Victoria’s Energy Efficiency Incentive Certificates: VEECs

Thinking about making an investment in a solar power system? While you’re at it, it might make sense to insulate your house and get rid of some of your old energy-guzzling white goods. If you’re a Victoria resident, the government has a scheme to help you mitigate some of the up-front cost of cutting down your carbon emissions and your energy bills.

Victoria has a reputation for being one of the most progressive and environmentally-minded states in Australia. The state offers one of the most generous Solar Feed-in Tariffs in the country–25c per kWh. Victoria’s state government’s incentives take a holistic, well-rounded approach to sustainability, providing support not only for renewable energy generation, but also for the implementation of energy efficiency measures that reduce a home or business’s carbon footprint. Victoria Energy Efficiency Certificates (VEECs) are the state’s energy efficiency version of Renewable Energy Certificates (RECs), which are offered by the Federal government as an effective upfront subsidy for renewable energy installations, including solar PV systems.

What’s a VEEC? Certificates issues through the VEET

The Victoria Energy Efficiency Target (VEET) is the scheme which sets up the rules for the creation and sale of VEECs. There are 10 categories of activities which, if undertaken, can result in the creation of VEECs and the associated discount which is passed on to energy users. 1 VEEC represents 1 tonne of CO2-e abatement, calculated by comparing the difference between the energy use of the new product (e.g. an air conditioner), and the ‘baseline’ energy use (essentially, the amount of energy that would have been used if the new high-efficiency product had not been installed.) There are free VEEC calculators available on the Essential Services Commission (ESC) website.

The price of VEECs vary according to supply and demand (at the time of writing, the value of 1 VEEC is approximately $33). The greater the energy efficiency gain of the upgraded product, the more VEECs are issued. This value comes through to the end customer in the form of a discount, which is recouped by whoever provides the product/service (see below).

Some of these categories are applicable only to households, some only to businesses, and some to both. 1The categories into with VEEC-generating activities fall are:

Water heating
Space heating and cooling
Space conditioning
Shower roses
Clothes dryers
Pool pumps
Standby Power Controllers

Who can issue VEECs?

VEECs can only be created by ‘Accredited Persons’. Businesses and sole traders can be deemed ‘Accredited Persons’ after being certified by the Essential Services Commission (ECS). Some examples of accredited bodies are sole traders, appliance stores, and electricity retailers. Unlike the Federal Solar Credit scheme, individuals cannot ordinarily hold on to their certificates in order to trade them at a later date to get better value.

Who buys the VEECs?

Much like under the Federal Solar Credit scheme, ‘Relevant Entities’ (usually big polluters and carbon-intensive industries) are required to ‘surrender’ a set number of certificates on the 30 April to cover their liability for the previous year. Not surrendering the requisite number of certificates results in a penalty. Although ESC does not provide a trading floor for VEECs, all ‘transfers’ (as sales are known) must pass through a VEET account to be registered.

Dual benefit: Upfront discount and electricity bill savings over time

VEECs offer a benefit to households and businesses by lowering the initial capital expenditure of energy efficiency improvements. On top of this comes the benefit of money saved on electricity bills as time goes on, especially important considering the electricity price rises that are expected across the country. As with installing a solar PV system, energy efficiency measures taken by a household mitigate these impact of these price increases, acting as an investment whose value increases as time goes on, with an ROI greater than the interest rate on many savings accounts.

Reducing your energy use makes sense when going solar

It is also worthwhile to note that energy efficiency and solar power investments can work hand-in-hand to reduce the need for further fossil fuel-based electricity generation sources–with the caveat, of course, that they are utilised strategically. Installing a solar system for a home, for example, makes little sense financially or environmentally if that home proceeds to consume even more electricity during peak tariff rate times.

James Martin II