National phase out of greenhouse intensive domestic water heaters
On 2 July 2009, the Council of Australian Governments signed the National Partnership Agreement on Energy Efficiency, which included a commitment to phase out electric resistance hot water systems from 2010. The measure is part of the 10 year National Hot Water Strategy to transition Australian domestic hot water systems to low emission products.
In January 2010 a consultation Regulatory Impact Statement (RIS) was released . Following on from this, the Ministerial Council on Energy agreed the Decision RIS on 10 December 2010.
The Victorian Government is currently considering the implementation of the phase out in Victoria.
Questions and Answers
Why is the Government targeting water heaters?
On 13 December 2007, the Ministerial Council on Energy agreed to the development of a national hot water strategy under Stage 2 of the National Framework for Energy Efficiency. Specifically, it identified an objective "To develop a set of nationally harmonised implementation measures for addressing efficiency and greenhouse impacts of new and replacement water heaters".
Water heating is the second largest category of energy using appliances, and the second largest source of greenhouse emissions in Australian homes, accounting for 23% of energy used and 24% of greenhouse emissions in the average Australian household. These figures are similar for Victoria.
Electric resistance water heaters produce the highest level of greenhouse emissions and have very high running costs, with average emissions of 5.65 to 6.09 tonnes per year per system and yearly running costs of $412 to $732 per year in Victoria. For more information please refer to www.resourcesmart.vic.gov.au.
What is an electric hot water system?
The phase out only applies to existing residential detached, terraced and town houses that are replacing an electric resistance water heater. Apartments and units are exempt from the phase out. Electric water heaters are defined as a hot water heater with an electric resistance element using electricity to power used to heat hot water in a residential home.
Consultation on the electric water heater phase out
A consultation Regulation Impact Statement (RIS) was released by the Commonwealth Department of the Environment, Water, Heritage and the Arts (DEWHA) on the phase out of greenhouse intensive water heaters in Australian homes in December 2009. A decision RIS endorsed by MCE Ministers, has now been released. See www.mce.gov.au
Which hot water heaters are affected under the proposal?
Under the electric water heater phase out proposal, only electric water heaters in existing homes that need to be replaced will be covered. Homes with a working electric water heater will not fall under this requirement until their heater needs to be replaced.
The phase out only applies to existing residential detached, terraced and town houses. Apartments and units are exempt from the phase out.
Low emission choices
When your electric water heater needs to be replaced, you have the choice to install a range of low emissions water heaters. These include:
- Gas water heaters (instantaneous or storage)
- Heat pumps
- LPG water heaters (where natural gas is not available)
- Solar water heaters (these could be electric or gas boosted)
- Solid fuel (eg. wood) heaters (low pressure systems only)
What are the greenhouse emission and cost impacts?
The electric water heater phase out is expected to reduce greenhouse emissions by 29.4 to 32.5 million tonnes within 10 years nationally. In Victoria, the phase out is expected to result in emissions reduction of around 5.4 million tonnes in 10 years.
The phase out of electric hot water systems will financially benefit an average Victorian home. For the majority of Victorians, a natural gas hot water system could be installed for a similar cost when replacing their electric water heater. Over the life of the hot water system, Victorian households can expect to save an average of around $360. The savings will vary depending on which low emissions water heater you replace the electric water heater with, and your consumption of hot water.
How much will it cost upfront?
For the majority of homes, it will be possible to replace an electric water heater with a gas water heater. The replacement cost for a gas system is similar to an electric water heater, particularly where reticulated natural gas is already available in the home.
For homes without access to reticulated natural gas, options available include LPG, heat pump and solar water heaters (boosted by either electricity or LPG). Heat pump and solar electric water heaters typically cost $1950 - $2300 more than an electric water heater but with State or Commonwealth rebates and other incentives the net cost of these systems is typically similar or less than the replacement cost for an electric water heater.
Are there rebates available?
Solar hot water rebates are currently available for homes replacing their electric (and gas) water heaters. For example, a rebate of up to $1600 is available for upgrades from electric water heaters to solar electric water heaters. For more information on rebates, see www.resourcesmart.vic.gov.au.
In addition to rebates, the Energy Saver Incentive also provides incentives for replacing an electric water heater with a low emissions water heater. Incentives on average range from $280 to $510 (based on conservative market valuation of Victorian Energy Efficiency Certificates of $10/ certificate).
In addition, Renewable Energy Certificates can be claimed for solar hot water and heat pump systems.
Your plumber can provide further information on rebates and incentives available.
More information is available
For information about the national phase out including the decision RIS document, visit the website for the Ministerial Council on Energy.