Looming Changes To NSW ESS Hot Water System Upgrades
Looming Changes To NSW ESS Hot Water System Upgrades
Changes to the NSW Energy Saving Scheme hot water upgrades and co-payment systems are on the horizon. These changes will help improve the way hot water usage across NSW is calculated, create more customer engagement with their upgrades, and ensure the cost of the upgrades is more equitably shared between the parties involved.
What do these changes mean for you if you’re considering a hot water system upgrade?
Probably the biggest change you’ll notice is the new co-payment amount.
Proposed Changes To NSW ESS Hot Water System Upgrades
If you’re a residential customer, you currently must contribute $33 towards your hot water system upgrade (times however many systems you upgrade). For small businesses and commercial enterprises, hot water system upgrades currently don’t require any co-payment. This however is set to change, and to be fair, there’s good reason for it. Several good reasons in fact…
- Quality hot water systems are not cheap and the current co-payment structure, which is based on bundled lighting upgrades, doesn’t go far enough towards contributing to these costs.
- ‘Cheap’ and ‘free’ are often associated with ‘poor quality’ – the ‘you get what you pay for’ perception. Therefore potentially some householders and business owners may feel it’s not worth ‘fixing what ain’t broken’ if the replacement is going to be cheap and nasty i.e. cheap or free.
- If you’re getting something cheap or free, the NSW Office of Energy and Climate Change (OECC) also feels you may not be particularly bothered about engaging with your upgrade process. That leaves the door open for sub par products and shoddy workmanship. NB: choosing a reputable company like Efficient Energy Group ensures you do get quality across the board, regardless of how ‘involved’ you may or may not be with the process!
What The New NSW ESS Hot Water System Upgrade Co-Payments Will Look Like
The proposal on the table is a $200 (ex GST) across the board co-payment for all types of hot water system upgrades installed under Schedules D and F of the ESS. In other words, the co-payment will apply to everyone – residential, small business, and commercial enterprises. Although it is higher than the current co-payment amounts ($33 or $0 respectively), the OECC believes it will still strike the right balance between:
- Ensuring customers have to pay enough to warrant taking an active interest in their upgrade, and
- Not being so expensive it acts as a deterrent to getting upgrades done
At the same time, it will contribute more $$s towards the cost of these upgrades.
Here is a summary of the proposed co-payment changes:
- Introduction of a new minimum $200 (ex GST) co-payment for each water heater installed in Activity Definitions D17-D21.
- Addition of a minimum $200 (ex-GST) co-payment for each commercial heat pump hot water heater installed in Activity Definitions F16 and F17.
Independent Product Testing Will Ensure Equipment Is Fit For Purpose
At the same time, IPART (Independent Pricing and Regulatory Tribunal) have announced they’ll be implementing independent product testing of equipment listed with the Scheme to ensure it meets reliability, quality, and performance standards. This will reduce the number of complaints about poor quality products, and help guarantee you receive quality, compliant equipment.
This initiative will also contribute to the long-term success of the Scheme – better quality products last longer, are often more efficient, and don’t need to be replaced as often. That translates to less waste and more cost-effective energy saving solutions, which are after all the goals of the ESS!
Fixing A Calculation Misalignment In Hot Water Use And Energy Savings
The OECC has also identified a current misalignment between ‘academic’ and ‘real world’ baselines for residential hot water usage and energy savings. They’ve therefore recommended the existing baseline of 60 litres of hot water use per person per day be dropped to a more realistic 45 litres. This will allow for more realistic energy savings calculations per se.
Additionally, baseline calculations will be aligned with our 2 climate zones for heat pumps in NSW – HP3 (non-alpine areas) and HP5 (alpine and cold areas). This will simplify the calculation process and take into account the differences in heating requirements, heat loss, and heat pump operation between the 2 zones.
Important Information Regarding ESS Co-Payment Coverage
It’s also important to note that not all ESS co-payments are affected by these changes and that co-payments will continue to differ between schedules.
Water heaters are covered by Schedules D and F, which require a co-payment for EACH ITEM of listed End-User Equipment installed. So… if you have more than 1 existing hot water system to upgrade under the Scheme, you’ll need to pay a separate co-payment for each one.
On the other hand – if you’re replacing a single hot water system with a registered manifold system, you only need to pay one co-payment (because you’re technically only upgrading one system).
ESS Schedule E co-payments are different again. This schedule includes residential and small business lighting and other equipment upgrades and your co-payment applies to the entire upgrade. There are also no current plans to change the co-payment amount for Schedule E upgrades.
Precedents For These Changes
Based on previous successful precedents, the OECC and government believe these changes will be widely accepted by stakeholders. In 2022, a $200 ex GST co-payment for RDC upgrades (Refrigerated Display Cabinets) was successfully proposed, accepted by the industry, and introduced. The OECC says that such ‘stakeholder support‘ demonstrates higher co-payment requirements do have potential to improve the system.
When Will The NSW ESS Hot Water System Upgrade Changes Be Implemented?
Once the industry consultation process has been completed, and providing all changes as proposed are accepted, they will come into effect around 3 months after that. At this stage, and based on previous similar changes, that will probably be early in 2024.
Want Your Hot Water System Upgraded Under The Current Co-Payment Arrangements?
If you’ve been sitting on the fence wondering whether or not you should get your hot water system upgraded, now is probably a good time to climb down, and get it done! Currently an eligible residential hot water system upgrade co-payment is $33 (inc GST) and $0 for small businesses and commercial enterprises.