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ECONERGY LIMITED

Government Hot Water Subsidy to be replaced with a Carbon Tax

Uptake of innovative technology for saving on electric power bills is facing increasing headwinds with changes in government policy says David Senn, Managing Director of Econergy Limited, the leading New Zealand Manufacturer of Heat Pump Water Heaters.

Heat Pump Water Heaters (HPWH) offer homeowners up to 75% annual savings on hot water by replacing electric resistance heating elements for heating. For an average household, that can be worth $650 savings per year. Widespread installation of heat pump water heaters in New Zealand would also result in up to 750 MW of peak load reduction on the national Grid and could save New Zealand up to 320,000 Tonnes of carbon emissions per year, according to calculations. For an average household it is estimated that replacement of resistance heater by a heat pump water heater would reduce carbon emissions by 1.6 Tonne CO2 per installation. At current pricing that’s equivalent to a carbon credit of $40 per year.

The Government has been offering homeowners a subsidy upon installation of $575 incl GST under the EECA Efficient Hot Water Scheme, however this subsidy was discontinued in the recent budget cuts. Refer http://www.beehive.govt.nz/release/thousands-more-nz-homes-be-insulated

Not only that but Government is now set to tax installation of heat pump water heaters under recent changes to the Emissions Trading Scheme (ETS). Under the new rules, the refrigerants used in heat pump water heaters will be taxed from 1st January 2013. It is estimated that the proposed tax will add up to $200 to the retail price of a heat pump water heater at current carbon emission unit pricing.

It is unfair to tax energy efficient products that reduce carbon emissions. Either the tax should be removed or the rules modified to allow installers of HPWH to claim a carbon credit at the point of sale (Similar to the Australian REC System)

It also makes sense to encourage installation of energy saving products that are cheaper than building new electricity infrastructure. For larger households, installation of heat pump water heaters is presently cheaper than building new hydro or wind power stations. Similarly, investment in LED lighting to replace incandescent or halogen lighting is presently cheaper than building new power stations.

Econergy would like to see the government reallocate surplus Electricity Levy Funds, (estimated at $3M in the current year) to a consumer awareness and information campaign that would see efficient new technologies, including heat pump water heaters and LED lighting showcased to the public.

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