on their way

Where the 90% will come from – existing, planned and potential generation

October 2010

Renewable heat and fuel

Case study:

Southern Pine - installed a briquette press turning MDF dust into combustible briquettes for boiler fuel. Saves $180,000 a year generates $25,000 in revenue

• Biomass could supply more than 25% (currently 8.5%) of the country’s energy needs by 2040 (BANZ Bioenergy strategy)

• Wood from forest harvest and processing residues

• Biogas from municipal, agriculture waste and food processing residues

• Liquid biofuels

• Direct geothermal energy for heating and cooling

Renewable transport

Biofuels

• Biodiesel – currently made in NZ from used cooking oil, rapeseed oil (canola) or tallow

• EECA grants programme has kick-started biodiesel production in NZ

• Bioethanol – made from NZ whey or Brazilian sugar cane

• Ethanol – no excise tax applies (unlike petrol)

• EECA has biofuels sustainability criteria on its website – includes CO2 reduction and source of feedstock

Electric vehicles

Electric vehicles

• EVs make sense for NZ now

• Highly efficient users of fuel – which in NZ is mainly renewable

• Dedicated infrastructure unnecessary in short term

• They can work with our 230 Volt domestic supply

• They fit New Zealanders’ travel patterns– 90% of NZ vehicles travel less than

84km a day– For main urban areas less than 69km– 52% of NZ households have 2 or

more vehicles

• CAENZ study shows for 390,000 EVs on road by 2025 will require only an extra 180 MW capacity

• Price remains a barrier

NZ’s solar energy potential

SeriesSource: IT Power & Southern Perspectives report for MED, 2009

Demand side opportunities

Homes• Housing design to minimise energy use in new builds• Insulation, double glazing, draught-proofing retrofits• Appliance and lighting efficiency• Behaviour change

Businesses• Appliance and lighting efficiency• Tuning boilers, continuous commissioning HVAC• Co-generation• Motorised systems

Transport• Fuel economy improvements• Public transport / modal shift• Driver behaviour

$4 billionTotal savings in 10 years

Residential $1.6 billion

Business and

Primary production$2.5 billion

Dwellings $0.5 bn

Private cars $1.1 bn

Heavy Industry$0.2 bn

Food Production

$0.4 bn

Business transport

$1.1 bn

Tourism$0.1 bn

CommercialBuildings $0.3 bn

OtherBusiness$0.5 bn

NZ energy savings potential

Houses – we all live in one

• Third of electricity used in the home

• Long term impact of investment

• Has an impact on health and well-being – huge losses for society could be avoided

• Many NZ houses are substandard

The typical New Zealand house

• NZ’s traditional light timber framed structures are very inefficient

• 80 kWh/m2/year in NZ

• Denmark has target of 16 kWh/m2/year

• Examples of poor performance include– Insulation– Air tightness– Glazing– Alignment– Heating– Lighting

• Our cold damp houses are a major health hazards as well as really expensive to heat

First Light house – “eco bach”

• Highly insulated

• Designed to maximise solar gain

• Solar water heating and photovoltaics

• LED lighting

• Energy monitoring system

White ware and appliances

• Minimum Energy Performance Standards (MEPS) keeps the lowest performing appliances out of the NZ/Aus market

• Labelling helps consumers compare efficiency (energy rating) or buy the top performers (ENERGY STAR)

• The average new fridge uses half the energy it did in 1990.

• Computers and consumer electronics are making up a growing portion of our electricity bills – expected to double by 2020

• Standby can use 400 Watts continuously

Business and transport

• Big opportunity for savings across the whole economy

• Transport and business sectors offer biggest savings

• And business transport has huge potential – 18 PJ by 2015

• Some savings will be BAU gains

• EECA’s business programmes could achieve about 14PJ by 2015

• Significant increase from current levels – current rate = 5PJ by 2015

• Example: Commercial refrigeration uses 10.5 PJ p.a. – estimated 15% savings available

Areas of potential (by technology)

Economic Savings Potential By Top 8 End-Use Technology Measures 2015/16 (Business Sector only) - total = 58 PJ

6.47 , 11%

3.75 , 6% 1.20 , 2%

8.15, 14%

14.00, 25%

10.16, 18%

1.40 , 2%

12.92 , 22%

Motorised systems (electricity) - KEMA 2016

Lighting (electricity) - KEMA 2016

HVAC (electricity) - KEMA 2016

Refrigeration (electricity) - KEMA 2016

Goods Vehicles - Load factors - OPENZ2015

Cars (non-private) - Fuel consumptioneconomy (diesel & petrol) - OPENZ 2015

Process Heat - EECA 2015

OtherElectricity Diesel, PetrolNatural gas / coal / wood/ other

Source: OPENZ, KEMA (electricity), and adjusted by EECA data on process heat

Transport efficiency in action

Downer New Zealand Ltd,

Supreme Winner at the 2010 EECA Awards

• Included GPS initiative for fleet, introduction of driver behaviour programme

•Projected savings $3 million and 12,000 tonnes of CO2 a year

•Payback for most opportunities less than one year

•Additional benefits - driver training also improves staff and public safety, reduces property and vehicle damage, carbon emissions and insurance premiums

•Enhanced business reputation

Technology is only one part of the solution

• Who designs houses?

• Who buys cars and drives them?

• Who chooses whether to turn their lights off when they leave the room?

• Who decides the priorities for investment in a company?

People

What influences energy use in the home?

Transport

TechnologyBehaviour

Envelope

Products

Conservation

Products

Transport

How do we influence behaviour?

• Information

• Incentives

• Regulation

Example: Providing the right information at the right time

• The average age of our light vehicles is 12.8 years old.

• 33% of light vehicles are 15 or more years old

• The average age of used imported vehicles — which make up almost half of the light vehicle fleet — has reached 14.4 years old It’s important to influence

this long-term decision – e.g. through vehicle fuel economy labels at point of sale.

Example: Providing funding/incentives

• Warm Up New Zealand: Heat Smart

• 100,000 homes insulated in two years

• Another 100,000 over the next two years

Co-benefits are key to engaging customers

EECA research shows people are motivated by different things

Sustainablefuture

Warm comfortable home

$$$$$$

Healthyhome

Co-benefit examples

• Health and welfare are the two biggest residential co-benefits

• Profitability and branding are the big business co-benefits

• Safety is the big transport co-benefit

The co-benefits with the greatest impact are often emotional

Behaviour change needed for maximum benefits

+ =EFFICIENT TECHNOLOGY

EFFICIENT BEHAVIOUR

MAXIMUMBENEFITS

Behaviour change works

• Almost 2.4 million New Zealanders have seen Energy Spot

• 1 in 5 New Zealanders have taken action as a result of the Energy Spot

The “co-benefits” of energy efficiency and renewable energy

• Energy security – Future proofing against limited cheap supplies of fossil fuels

• Reduced dependence on volatile global oil prices

• Sustainabilty - efficiency means resources go further

• Reduces the overall growth and peak demand for electricity

• Defers the need for new investment

• Reduces future wholesale electricity price

• Improved health and welfare of our citizens

• Helps meet international climate change obligations

The wider economic co-benefits

• Billions of dollars saved – reinvest into the economy

• Improved productivity and competitiveness of our businesses

• International competitive advantage

• Combat ‘food miles’

• Globally differentiate ourselves with our ‘brands’ of fresh water, fertile land and renewable energy

Summary – a future view

HOMES

• Zero energy or energy positive homes are the norm

• Small scale renewable energy is affordable

• People choose the most efficient appliances and only use them when needed

• Smart technology helps people save energy

BUSINESSES• Thriving, productive business

sector resulting from uptake of energy efficient and renewable technologies

• NZ exports differentiated in the market for their low carbon production

• Renewables used for process heat

• Saving energy part of everyday office/workplace culture

TRANSPORT• Transition from current system

dominated by imported oil to predominantly home-grown and renewable fuelling

• Behaviour change, improved technology, renewable fuels all play a role