Australia

AU-2:Generator Efficiency Standards (GES) (ENDED)

Policy Description

The Generator Efficiency Standards (GES) was a programme in which the Australian national government entered into a legally binding agreement with fossil-fuel electricity generators, i.e. not just for power plants, but all businesses that use fossil fuels to generate electricity. The aim of the measure was to encourage participants to move towards best practice in fossil-fired electricity generation in terms of energy efficiency and to reduce GHG emissions from power generation. This programme ended in 2013.

Description

The Generator Efficiency Standards (GES) was a programme in which the Australian national government entered into a legally binding agreement with fossil-fuel electricity generators, i.e. not just for power plants, but all businesses that use fossil fuels to generate electricity. The aim of the measure was to encourage participants to move towards best practice in fossil-fired electricity generation in terms of energy efficiency and to reduce GHG emissions from power generation. Participation was voluntary, but once a business has entered into the programme, it had to meet the performance standards defined within the programme, set by the programme administration, the Australian Greenhouse Office. In return, the government offered ‘recognition and support’, which consisted of technical support (information on best practices, guidelines and tools) and covered the costs of of the audit of the results achieved by the participants.

 

Though “Best Practice” was defined in terms of thermal efficiency, the actual commitments at the plant level were set in terms of GHG emissions to allow greater flexibility in response options to meet the targets (including fuel switching). Performance was measured as emission intensity (t CO2eq/MWh), where co-generators could include both useful heat and electricity in calculating the emission intensity.

All six greenhouse gases recognised under the Kyoto Protocol had to be reported (in practice this was mostly CO2, CH4 and N2O).

The performance standards applyed to all fossil fuel-fired (*1) electricity generation plants of the participants exceeding a minimum threshold, independent of whether they were connected to the grid or not. Standards also applied to new electricity generation capacity and significant refurbishments as well as to existing generation capacity. All of the participants’ fossil-fired plants for which all of the following criteria were met were covered:

  • Electrical capacity = 30 MW or above; AND
  • Electrical output = 50 GWh per annum; AND
  • A capacity factor of 5% or more in each of the last three years.

Businesses that entered into the scheme had to sign a 5-year Deed of Agreement with the national government in which they commited to:

  • To ‘achieve movement towards best practice performance’ for each individual plant (in case they were ‘below Best Practice’ level, see below for the definition);
  • To improve within the ‘best practice performance band’ (in case they were ‘at Best Practice’ level, (see below for further explanation).

 

Under the agreement, businesses had to:

  • Establish the design performance (The efficiency level according to the design specifications of the plant) for their plant(s) in accordance with the guidelines;
  • Calculate the non-recoverable degradation of their plant(s) (see below for further explanation) and then establish the corresponding greenhouse efficiency targets ;
  • Determine their plant(s) performance in relation to its Best Practice performance band (see below for further explanation);
  • Develop a menu of potential options to improve greenhouse gas emission performance;
  • Undertake feasibility studies based on the menu of potential options and, within 21 months of signing of the Agreement, submitting a list of proposed actions to the Government to be evaluated and approved;
  • Implement the agreed actions within the 5 year timeframe of the Agreement; and
  • Report on progress of agreed actions on an annual basis.

Best practice includeed both technical and economic considerations and was determined by:

  • The fuel source(s) used (and hence the technologies available to combust fuel);
  • Plant-specific technical factors, such as age and size of plant, ambient temperature, duty cycle (percentage of time in use), the particular industry application and local pollution requirements; and
  • Commercial factors such as relative fuel and equipment costs, expected rate of return and the availability of backup power.

 

Definition of Best Practice

The Best Practice for the programme was based on the performance of Australian and overseas power generation plants on an ‘as-designed’ basis and on a ‘current performance’ basis (set in 2000, reviewed in 2004/5). The ‘current-performance’ efficiency (measured as ‘sent-out’ – i.e. output - thermal efficiency) was normally lower than the ‘as designed’ efficiency because operational requirements were not included in the design efficiency (e.g. frequent stops/starts and part-load operation) or efficiency decreases over time. Part of the latter efficiency gap could be recovered through improved operation and maintenance (short-term) or through repair and replacement of plant components (long-term). Part of this efficiency loss (e.g. caused by build up of scale and deposits) could only be recovered in major refurbishments (the so-called ‘non-recoverable degradation in efficiency’). The Generator Efficiency Standards (GES) aimed to minimise the recoverable reductions in efficiency compared to the design efficiency.

 

For existing plants, Best Practice was defined by a maximum non-recoverable degradation in ‘current performance efficiency’ of 0.2 - 0.3% of net heat rate per annum (unless otherwise indicated by plant manufacturer’s data). This was translated to an equivalent maximum allowed increase in greenhouse intensity from the design efficiency level, based on the plant’s current configuration, current fuel type and the design/acceptance test operating conditions and performance (with allowance for additional thermal losses that would not normally be taken into consideration during performance or acceptance testing of new plant (e.g. a plant’s market generation role may require frequent stops/starts or part-load operation)).

 

The Best Practice level the participant commited to moving towards under the programme equaled the carbon intensity of the design efficiency level + the maximum allowed increase due to the non-recoverable degradation. The range of 0.2-0.3% in maximum allowed degradation leads to the Best Practice performance band for the plant.

 

For new plants, best practice was defined in terms of best available technology with allowances made for performance under typical Australian conditions and for commercial factors. These were set by fuel category (black coal, brown coal, natural gas, oil and other fuels), which were applied on a plant-by-plant basis to arrive at actual performance targets at the plant level. The standards were defined as a ‘current performance efficiency’  of:

  • 42% for black coal;
  • 31% for brown coal; and
  • 52% for natural gas (combined cycle) *2).

 

The performance of cogeneration plants depends largely on the industrial application and the steam host’s requirements.

 

All standards (for new and existing plants) were reviewed on a 5-yearly basis

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative, Standards

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 2000

End Date: 2013

Policy Linkages

Supports Carbon Pricing Mechanism (CPM) Effort Defining
Supported By Carbon Pricing Mechanism (CPM) Effort Defining
Supported By Clean Energy Finance Corporation (CEFC) funding Supporting Measure
Supported By Clean Technology Program (CTP) Supporting Measure
Supported By Energy Efficiency Opportunities Program (EEO) Supporting Measure

Agencies Responsible

Australian Greenhouse Office
Climate Change Authority

Primary Objective: Energy

Objective

­- Achieve movement towards energy efficiency best practice levels for fossil-fuel electricity generation; and ­- GHG emission reductions from energy supply

Target Group

Businesses that use fossil fuel for power generation.

Driver of energy consumption or emissions affected by policy: GHG emission intensity

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

In 2007, 19 companies participated, covering 85% of Australia’s installed capacity. No newer figures are available [AG), 2007].

Quantitative Target? yes

Target: On a plant-by-plant basis

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Sanctions: Information not available

Requirements on the Target Group

  • Determining performance of the plant in relation to the best practice performance band;
  • Developing a menu of potential options to improve greenhouse gas performance;
  • Undertaking feasibility studies based on the menu of potential options and, within 21 months of signing of the Agreement, submitting a list of proposed actions to the Government to be evaluated and approved;
  • Implement the agreed actions within the 5 year timeframe of the Agreement; and
  • Report on progress of agreed actions on an annual basis as well as against key performance indicators.

Support by Government

  • Guidelines on what is expected of businesses, including technical guidelines that set out an appropriate methodology;
  • Reimbursement of full costs associated with the verification audit;
  • Dissemination of non-confidential information on best practice where available;
  • Streamlining of reporting requirements under GES, the Climate Challenge programme, the national emission inventory under the UNFCCC, NGERS;

Implementation Toolbox

 GES Greenhouse Intensity Calculator
 GES abatement cost calculator

Complexity of Implementation

Government

Targets are set on a case-by-case basis on very technical considerations. Technical options must be approved and monitored by the government.

Target Group

Evaluations part of core business, integrated into environmental impact assessment procedures. Monitoring streamlined with other reporting obligations.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions ­Ex-ante estimates suggest the program would save about 4Mt/yr (additional to any commitments of the businesses under the Greenhouse Challenge program) [Australian Greenhouse Office, 2000]. No recent evaluations seem to have been made
Estimated costs/benefits for industry Above estimated GHG emission reduction comes at a cost of up to $10/tonne carbon dioxide equivalent [Australian Greenhouse Office, 2000].
Estimated cost for government N.a.

References & Footnotes

References

[1] Australian Greenhouse Office, 2000, PROGRAM GUIDELINES GENERATOR EFFICIENCY STANDARDS A program to encourage businesses using fossil fuels for power generation to achieve best practice in generating power and reduce greenhouse gas emissions, July 2000. http://www.environment.gov.au/archive/settlements/ges/publications/program_guidelines.html

[2] AGO, 2006, GES Technical guidelines http://www.environment.gov.au/archive/settlements/ges/publications/technical.html

[3] GES emission intensity calculator http://www.environment.gov.au/archive/settlements/ges/publications/intensity.html

[4] GES abatement cost calculator http://www.environment.gov.au/archive/settlements/ges/publications/calculator.html

[5] GES reporting template http://www.environment.gov.au/archive/settlements/ges/publications/annual-reporting.html

[6] GES Independent verifier guidelines http://www.environment.gov.au/archive/settlements/ges/publications/iv-guidelines.html

[7] IEA policy database http://www.iea.org/textbase/pm/?mode=pm&id=594&action=detail

[8] Mount Alexander, 2010, The Mount Alexander Sustainability Group submission to the Cleaner Future for Power Stations Interdepartmental Task Group on an Emissions Standard for power generation in Australia.

[9] AGO, 2007, ‘Generator Efficiency Standards’, presentation by GES programme manager A. Yvory, http://www.asiapacificpartnership.org/pdf/PGTTF/event-april-07/April_16_Australia_Generator%20Efficiency%20Standards.pdf

Footnotes

(*1) In the case of multi-fuel plants (such as sugar mills or pulp and paper manufacturers) that use both renewable and fossil fuels, the threshold will be measured according to the fossil fuel.

(*2) All based on Higher Heating Values

(*3) Voluntary participation, legally binding targets upon participation

(*4) Note on targets: Best practice is defined in quantitative terms, but deviations from best practice are possible with argumentation.

(*5) Note on monitoring: Target group monitors annually, then submits to the government, which monitors the program’s performance.

(*6) Verification: At least once during the 5-year period of the Deed.