One of Australia’s oldest manufacturers of hot water system suppliers, Dux Hot Water, has warned a Senate inquiry that demand for electricity will increase faster than projections, meaning moves to shut down coal-fired power stations are too risky for the stability of the grid.
When it was acquired by Noritz in 2015, the Japanese company said Dux had an annual turnover of around $70 million (US$45.8 million).
It is the oldest water heater manufacturer in Australia, and provides a full range of electric water heaters encompassing electric storage, gas storage, gas continuous flow, solar, heat pump, and commercial water heaters.
In its submission to the Senate Economics References Committee Inquiry into Residential Electrification, Dux said it “fully supports the government’s net zero emissions by 2050 target” but it believes the Australian Energy Market Operator’s (AEMO) estimate for how much electricity the country uses is too conservative.
Banning New Gas Connections Will Drive Up Demand
It points out that since the AEMO study in 2002, the Victorian government has banned gas connections in new homes and apartments this year. Victoria is Australia’s largest gas-connected market.“Supply chains are shifting to electrical appliances sooner than was previously expected. The market is aware of a clear signal of electrification,” Dux said.
“Australians already have an incredibly high demand for electricity. In November 2022 ... an International Energy Agency report show[ed] Australia to be the world’s second-largest [per capita] consumer of electricity in 2020. Australia’s demand for electricity will accelerate with the replacement of gas appliances.”
As a result, the government should be wary of closing coal-fired electricity generation stations too soon, the company said, pointing out that Australia is still very reliant on electricity from that source.
Closing Coal Power Stations Has Pushed Prices Up: Dux
“Electricity producers and their stakeholders are motivated to close coal-fired power stations and justifiably reluctant to invest capital into their maintenance,” the company said. “Hazelwood power station in Victoria closed back in 2017 resulting in a huge spike in wholesale electricity pricing.”It quotes the Australian Energy Regulator (AER): “In Victoria, average spot prices for 2017 were up 85 percent on 2016, and up 32 percent in South Australia for the same period. New South Wales and Queensland were up 63 percent and 53 percent respectively.”
Further closures will only exacerbate the issue, Dux said.
“Liddell power station in NSW closed in April 2023. Origin has provided the required regulatory notice to close Eraring power station in August 2025. This is Australia’s largest power station supplying 25 percent of NSW’s electricity.
Not Ready for a Full Renewable Transition
There were also shortfalls in storage capacity for renewables and in the transmission network.“Renewables like solar and wind energy are weather dependent, so Australia needs significant firming capacity for when the wind doesn’t blow or when the sun doesn’t shine. Sufficient firming capacity from batteries, gas-fired power stations and pumped hydro doesn’t currently exist,” Dux asserts.
“Australia’s current transmission network, especially in NSW and Victoria is based around centralised power generation in the La Trobe or Hunter Valleys. Renewable energy solar and wind farms aren’t in these same locations.
“They’re located in areas like Central West NSW, New England, Bendigo, Ballarat and require 10,000 kilometres of new 500kV transmission lines to be connected in this decade. Difficult land owner consultations, planning delays, skills and materials shortages have made for slow progress,” the submission says.
The company also complains that conflicting signals from the government have made it very difficult for manufacturers to plan.
For instance, electric storage water heaters are banned in new homes in the National Construction Code 2022 (NCC), despite there currently being no restrictions on their installation in Queensland, the Northern Territory and Tasmania.
“I don’t know that you could identify an appliance subjected to the heavy hand of government more than a water heater. In 2007, the Australian government announced a proposed ban on electric storage waters from 2010 in favour of gas. Electrification of products represents a u-turn in policy direction. Hundreds of thousands of new homes have been built with gas appliances over the last two decades,” said Dux CEO Simon Terry.
Referencing Energy Minister Chris Bowen’s prediction that the energy market will be ready to deliver 82 percent of power from renewable sources by 2030, the submission asks: “If 82 percent of the electricity supply in less than a decade is going to be from renewable sources, why is the installation of electric storage water heaters still restricted in some states” noting that South Australia first outlawed new installations of electric water heaters in 2008, meaning over 95 percent of installations over the last 15 years were of continuous flow gas water heaters.
