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Electric hot water systems being phased out

From this year, the Commonwealth Government has begun a two-stage phase-out of electric hot water systems. Australian Bureau of Statistics figures from March 2008 show that 'electricity was the primary source throughout Australia for household cooking and for hot water systems'. In fact, the http://www.yourhome.gov.au/ website advises that 'water heating accounts for 25 per cent of the energy used in an average home and is responsible for 23 per cent of the total greenhouse gas emissions from home energy use'.

From this year, a national phase-out of electric hot water systems is taking place on a state-by-state basis. Viable alternatives, under the initiative, include both solar and gas hot water systems and heat pumps. The phase-out applies to systems that have reached the end of their working lives. It is being implemented in two stages.

Stage 1 starts in 2010 and involves states adopting changes to the Building Code of Australia to ensure that new homes do not have electric hot water systems installed. Stage 1 also involves changes to plumbing regulations for the installation of hot water systems on established homes. As this is occurring on a state-by-state basis, each state is free to decide the exact commencement date in 2010, the criteria for eligibility and any exemptions. South Australia and Queensland have already put in place programs for both new and existing homes. Victoria, New South Wales and Western Australia have programs for new homes and are currently developing programs for existing homes.

Stage 2 begins sometime in 2012 and will be informed by outcomes and learnings from Stage 1. It extends the phase-out to any existing detached, terraced, townhouse or hostel as well as new flats or apartments with reticulated gas. The phase-out to areas with no reticulated gas will occur sometime between 2012 and 2015 and will be guided by the outcomes of further investigation into cost-effective options and alternatives.

The Commonwealth Government currently offers two incentive schemes that can help drive the phase-out of the electric hot water systems. The first is the Renewable Energy Bonus Scheme - Solar Hot Water Rebate (REBS-SHWR) scheme.

The REBS-SHWR replaces the previous SHWR but still offers rebates for replacing electric storage hot water systems with solar or heat pump systems. Under the REBS-SHWR, eligible households can claim a rebate of $600 for a heat pump hot water system or $1,000 for a solar hot water system. The rebate is only open to those who have not taken advantage of the home insulation program at the same address. More information on the REBS-SHWR is available at the Department of Climate Change and Energy Efficiency website http://www.climatechange.gov.au/government/programs-and-rebates/solar-hot-water/guidelines.aspx#4.

The other financial incentives available to householders who wish to replace their electric hot water system with a solar or heat pump system are Renewable Energy Certificates (known as RECs) through the Renewable Energy Target (RET) and the Solar Credits schemes. The RET requires that 20 per cent of Australia’s electricity be produced from renewable energy sources by 2020. To achieve this, the Government has created a market for tradable renewable energy certificates. When a person or company installs a solar or heat pump system on a house, a certain number of these certificates is automatically generated, and can be sold to offset the cost of the installation. A complementary program known as the Solar Credits scheme works in conjunction with the RET and allows households, businesses or community groups to generate multiple certificates for some of the electricity generated. The price of these certificates is fixed by the Government at $40. In this way the RET acts as a rebate.In most cases, the installer of the system will offer to reduce the cost of installation by the value of the generated certificates. Then the installer retains the property rights of the certificates and is free to trade on the market.

Tasmania is the only jurisdiction exempt from the phase-out. This is because then-Energy Minister David Llewellyn put forward the case that Tasmania has such a relatively high proportion of electricity from hydropower that a regulatory push to phase-out electric hot water systems in the interest of reducing greenhouse gas emissions was unwarranted. However, according to Workplace Standards Tasmania:

...these changes will affect Tasmania in the long term as they provide for the reduction of greenhouse gas emissions associated with water heating through the specification of minimum energy performance standards for water heaters and the phasing out of conventional electric resistance water heaters in other jurisdictions. Therefore, older style water heaters ultimately will no longer be readily available for sale in Tasmania and only energy efficient types of water heaters will be available for installation.
(image sourced from: http://www.savepower.nsw.gov.au/Portals/0/images/household/dreamstime_4201715.jpg)