The Hardly Known Victorian Energy Upgrades (VEEC) Incentive
The adoption of renewables in Australia has exploded and is now unstoppable, with numerous government grants for solar panels
The Victorian Energy Efficiency Certificates (VEECs) is a government incentive that can be utilised to help pay for your solar project and reduce your energy bill. Each certificate represents one tonne of greenhouse gas emissions reduction. These certificates are sold to energy retailers who have an obligation under the program to surrender a certain number each year. The amount of certificates that can be claimed is based on real-world data that must be provided to a Victorian Energy Upgrades (VEU) accredited person. The accredited person does an analysis of the amount of CO2 displaced by the installation until 2030, and then issues the certificates.
As you can imagine, every kWh generated from solar energy translates to a certain amount of greenhouse gas emission reduction.
VEEC Price Today
This is the great news: One VEEC was worth a little under $40 in late January 2020. As of 6th July 2022, it’s worth about $74! This means a massive upside, up to hundreds of thousands of dollars in benefit, for any organisation that is looking at a medium to large solar installation.
The calculation is complex and requires some statistical tools. It’s dependent on the site load, seasonal variation and how much solar energy will be self-consumed. This is almost like an art rather than a black-on-white process. The VEECs program continually gets revised by the Essential Services Commission. Thus, if the client wants to maximise the benefit, it’s critical to engage an accredited person who truly has mastered energy analysis and has a strong understanding of how the program is run by the state authority.
The VEEC spot price can vary because of demand-supply and other factors. Holding onto certificates can carry risks, because the VEECs price may decrease. There are ways to mitigate the risk of market movement by locking the prices. The providers estimate the number of potential certificates and then offer X amount of money upfront. In exchange for this, they receive the certificates when they are issued but also carry the risk and the potential reward.
We have found some solar providers offer VEEC benefits that are much lower than the market or apply larger than necessary risk premiums. This means the client would give up too much upside, up to 30% of the VEEC benefit!
Therefore, most of the time it is more profitable to engage an accredited person who provides the bespoke solution to maximise the number of certificates created by taking into account the monitored energy data from the solar PV system and time the sale of the certificates to secure higher market prices. This is the approach we would recommend most of the time unless the client cannot tolerate any uncertainty, in which case we can facilitate locking in prices.
Most of the VEECs rebate can be realised as soon as 10 months after installation for huge amounts of benefits. In some instances, companies have claimed upwards of 40% of capital expenditure. In a recent project estimated at just over $1,000,000, the VEEC incentive was estimated to save no less than $500,000.
This amazing incentive requires an energy expert to navigate the complex process, minimising the risk and maximising the benefits of this incentive. Some providers can unlock some portion of these benefits. Yet, most are not providing the maximum benefits. Hence comparison and due diligence before selecting the best provider are critical.
This incentive is only available in Victoria and now, along with other incentives, companies are having these unprecedented returns on their solar investments. Not only are short-term incentives high, but the obvious benefit of your energy reduction is an ongoing benefit that you will be receiving for decades.
Government Solar Incentives
The other government solar incentives that you may not know about are the Small Scale Technology Certificates (STC), Instant Asset Write Off, Large Scale Generation Certificates (LGC), Solar Battery and Solar for Business Rebate.
There are also amazing benefits for landlord-tenant relationships that are supported by the government and financiers!
The current government solar incentives are a game-changer. Coupled with the soaring energy costs post-COVID, the Return on Investments on solar projects are now terrific. If you haven’t gone through a feasibility study by independent engineers in the last 2 months, then it is seriously worth a look again right now. The days when solar payback was too long are now gone. In fact, 2-4 year payback is now common, particularly in Victoria.
VEECs can also be utilised for a number of other energy efficiency projects.For more information on what else you can claim email us at eric@freeengineer.com.au
For more information on other solar incentives please visit https://www.solarpedia.com.au/blog/commercial-solar/current-solar-and-battery-rebates-grants-and-incentives-for-business.
Written by Chaminda
July 4th, 2022