What are Victorian Energy Efficiency Certificates (VEECs)?
An increase in commercial rebates and a change of regulation around solar energy means many Victorian businesses can now consider their electricity supply in a new way.
The Victorian Energy Upgrade (VEU) program was created to help Victorians reduce their energy bills and greenhouse gas emissions by enabling access to discounted energy-efficient products and services. Under this program, VEECs are created when certain energy efficiency activities are undertaken in residential or non-residential premises. Each certificate represents one tonne of greenhouse gas emissions reduction (CO2-e).
These certificates can be sold to energy retailers who have a liability under the program to surrender a certain number of certificates each year. The number of VEECs that a given activity can create depends on the amount of greenhouse gas emissions reduction from the activity. The program sets a state-wide target for the number of certificates created every year. The VEU’s target for 2021 is 6.5 million certificates.
Space heating and cooling
Refrigerators and freezers
Refrigerated display cabinets
Refrigeration fan motors
Building based lighting upgrades
Non building based lighting upgrades
Pre-rinse spray valve
Gas-fired steam boilers
Gas-fired water boilers or heaters
Electronic gas/air ratio controls
Combustion trim systems
Project based activities
Only entities accredited by the Essential Services Commission can create VEECs under the VEU program.
Can VEECs be used for Solar?
Solar installations come under project-based activities that reduce carbon emissions. In project-based activities, the incentive that can be claimed is specific to a given project and is claimed by using the Measurement and Verification (M&V) method.
By using industry-standard M&V techniques, the energy savings can be calculated by comparing a baseline energy model of the customer with the energy use after upgrading with the solar installation. Emissions reductions and incentives are accurately calculated based on the difference in consumption and this allows for businesses to claim incentives for their solar installation.
Figure 1: Energy Savings Verification Period (Ecovantage, 2021)
This calculation also allows VEECs to be created for future savings based on a measurement period after the project is installed. Most upgrades can forward create certificates for 10 year duration of the schemes (reversible or behavioural upgrades not allowed).
Schemes allow part of the 10 year savings to be created initially (after the operating period finishes), with balance created when actual savings exceed certificates already created. For solar PV, 99% can be created initially. The benefit of using forward creation is that VEECs can be claimed earlier, which can make a project more financially attractive. The total forward creation for a M&V project in Victorian Energy Upgrades is capped at 50,000 certificates over a maximum time period of ten years.
VEECs is likely to be most appropriate for larger-scale upgrades such as system sizes greater than 0.1 megawatts because the process is relatively complex and therefore involves a greater cost. VEECs has become much more attractive for solar installations for two reasons, one the change in requirements and the second the increase in VEECs certificate prices.
Requirements for claiming VEECs for solar?
Until recently solar installations that exported energy back to the grid were unable to claim VEECs. As of November 2020 the VEU program has made projects exporting renewable energy eligible for generating VEECs. It will not place a limit on the amount of energy you can export to the grid but only electricity consumed on site will be eligible for incentives. Removing the renewable energy export ban on M&V projects is expected to result in the installation of up to 100 megawatts of solar photovoltaic panels within ten years. This will provide Victorian businesses with up to $20 million in incentives each.
Solar installations can either claim VEECs or incentives under the Commonwealth’s Renewable Energy Target, not both. Projects can however create Small-scale Technology Certificates (STCs) for the first 0.099 megawatts of solar, and then create VEECs for the remaining capacity above 0.1 megawatts. Any generation which has created STCs will need to be subtracted from the amount eligible for VEECs.
Existing projects will also be able to apply for approval from the Essential Services Commission (ESC). including a project variation to allow the export of renewable energy
How much can you save by utilising VEECs?
The VEECs price has seen a staggering increase from November 2020 and is now more competitive than all the other rebates in the market. This is due to a combination of several factors:
The phase out of the scheme’s main source of supply (lighting upgrades) by 31st January 2022,
Doubling in the scheme’s spot price during the last 12 months, and
the reduction of emissions factor, which reduces the number of VEECs created for each activity,
Forward creation of 99% of VEECs after the 12 month ‘Verification Period’
The ability to combine the generation of the federalSmall-scale technology certificates (STCs) for the first 100kW with VEECs for the component of solar installations above 100kW
Certificate target for each year driven by act that governs the scheme is increasing year on year. The annual certificate liabilities for the retailers is set from 2009 & 2024
These factors combined have led to the dramatic increase in VEECs spot prices. As of 6th July 2021, the spot price for VEECs is $63.00. This means for a 0.2 megawatts system, the amount of incentives that can be claimed is up to $124,000. This will help solar installations above 0.1 megawatts to be more financially viable in Victoria.
Figure 2: VEECs spot prices (Demand Manager, 2021)
At Energy Terrain we are committed to seeing a world powered by renewable energy and incorporate sustainability as the underlying thread of everything we do. Through the Solar Power Purchase Agreement offered by Energy Terrain, we take all the hassle out of owning a solar system including navigation of the rebate options and provide you with a guaranteed low cost of energy. You as a business can focus on your core activities and know that you are a part of a greater vision for a sustainable world for generations to come.
Common Capital Pty Ltd. (2017). Calculating Savings using Measurement and Verification. Department of Environment, Land, Water and Planning.
Demand Manager. (2021, July 6). Certificate Prices. Demand Manager. https://www.demandmanager.com.au/certificate-prices/
Department of Environment, Land, Water and Planning. (2020, November). FAQs: Measurement & Verification removal of renewable energy export ban. State Government of Victoria.
Department of Environment, Land, Water and Planning. (2021). Custom upgrades. Energy advice for business. https://www.victorianenergysaver.vic.gov.au/energy-advice-for-business/discount-energy-saving-products-for-business/custom-upgrades2
Department of Environment, Land, Water and Planning. (2021, April 12). Victorian Energy Upgrades - Targets. Engage Victoria. https://engage.vic.gov.au/victorian-energy-upgrades/targets
Department of Environment, Land, Water and Planning. (2021, June 30). Accredited providers. https://www.energy.vic.gov.au/energy-efficiency/victorian-energy-upgrades/specifications
Essential Services Commission. (n.d.). Victorian energy efficiency certificates (VEECs). Essential Services Commission. Retrieved July 07, 2021, from https://www.esc.vic.gov.au/victorian-energy-upgrades-program/about-victorian-energy-upgrades-program/victorian-energy-efficiency-certificates-veecs
Essential Services Commission. (2020). Overview of VEU activities. Essential Services Commission. https://www.esc.vic.gov.au/victorian-energy-upgrades-program/about-victorian-energy-upgrades-program/overview-veu-activities
Stella, M. (2021, May 5). Australia’s largest energy efficiency market hits new price high, from shaky ground. Renew Economy. https://reneweconomy.com.au/australias-largest-energy-efficiency-market-hits-new-price-high-from-shaky-ground/