Devised by a PhD student and developed by energy company Independent Products, the IP Kinetik system is installed on air conditioners to make them more efficient.

Air conditioners burn up energy cooling the surrounding hot air; the hotter the day gets, the less efficient they become. The IP Kinetik system uses cold condensate, the waste water produced by air conditioning, to lower the air temperature and the unit's refrigerant gas temperature more effectively, using 30 per cent less energy on average.

"The driver for blackouts during heatwaves is air conditioning," the managing director of Independent Products, Steven Heaton, said. "The hotter and more humid the environment, the more efficiently our technology operates."

The IP Kinetik system can be retrofitted to any air conditioner that uses refrigerant gas, regardless of size or brand, Mr Heaton said. Field trials have shown it reduces peak electricity demand by up to 45 per cent.

Mr Heaton said using energy more efficiently, and improving on existing technology, "is a much better outcome for taxpayers, for consumers, than simply looking to generate more power".

Melbourne-based Independent Products won the Smart Cities award at last year's Australian Technologies Competition, where it was named Australian Technology Company of the Year.

Competition organiser John O'Brien said IP Kinetik would have a global impact on energy use, and the capacity to retrofit it to most existing air conditioning units was a key selling point.

"The potential is massive," Mr O'Brien said. "Maybe they should be phoning up Elon Musk and saying, 'We could do it together'."

When Mr Heaton ran his own energy auditing company, clients always asked how they could cut their air conditioning costs.

His search for a solution led him to Sydney student Vahid Vakiloroaya who, while completing his PhD, came up with a system to use cold condensate as part of the cooling process.

Independent Products developed and refined his system, which is now used by clients including Qantas, Telstra and BHP. Investors include outgoing AFL Chairman Mike Fitzpatrick, with former Victorian treasurer Rob Jolly serving as the company's chairman.

Western Sydney University, where Dr Vakiloroaya is a postdoctoral research fellow, has been running trials of IP Kinetik for two years.

The director of the university's Centre for Infrastructure Engineering, Professor Bijan Samali, said the system reduced energy consumption by 30 per cent on average and as much as 45 per cent on wetter, more humid days.

"Air conditioning is a major source of energy use in any household or business or industry," Professor Samali said. "Cutting back your energy usage for air conditioning by 30 or 40 per cent would cut down on the overall energy costs by at least 10 to 15 per cent, which is a huge saving given how much electricity prices are going up and how much electricity generation is being threatened."

Several private schools have been trialling the system and were excited about the potential savings, said Dennis Hensman, director of Optimum Control Technologies, which is monitoring live energy use during the trials.

Air conditioning is "a nightmare cost for schools because they can have 200 or 300 of these air conditioning units", Mr Hensman said. "Anything that can reduce the running costs ??? is significant."

The importance of energy efficiency has been reinforced by a summer of record-breaking heat, power blackouts and growing concerns about an energy crisis.

The Energy Efficiency Council said smart energy use was key to reducing peak demand, energy consumption, electricity bills and spending on infrastructure. Improving energy efficiency by just 1 per cent a year would grow Australia's economy by $26 billion by 2030.

"Improving the way we manage energy is critical to improve energy affordability and security," the council's head of policy, Rob Murray-Leach, said. "If we'd been able to manage demand properly in NSW and South Australia we would have avoided the cuts in supply to homes and businesses that happened in February."