ESC FAQsPrint this page
Q: 1. What is the Energy Savings Scheme?A:
The Energy Saving Scheme is a NSW energy savings program with the objective to:
- assist households and businesses to reduce electricity consumption and electricity costs
- complement a national scheme for carbon pollution reduction
- reduce the cost of, and the need for, additional energy generation, transmission and distribution infrastructure
- reduce greenhouse gas emissions.
The Energy Savings Scheme is designed to encourage investment in energy efficiency through financial incentives. It is a market based scheme that works by placing an obligation on the Liable Entities, mainly electricity retailers in NSW, to undertake or pay for energy efficiency programs.
Voluntary participants apply to have their energy savings project accredited so they can create Energy Savings Certificates proportional to the amount of energy saved. They can then sell these certificates to the Liable Entities who have an obligation to meet a quota of certificates.
See: How does it work?
Q: 2. What is an energy savings certificate, or ESC?A:
An energy savings certificate, or ESC, is equivalent to 1 tonne of carbon dioxide equivalent (tCO2-e), which is equal to 0.94 Megawatt hours (MWh) of energy:
N = 1.06 x E
- N is the number of Energy Savings Certificates (ESC) in tCO2-e, and
- E is the energy savings in MWh.
After implementing a Recognised Energy Savings Activity (RESA), an Accredited Certificate Provider will be able to create Energy Savings Certificates for each tonne of carbon dioxide (equivalent) saved, or 1.06 times megawatt hours of energy saved. These certificates can be traded and sold to liable entities who have an obligation to meet a predetermined energy savings quota.
Q: 3. How long do I have to claim ESCs?A:
ESCs can be created up to 30 June in the calendar year after the installation date if you wish to receive the maximum deemed value. Please allow sufficient time for processing; Green Energy Trading cannot guarantee full deemed value for registration forms received between 31 May and 30 June. If you miss the 30 June deadline you can still create ESCs, but one year of deemed value is lost.
Please note, for installations that have already taken place, Green Energy Trading can only create certificates from savings that occurred on or after 19 May 2011 on a pro-rata basis.
Q: 4. Who is IPART?A:
IPART is the Independent Pricing and Regulatory Tribunal of NSW. The NSW Government has appointed IPART as the Scheme Administrator and the Scheme Regulator for the Energy Savings Scheme.
The Scheme Administrator is responsible for, but not limited to:
- assessing applications
- accrediting applicants to become Accredited Certificate Providers
- managing compliance of existing Accredited Certificate Providers and Liable Entities
- amending accreditation conditions
- managing the website and Registry
see IPART for further information
Q: 5. Does it matter where the activities are undertaken?A:
The activities must be undertaken at a site registered in New South Wales to be eligible.
There are also limitations as to what activities and calculation methods can be undertaken at industrial, residential and commercial sites. For example, the Commercial Lighting Energy Savings Formula can not be used for residential installations, and the NABERS Baseline Method can not be used for industrial or residential sites.
Q: 6. Does an energy savings upgrade need to remain in place for a certain amount of time after the upgrade is completed?A:
Yes. There is an expectation that upgrades made will remain in place for the entire time for which an Accredited Certificate Provider receives energy savings certificates. The actual duration depends on the calculation method used (i.e. the Project Impact Assessment Method has an option to have 5 years of credits issued upfront and the Commercial Lighting Method allows up to 10 years of credits to be issued initially). The risk and obligation is on the Accredited Certificate Provider to ensure that the upgrade remains in place. Accredited Certificate Providers are required to notify IPART if anything changes that impacts the project activity.
Once a company is accredited, they are subject to several different accreditation conditions and those remain in force for the duration of their accreditation. Companies accredited under the Energy Savings Scheme are required to have an adequate customer engagement process to ensure that customers are properly informed of what is being installed and that they are satisfied with the outcome. All Accredited Certificate Providers must have a process to deal with any follow-up issues should they arise after the upgrade has taken place.
Additionally, if you have an upgrade done by an Accredited Certificate Provider, this precludes an Accredited Certificate Provider (whether the same, or a different one) from carrying out an upgrade of the same areas in the future. The Energy Savings Scheme maintains a database of all premises where certificates have been created and this will identify if certificates are being claimed for a premise which has previously received an energy savings upgrade. In this case only the first upgrade will count towards certificate creation under the Energy Savings Scheme.
Q: 7. What are the requirements for participating in the Scheme?A:
To participate directly in the Energy Savings Scheme you will need to become accredited as an Accredited Certificate Provider. Once you are accredited you will be able to create, register and sell Energy Savings Certificates with respect to energy savings activities.
This application process has two main parts: Record keeping arrangements, and eligible Recognised Energy Savings Activity (RESA).
The first part focuses on the ability of the applicant to document and manage the Recognised Energy Savings Activity and to be ably to show, by audit, compliance with the Scheme’s requirements. When assessing an application the Scheme Administrator puts a lot of attention as to the processes in place, the quality assurance measures and the overall competency of the applicant to undertake the activity as proposed.
The second part looks at the actual activity for which the applicant is seeking accreditation. This assess if the activity is eligible, how the activity will be implemented and how the certificates will be calculated.
Q: 8. What are the benefits of participating in the Scheme?A:
Reducing the consumption of electricity through energy savings activities benefits households and business through cheaper power bills, reduced greenhouse gas emissions and a cleaner environment. The Scheme is designed to provide additional financial incentives to undertake these energy savings activities. There are many direct and flow-on financial benefits from participating in the scheme, including:
- Residential consumers can benefit from lower cost energy efficient products because the supplier can subsidise the product with the additional revenue from the sale of certificates;
- Energy efficiency businesses can earn additional revenue from the creation of certificates when completing energy efficiency projects. These funds can then be passed on to their clients to make themselves more competitive and provide a cheaper service.
- Industrial and commercial site can become more productive by reducing operating costs and becoming more competitive.
- The Commercial Lighting and Project Impact Assessment Methods allow for forward creation of certificates which will generate additional up-front funds for a project to help offset some of the capital costs. This would allow more project to be implemented due to the offset capital costs.
Q: 9. Can I use the Commercial Lighting Calculation Method to create ESCs from upgrades that were previously undertaken by another party but no ESCs were created?A:
Yes, where sufficient evidence of original end-user equipment can be produced.
At a minimum, the original energy saver would need to provide the ACP with auditable evidence dated prior to, or at the time of, the upgrade taking place. This evidence must provide clear details of the original equipment.
For example, a full reflected ceiling plan that includes a schedule of the original lighting equipment may provide sufficient information. The reflected ceiling plan must be signed and dated for the ‘as-installed’ lighting configuration.
If a reflected ceiling plan is not available, then alternative evidence providing details of the original equipment must be provided. This could be a combination of equipment schedules, invoices and completion of work certificates, provided that the evidence is sufficient to quantify and detail the original equipment that was removed, the installation date and the site address.
A statutory declaration can be useful to establish links between the existing documentation but is not sufficient on its own.
Documentation created after the fact cannot be used as evidence of original equipment, even when supported by a statutory declaration.
Q: 10. Can I use the Commercial Lighting Calculation Method to create ESCs from upgrades that were undertaken by me if a previous upgrade was undertaken at the same site and ESCs were created?A:
Yes, but only for the difference between the upgrades and providing you have sufficient evidence to quantify the difference.
ESCs cannot be created twice for the same energy savings.
If a lighting upgrade is proposed at a site where ESCs have been already been created, only the difference between the existing configuration and new upgrade can be claimed.
New nomination forms detailing the new upgrade must be signed by the original energy saver and must be supported by the documentation sufficient to establish details of the lighting equipment before and after the upgrade.
All relevant evidentiary requirements apply. These are detailed above and in the Application Guide and Commercial Lighting Application Guide.
Q: 11. What happens to the ESCs I created if I have to replace lighting equipment that fails or is unsuitable?A:
There is no effect if the lighting equipment is the same. If the replacement lighting equipment is different to the original, the number of ESCs claimed should also be amended.
If the replacement is ‘like for like’, there is no difference in energy savings and no further action is required.
If the replacement is not ‘like for like’, the ACP must calculate the difference in energy savings, as follows:
- where an over creation of ESCs is identified, the ACP should request voluntary forfeiture of the incorrect number of ESCs.
- where an under creation of ESCs is identified, the ACP may adjust the number of ESCs, such that correct number of ESCs is registered.
In each case, the amended calculations must take account of the ESCs already created and the remaining time left in the deeming period (or lifetime of energy savings) used in the original ESC calculation. The deeming period does not start again at the time the replacement lights are installed.
For example, if 2012 vintage ESCs were created through the original installation, but the replacement occurred in 2013, only nine tenths of the difference in ESCs should be registered or forfeited.
Details of the replacement should be signed off by the original energy saver and appended to the original nomination form in order to document the process for audit purposes.
Regardless of whether the replacement is like for like, or results in ESC forfeiture or new ESC creation, replacement actions should be recorded in your issues register for audit purposes.
Q: 12. What happens to the ESCs I created if the lighting equipment is removed by another party?A:
There is no effect if the removal is out of the ACP’s control, where the lighting was installed with the reasonable expectation that it would be in place for the lifetime of the energy savings.
The Commercial Lighting Energy Savings Formula allows for the upfront (deemed) creation of energy savings certificates for the expected lifetime of energy savings. This means the ESC calculation should not be amended if changes are made by other parties and are out of the ACP’s control.
However, this does not apply if changes have been made or lights removed due to an unsuitable or faulty product being installed by the ACP. In this case, the ACP is expected to act in good faith and to take steps to address the issue and adjust their ESC calculations accordingly (see above). In addition, if you are aware that the building where the upgrade occurs is about to be demolished or substantially refurbished, you should not claim ESCs.