Interview with Anne Delaney, SwitchedOn Australia podcast

ANNE DELANEY, HOST: You’re listening to SwitchedOn Australia, the podcast that tracks the opportunities and challenging of electrifying everything everywhere. SwitchedOn is brought to you by the publishers of Renew Economy, Australia’s best informed, most read website focusing on the green energy transition, and is supported by Boundless Earth, using philanthropy, investment and direct advocacy to help Australia become a global force in a decarbonised world.

Hello, and welcome to the SwitchedOn podcast. I’m Anne Delaney, and I’d like to acknowledge the traditional custodians of the land on which the SwitchedOn podcast is recorded and produced. That’s Arakwal country in the Bundjalung Nation of northern New South Wales.

Well, big renewables are in the news again with the Prime Minister’s announcement last week that the government will use taxpayer-funded incentives to advance the manufacturing of clean energy industries, including hydrogen, green metals, solar power and emerging renewables.

Much less publicised was the government’s release of its National Energy Performance Strategy the week before. What’s that, you might ask. Well, basically, it’s an overview of the opportunities that will help improve the energy efficiency of our houses and buildings. That’s to enable us to adopt technologies that use less energy and help lower costs and emissions.

Most of the energy experts I spoke to about the strategy say there’s nothing new in the document; it’s a lot of re-announcements, some quite small and specific but, nevertheless, important programs. Fundamentally the strategy says that in a few years the average Australian house should be working to save families money and make them comfortable on a hot summer day or a cold winter’s night. But while it’s hard to argue with the vision, the document was light on specifics and how we’re going to make this happen. And as many of you would know, there are plenty of hurdles on way of getting every home and building fully electrified and energy efficient.

So, I thought I’d talk to one of the federal ministers responsible for energy about the National Energy Performance Strategy. Senator Jennifer McAllister is the Assistant Minister for Climate Change and Energy, and I began my discussion with the senator by asking why she thinks we need a National Energy Performance Strategy.

SENATOR JENNY MCALLISTER, ASSISTANT MINISTER FOR CLIMATE CHANGE & ENERGY: This is an area where there are so many good things we can accomplish, and it is also an area that was almost entirely neglected under the previous government. You know, in the very first day that I got on to the job I walked into a meeting and found myself confronted by an alliance of the Australian Industry Group, the Property Council, ACOSS, the Energy Efficiency Council and the ACF, and you know when you’ve got a group of stakeholders as diverse as that all working together and asking for a reform agenda that there’s really some work to do. And it’s been a really rewarding couple of years working with those stakeholders and the many other people across the community who want to see us do better in this regard. One of the interesting things I think is that over the last decade we’ve seen a real change in the way people think about energy at consumer scale. We used to talk a lot about energy efficiency, and that remains incredibly important. But in the last decade we’ve seen a couple of other dynamics emerge which meant the conversation is evolving to be a little broader. It’s not just energy efficiency anymore; it’s also about our capacity to shift our consumption to align with an increasingly variable supply. So, we’re talking about moving the time that we use consumption – use electricity. And, of course, it is also about electrification, and right across the country we’ve got lots of citizens, lots of consumers, lots of community organisations wanting to talk to their governments – local, state, and federal – about electrification opportunities in their community.

DELANEY: And I want to go into some of those issues. I want to drill down a little bit into some of those issues you’ve just raised. But just focusing specifically on this new strategy that you’ve brought out, there’s not a lot new in it, let’s face it. And we have had previous strategies to try and address energy efficiency, as you say. And we’ve often landed in a very similar place and it’s hard to argue, though, that energy performance in Australia has improved. Why do you think that we haven’t dealt with these issues adequately?

MCALLISTER: Well, I think there’s, regrettably, a quite straightforward explanation for the last decade, which is that the previous government was utterly unable to settle an energy policy of any kind. And the divisions within the previous government between the Liberal Party and the National Party and within the Liberal Party between different factions and groups meant that they could never settle a clear policy on either energy or climate, and it left us with a really big vacuum over a good decade. Our government is working diligently to resolve that situation. And, you know, you see that, of course, in our approach to grid scale generation and the big investments in the system. But you also see it in the focus that we’re bringing to energy performance. So, there’s two things I’d particularly point to. The first is the $1.7 billion package that we brought through in the last budget which provides a range of measures and opportunities to support households and businesses and community organisations. The second is this strategy which creates a framework to make sense of it and also to set up the lines of effort for future work.

DELANEY: A lot of energy experts, though, that I speak to, what they’re saying now is that what’s important is we can’t waste any more time planning, we’ve got to get on with the doing. We need rapid implementation of some of the things which you’ve raised in the strategy to ensure households and businesses can transition. We just need to be smarter and faster. What’s your response to that?

MCALLISTER: It is the time for action for a whole range of reasons. The most obviously and easy to explain is because there’s actually real cost benefits and savings for consumers if we can get this right, and we do need to start moving. Australians have already embraced solar technology. You know, I think your listeners will understand that we lead the world in terms of rooftop solar, but we’ve got a whole new range of technologies coming on board enabled by the digital revolution but also enabled by new battery technology and new vehicle technology. This is the decade to get this right, and we’re quite determined to do so.

The budget package was really designed to start standing up our capacity to help consumers with this. So I think your reader, your listeners, probably already know that we had a big package, $300 million, to work with the states and territories to improve the energy performance of social housing; $1billion dollars in low-cost loans to support consumers who are able to finance their own transition, make that transition; and, of course, tax incentives for small businesses to make changes in their own environments.

DELANEY: We’re still waiting –

MCALLISTER: All of our thinking – sorry, I was just going to add, Anne – that all of our thinking there was not just about the changes that those measures will mean for individual households and businesses but also about the stimulus that should provide to all of the businesses who seek to provide services in this area; the technology providers, the installers. We want them to understand that they can start making the necessary investments to build their businesses and provide these services. Our future is dependent on building an ecosystem of providers who can actually support households and businesses when they’re looking for support to make these changes.

DELANEY: There’s a lot in what you’ve just said and, you know, the strategy recognises that consumers want to transition to a clean energy system. And it acknowledges thanks the average Australian house should be working to save families money and make them comfortable. But one of the primary concerns of householders is the affordability of the machines that they’re going to need to transition to renewables, to buy the efficient electric machines. And that’s not just low-income earners who lot your packages will assist. What’s the government planning to do to assist with those upfront costs in the future?

MCALLISTER: You’re right – the two big barriers for many households are access to the technology and confidence in that technology and meeting the upfront cost. There are savings available, but a capital expenditure is required to get the technology on – in place. It was the recognition of that dynamic that really led us to the package we put together about the low-cost loans. We want households to be able to easily access finance so that they can borrow to put in place these technologies and then pay that back over time while they are reaping the savings that come about once you’ve got solar in place or a battery in place or some of these other changes. I think we are conscious that not every household is the same. There are some low-income households that are simply not going to be able to self-finance this.

DELANEY: Yeah.

MCALLISTER: And it’s for that reason that we provided the $300 million that we’re using to partner with states and territories to improve social housing stock. But there are other families that can self-finance this. We just want to make sure that their journey is a little easier than it might otherwise be and to give them the tools and the confidence to take these steps in their own homes.

DELANEY: One of the strategies that’s been suggested by Rewiring Australia is to help fund every Australian to make the transition, and that is using an HECS-style loan scheme, like we have for student loans, which would be provided by the government. And these would be no-interest loans. You’ve been talking about low-interest loans. These would be no-interest loans that would only have to be paid back on the sale of a property. What’s your view of that sort of model, which would obviously not only help everyone transition faster, but it would also directly address our current cost of living crisis.

MCALLISTER: I think we’re in furious agreement with Rewiring about the opportunity here. We know that if families can make these changes to their homes, they can save money, they can make their houses more comfortable to live in and there are also benefits for the electricity system overall if we can start to see some of the load-shifting that’s enabled by batteries in homes. We’re always interested in new policy proposals. Bruce Chapman, of course, worked with Rewiring on this, and he’s a very respected voice. We’ll look at this. But it’s – we’re probably in a similar space. I mean, the reason that we focused on finance so much in our budget package last year is because we do recognise that access to finance will be one of the key enablers for helping households make this change. I think different households will approach it differently. Some households will want to do it in a big bang. They’ll sit down and think, “What technology do I need, what changes do I want to make to the physical shell of my house,” and they’ll want to do it all in one go and need a bigger loan to do so. Other households might approach it differently. They’ll make these changes gradually as various appliances wear out or otherwise require replacement. We’re alive to the possibility that we’re going to need different tools to help different households depending on their preferences.

DELANEY: So I can’t get you to tell me whether or not we’re going to see some additional financial assistance for people to electrify?

MCALLISTER: You know, Anne, we are just weeks away from the budget. I think that I’d find myself in hot water with the Treasurer if I made pre-budget announcements on your podcast.

DELANEY: Now, look, we know that electrification is the best way for householders to reduce emissions and reduce their energy bills. But we’re still seeing new gas appliances and inefficient electric appliances being installed in homes every year. And this is going to lock consumers into many years of higher running costs. Can we expect further support from government to help consumers switch to efficient electric appliances? I mean, to not put in those gas appliances, for instance?

MCALLISTER: I think the overall approach that I take when I’m thinking about this transformation is that it is about choice and control for consumers. And so, whenever we’re thinking about policy design at the Commonwealth level we’re thinking about ways to give consumers more choice, not less. And that’s really aligned with some of the research that we’re seeing about how consumers are approaching this. Energy Consumers Australia did some really good work recently, and it’s essentially sort of social research with a quite wide range of consumers. And the information that came back to them is that consumers are looking for information from trusted voices that gives them some certainty about the best concrete and practical ways that they can improve energy performance in their own home but critically gives them agency and control. And we’re really thinking about that end when we’re thinking about all of our policy designs. You’re right that we can help consumers make better choices about which products to choose. The GEMS Act is one of the most remarkable pieces and unsung pieces of legislation in terms of helping consumers along that journey. It’s the legislation that actually establishes the framework for the star rating that many of your listeners will be familiar with when they go into a whitegoods shop, for example. It’s saved consumers billions over the period that it’s been in place. Even the simple act of giving good information at the point of purchase can really help. But, as I’ve said, we also recognise that finance matters too. And that’s the basis for the billion dollars that we’ve given to the Clean Energy Finance Corporation. And they’ll later this year start announcing some of the partnerships that they’ve formed with existing lending organisations to roll that money out.

DELANEY: You’ve raised the GEMS Act, and I think it’s important because it goes to the issue of standards, and standards in our homes and standards with the appliances is really crucial. And the strategy recognises the importance of appliance labels and minimum standards for electrical appliances, because they are one of the most effective mechanisms for decarbonisation and, as you say, ensuring consumers benefit from energy performance improvements. But there’s been a review of the GEMS Act, and when are we likely to see the reforms that are going to expand the electrical appliances that we don’t already have standards for? And, in particular, hot water heat pumps?

MCALLISTER: Yeah, I’m really conscious of the opportunities there to use the GEMS Act to give Australian consumers the very best outcomes. And we will have something more to say about GEMS in coming months. It’s important for two reasons: information helps, but consumer trust in the products that are on the market is also incredibly important when we’re talking about new technologies coming through. It’s been really important that Australian solar installations have largely worked well for the people who have purchased them and installed them in their roofs, and it’s really built momentum. I think in the last year we’re just seeing ever increasing momentum for more and more solar going on to rooftops. As some of the new products come on to the market that consumers may want to integrate into their households, it’s really important that we pay attention to the quality of those and that consumers can be confident that they’re getting a good deal when they go to suppliers or go to installers.

DELANEY: The problem is, though, the delay in getting those minimum energy standards for things like hot water heat pumps is emerging now as a significant problem. We’re seeing actually, you know, a lot of heat pumps being installed that probably aren’t particularly efficient, and governments are giving rebates for them. Given most of us are probably going to need to install a hot water heat pump, you know, in the next decade, two decades, et cetera, if we’re going to meet our net zero targets, when will the government deliver those standards?

MCALLISTER: I think you’re talking a little bit about some of the approaches that state governments have used in incentivising hot water systems through some of their white certificate schemes or similar, and I know that state governments have been looking at those. In New South Wales I know they’ve made some refinements. But, as I said, I am conscious that this is a terrific tool. The GEMS framework has, I think, saved consumers somewhere between $12 and $18 billion in energy costs over the period it’s been in place. We are keen to modernise, streamline GEMS and make sure that it’s fit for purpose given all of the products that we know are coming on to the market now and will in the coming years.

DELANEY: I want to also look at standards in terms of our houses. The strategy does say that the government will support improved energy ratings for apartments and apartment buildings and it will work with the states and territories to improve the transparency for consumers, including the release of home energy ratings. But I have to say, it is disappointing that there are no specifics here in the document on minimum energy efficiency for existing housing, in particular, for rentals, and a third of us live in rentals. And there’s also no mention of the disclosure of house energy ratings at the point of sale or when a house is rented. And these issues, I suppose, have been on the table now for decades, but we know that what works best to improve some of these energy performances are regulations – clear, fair regulations. Does the government plan to introduce minimum standards and mandatory disclosure?

MCALLISTER: A couple of things here, Anne. One of our early steps was to improve the required star rating through the National Construction Code for new build. And that moved from 6 stars to 7 stars. It was the first time that we’d seen movement in that standard for a decade. It was last increased under the last Labor government, and we know that we have a really important opportunity to make sure that the homes that are being built now for the climate we have now but fit for a warming climate, because the climate isn’t going to be the same, unfortunately, in 2050 as it is now. There are some things that are baked in and we just can’t avoid. We do think that better information for households in terms of the performance of existing homes is also going to help. Last year we announced funding to expand some of these tools. We haven’t had a tool so far that can measure the performance of existing homes, and we’re working on pulling that tool together right now. One of the things that is different, of course, is that with an existing home it probably requires an inspection from an auditor to establish the rating. That’s different to a new build where an assessment can be made on the plans. And so part of the work we’re undertaking at the moment is talking – is working through the policy settings that would allow us to operationalise a tool and get those robust assessments in place for existing dwellings. Questions around disclosure, either at the point of sale or at rental, are really questions for states and territories. The legislation for consumers around tenancy and property transactions are all constitutionally with the states and territories. So, this is one of those areas where states and territories need to collaborate with the Commonwealth to make progress. It’s –

DELANEY: What’s your view on them, Senator?

MCALLISTER: On the value of disclosure?

DELANEY: On the value of disclosure and also on the introduction of minimum standards, minimum energy efficiency standards or performance standards?

MCALLISTER: I think we’re really clear that disclosure can be very, very helpful, and we’re – we’ve been working, as I said, to establish the tool to get that moving. And the states and territories have also been working on a framework that would allow the approach to disclosure to be relatively similar across states, so that if individual states and territories do take the step to require disclosure, that it looks and feels fairly similar in each of the jurisdictions. That’s work that’s going on right now through the Energy Ministers Council. It’s a very important forum for us and it’s a point I’d make to your listeners. The energy system really requires collaboration between the Australian government and the states and territories. Again, that was something that didn’t happen particularly effectively under the last government. It’s been a real area of focus for Minister Bowen and I, and that group of Ministers now meets very regularly and has got quite an expansive work program.

DELANEY: I want to just go on to that issue of trust that you raised. The market operator has made it clear that it wants to orchestrate all the consumer energy resources that Australians are increasingly putting on their roofs and in their houses. But many consumers don’t trust the energy companies who they have to deal with because of a lot of vested interests. And, you know, we don’t have people signing up for virtual power plants in record numbers. Many people are unsure about things like smart meters if they only provide retailers with information and not themselves. But with consumers, you know, buying more solar heat pumps, electric vehicles every day, don’t we need policy and regulation to catch up and leverage these investments for everyone’s benefit so people can regain trust in the energy system?

MCALLISTER: There’s a lot in that question, Anne, because –

DELANEY: It’s probably too long, but anyway.

MCALLISTER: It speaks to the challenge of the transformation. You know, we are moving from a system that had a small number of very large-scale generators to a new electricity system model that will continue to have large-scale generators but also an increasing number of distributed generators in homes and in businesses. And that’s – it is a real change and it requires a number of different things to happen in parallel. The first is, of course, that we need the technology providers and the ecosystem of commercial arrangements that sits around that. The second is that we need finance to be made available for homes and businesses to participate. The third is that we need the regulatory system to be supportive and to make sure that the choices that people are making are enabled by the way we run the system overall. And all of that is underpinned by trust and the communication of the opportunity that’s available to consumers in this space.  Energy ministers are really cognisant of this challenge, and it’s why there’s quite a lot of work going on at the national level to try and pull the policy settings together across all of these fronts. Our strategy is really designed to bring focus to exactly this challenge and to point out all of the areas where we need to take coordinated action in the coming years. Some of that work has to be done in collaboration with the states and territories and, as I mentioned, there’s a really expansive work agenda going on through that forum.

DELANEY: It is anticipated that, you know, within the next decade consumer energy resources – the solar panels, the batteries, the EVs – they’re going to be supplying more than 50 per cent of our energy needs. And if that is the case, it feels that, you know, we need to ensure that consumers, communities, businesses are put on a level playing field with big renewable energy. Do you concur with that?

MCALLISTER: I think I would – I suppose I would place the emphasis on choice and control for consumers themselves. And they will need good information about how the system works. I think the principle that our system should be organised to support consumers is absolutely the right one. And that’s true whether we’re talking about the way that they interact with retailers, but also about the way that they interact with technologies in their own properties. I don’t think that we can pull the two things apart. At the heart of this is the need to give consumers confidence that the system is working for them and to give them the information that they need to manage their own energy needs as well as they possibly can for the benefit of them and their family. You know, and so, really, I think the challenge for everybody is making sure that the regulations that we have for the system in the coming years will work for consumers whatever the particular model of energy generation is that they are individually engaging on.

DELANEY: But wouldn’t they – you know, wouldn’t consumers feel more confident in the system if they were being properly recompensed for the energy that they produce? The energy companies are continuing to reduce feed-in tariffs for, you know, solar energy that feed into the grid, and then they make money, you know, out of essentially selling it to our neighbours. You know, isn’t there an increasing risk that people are going to lose confidence in the system that we have? People may want to, you know, even go off grid, especially now that the cost of home batteries are coming down.

MCALLISTER: Isn’t the case, Anne, that there are lots of opportunities for consumers to save money if they can have access to these technologies? That’s the real focus for our government. Of course, we’re interested in making sure that consumers are getting the best deal out of the energy system as it changes in the coming years. And, in fact, at the last ECMC we agreed to develop a consumer-focused reform package, and that followed some briefings from the ACCC and the AER and Energy Consumers Australia about the way that people are presently engaging with the system. We want people to have good information. We want them to have access to good technologies. And we want them to have homes that are set up so that they are comfortable and affordable to run. That’s not straightforward. It requires focus, and that’s kind of one of the reasons we’ve been working through this strategy with all of the stakeholders over the last 12 months.

DELANEY: Do you think you need to take a bigger stick to the energy companies, though, to ensure that consumers get their dues?

MCALLISTER: We always want our companies to deliver the best possible deal for consumers. Everyone is going through a period of change and we’re really looking to bring the regulators, the policymakers, consumers, and businesses together to make this transition over the coming years.

DELANEY: Mmm. Just a couple of final questions: I attended the Community Energy Congress a few weeks ago where I heard some – you know, about incredible projects that communities are getting up with largely volunteer labour, little funding and often obstruction from the power companies. What does the government plan to do to assist communities which are not only providing energy for the grid but are a key platform for information-sharing about the energy transition?

MCALLISTER: Are you speaking about consumer – about small-scale local community projects that are bigger than a household but less than a grid-scale project?

DELANEY: Exactly. It’s kind of like the third level, so to speak. It is bigger than what you can put on your house. It’s obviously not as big as utility scale, but it’s in there in the middle and they can range from, you know, in terms of the projects that they do and the way that they’re financed, they’re all quite different, but the thing that they share is that they are community driven and there is, you know, a lot of community goodwill with these communities because they’re doing something for the local community rather than having a big utility, for example, coming into town and, you know, wanting to put in big renewables, which can cause friction. These ones are all about ground up, so to speak.

MCALLISTER: Yeah, look, we’re always interested in feedback about how the system can be made more responsive and more flexible. There’s a lot going in in this clean – going on in the clean energy transformation. We are seeing large-scale renewable projects, we’re seeing changes in homes, and if we are also seeing an appetite for those neighbourhood-scale projects, we’re of course interested to understand what changes would be necessary to enable and support them. We do have some programs that really target those community-scale projects as well. So, of course, we have the community solar bank projects. We’re standing those up to support community-scale electricity for households that are unable to access their own solar because they’re in a strata or they’re renting. And we’re working with states and territories to stand those solar banks up at the moment.

DELANEY: Mmm, yeah. I mean, they were announced back in, I think, 2021 and it was supposed to be just an initial round of funding. But we’re actually only seeing the first solar gardens up and running this year, aren’t we?

MCALLISTER: Look, we’ve been working with states and territories. We have agreements now with Victoria, with New South Wales, with Western Australia and with the Northern Territory. We want to do this well. We want to do it in partnership, and there is an enormous amount of work to do to overcome the decade where almost nothing sensible happened in energy policy under the previous government.

DELANEY: Mmm. I am getting the wind up signal from your adviser. So I’m just going to actually ask you a final question, a personal one: can you tell me about your electrification journey? Do you have solar, an EV? Are you still using gas in your home? And if you are, what are your plans for the transition?

MCALLISTER: Well, I live in strata as an owner. And that’s been the case for probably 15 years now. In fact, I can’t remember a time when I didn’t live in strata in recent decades. So it’s a quite – it’s given me quite a lot of understanding of some of the particular challenges that present in these buildings. I think my most successful intervention was actually in our previous home where we insulated our top floor ceiling and turned a room that was really difficult to live in in summer into something that was quite comfortable. In the building we’re in at the moment the biggest opportunity I think is actually in the glazing. And so I’m presently looking for opportunities, exploring an opportunity to replace the single glazing along the western side of our flat with double glazing. But it’s difficult in strata. I’m very conscious of how challenging it is, and I see and hear stories about people in strata trying to navigate all sorts of things. How are they going to manage EVs? Can they get solar into the property? What are the other changes to the thermal shell that might make apartments more comfortable? I think this is an area of increasing importance. It’s again an area where states and territories are, in fact, in the lead. But I’m keen to work with states and territories and see what can be done, because we have so many Australians now living in apartments, either as owners or renters. This is a part of the energy transition that we can’t afford to ignore, and I’m really interested to see what we can do.

DELANEY: No EV yet?

MCALLISTER: Not for me, but I’m hopeful in the coming years it may be possible.

DELANEY: As the prices come down. Well, there’s a lot in what you’ve said. There’s a lot in the strategy. We’re hoping for more detail and perhaps after the budget comes down we can get you back on to talk about what I’m hoping will be detail and money.

MCALLISTER: Thanks, Anne. I’m really grateful for your having me on, and it’s lovely to have a chance to talk with your listeners.

DELANEY: And Senator Jennifer McAllister is the Assistant Minister for Climate Change and Energy. I’m sure the senator will have more to say about energy performance after the release of the federal budget on the 9th of May.

Next time on SwitchedOn I’ll have that interview with Mike Casey last time. Mike is the Chief Executive of Rewiring Aotearoa, who recently published a report that New Zealand has reached an electrification tipping point – electric homes are now more affordable than fossil fuel alternatives. A good news story.

I’m Anne Delaney. See you then.