Demonstrating how incentivising energy efficient lighting retrofits transformed the NSW lighting market supply chain.

Client: NSW Office of Environment and Heritage

The challenge

The NSW Energy Savings Scheme(ESS) incentivises organisations to invest in energy saving projects through installing energy saving equipment, including lighting.

After 5 years of operation, the NSW Office for Environment and Heritage engaged Common Capital to analyse the impact of the scheme on the NSW lighting market.

Our approach

With no baseline data to work from, we used quantitative and qualitative data modelling to create a theoretic baseline. We looked at stock and sales across the entire lighting market and cross referenced that with other historical data sources.

To evaluate the program’s influence, we combined analysis of the market structure, performance and dynamics, including supply chain theory, with the program’s theory of change and intended benefits.

We then applied behavioural economics and innovation diffusion theory to understand the scheme’s impact on the wider lighting market and supply chain from lighting manufacturers and distributors right through to the customer.

The research was strengthened by detailed interviews with key market players, eg overseas manufacturers, wholesalers etc to validate or disprove several hypotheses about market behaviour.

Common Capital developed a Market Impact Evaluation Strategy to understand and assess the requirements and gaps in current data gathering and develop pathway for future data gathering and analysis to support ongoing evaluation.

The outcome

The Market Impact Evaluation study demonstrated that the incentives offered under the ESS had a significant impact on the market. 

The lighting product supply chain is comprised of many businesses who can present significant barriers to market change, such as the adoption of energy efficient technologies.

In NSW the ESS incentives created demand which overcame these barriers stimulating key market players to bypass the conventional supply chain network and work directly with businesses higher up the chain such as manufacturers. This significantly accelerated the transformation of the lighting market. 

Common Capital has now presented this research at conferences and to other governments, to share how thinking holistically about the energy supply and demand markets when introducing energy efficiency schemes can lead to more effective and lasting change.