Renewable Energy
What Are VEECs and How Can They Save Your Business Money?
Many businesses today choose sustainable practices to reduce their environmental impact and save money. One way to do this is by focusing on energy efficiency and saving energy.
The Victorian Energy Upgrades (VEU) program is a government initiative that helps businesses adopt energy-efficient solutions and offers financial benefits through Victorian Energy Efficiency Certificates (VEECs).
So what VEECs and how can they save your business money? Let’s find out.
About Victorian Energy Upgrades
The Victorian Energy Upgrades (VEU) program, previously known as the Victorian Energy Efficiency Target (VEET), is one of Victoria’s most effective programs for reducing energy use and greenhouse gas emissions.
Created by the Victorian Government, the program encourages homes and businesses to use energy-efficient technologies and practices.
It offers financial incentives to reduce the upfront costs of energy-efficient upgrades, making them more affordable and accessible for everyone in Victoria.
How the Program Works
The VEU program is based on a system of Victorian Energy Efficiency Certificates (VEECs). Each VEEC equals one tonne of greenhouse gas emissions saved through approved energy-saving activities.
Accredited providers, like Cyanergy, carry out these activities. Examples include:
- Replacing old, inefficient lighting with LED lights.
- Installing energy-efficient appliances.
- Upgrading insulation.
- Adding renewable energy systems like solar hot water.
For each upgrade, providers generate VEECs and pass savings to consumers through discounts or rebates.
Energy retailers in Victoria must buy and submit a certain number of VEECs each year to meet legal emissions reduction targets. This drives energy-saving projects and promotes efficient technologies in homes, businesses, and industries.
Benefits of the Program
The VEU program offers several advantages:
Lower Costs: Households and businesses save on energy bills using less energy.
Environmental Benefits: The program reduces greenhouse gas emissions, supporting Victoria’s climate goals.
Economic Growth: By boosting demand for energy-efficient products, it supports local businesses, creates jobs, and promotes innovation in green technology.
Accessibility: Financial incentives make participating easier for low-income households and small businesses.
Program Scope and Eligibility
The program includes various energy-saving activities for homes and businesses, such as:
- Switching old halogen or incandescent lights to energy-efficient LEDs.
- Installing efficient heating, cooling, and ventilation systems.
- Upgrading appliances like refrigerators and freezers to energy-saving models.
- Improving building insulation and sealing to prevent energy loss.
- Adding renewable energy solutions, such as solar hot water systems.
Participants range from individual households to large businesses, ensuring the benefits of energy efficiency reach all parts of the community.
What are Victorian Energy Efficiency Certificates (VEECs)?
VEECs are digital certificates representing the savings of 1 tonne of greenhouse gas emissions (measured as CO2 equivalent) through energy-saving actions by homes and businesses.
These certificates are part of the VEU program, run by the Essential Services Commission.
Businesses can earn VEECs by adopting energy-saving methods like upgrading lighting, adding solar panels, or improving heating and cooling systems (HVAC).
These certificates make energy-efficient products and activities more affordable, helping businesses cut costs and reduce greenhouse gas emissions.
How Victorian Energy Efficiency Certificates Work?
Victorian Energy Efficiency Certificates (VEECs) are part of the Victorian Energy Upgrades (VEU) program, which started in 2009 to help reduce greenhouse gas emissions from energy use by encouraging energy efficiency.
To be part of the VEU program, energy-saving products must be approved and listed in the program’s Register of Products. This involves an application and approval process.
Accredited providers must carry out installations and energy-saving activities to generate VEECs.
Common ways to earn VEECs include:
- Upgrading lighting in commercial buildings.
- Improving heating and cooling systems (like water heaters and air conditioners).
- Switching to high-efficiency appliances like fridges, pool pumps, and clothes dryers.
- Insulation or low-flow showerheads should be added for better energy use in homes.
Lighting upgrades have been the main source of VEECs so far. However, many lighting products have recently been removed from the program’s approved list so that more certificates will come from other energy-saving activities.
Under the VEU scheme, energy retailers must participate if they sell large amounts of gas or electricity in Victoria. Retailers are considered responsible if they either:
- Serve at least 5,000 customers.
- Sell over 30,000 megawatt hours (MWh) of electricity.
- Sell over 350,000 gigajoules (GJ) of gas.
How Are VEEC Prices Determined?
How VEECs Are Generated?
The number of VEECs created by an energy efficiency project is directly tied to the amount of greenhouse gas emissions it saves.
For example, upgrading a building’s lighting or installing a solar hot water system reduces energy use, which lowers emissions.
Each tonne of emissions saved is converted into one VEEC, making these certificates a measurable representation of environmental benefits.
Who Buys VEECs?
Several entities participate in the VEEC market, including:
Energy Retailers: These companies have legal obligations under the VEEC Act. Their liability is calculated based on the total energy (electricity or gas) they sell yearly.
To meet these obligations, they must purchase and submit a specific number of VEECs annually.
Accredited Persons: Businesses or individuals accredited under the VEU program for energy efficiency upgrades may purchase VEECs to meet project requirements or manage their commitments.
Certificate Traders: These entities act as intermediaries, buying and selling VEECs to ensure smooth market functioning.
Other Account Holders: Any organisation or individual with a VEU account can trade or hold VEECs, often for financial or compliance purposes.
How Are VEEC Prices Set?
Like other environmental certificates across Australia, VEEC prices are determined by market dynamics. The spot price, or current market price, changes based on:
Supply: The availability of VEECs depends on the completion and creation of energy-saving projects and certificates. If more projects are implemented, the supply of VEECs will increase.
Demand: Demand comes primarily from energy retailers meeting their legal obligations and others trading VEECs. Prices may rise if demand is high (e.g., due to increasing energy retailer liabilities or growing participation in energy efficiency programs).
Market forces, regulatory changes, and technological advancements can significantly affect supply and demand, causing the spot price of VEECs to fluctuate.
How VEECs Help Beat Energy Prices?
VEEC prices impact:
Consumers: Higher VEEC prices may translate to better rebates and discounts for households and businesses adopting energy-efficient upgrades.
Energy Retailers: Rising VEEC costs increase compliance expenses, which may influence consumer energy prices.
Market Stability: A healthy balance between supply and demand ensures a stable VEEC price, supporting continued participation in the program and fostering investment in energy efficiency projects.
Understanding these price dynamics helps stakeholders decide about energy efficiency investments and trading strategies.
Benefits of VEECs for Your Business
Victorian Energy Efficiency Certificates (VEECs) can provide several advantages for businesses, especially those with high energy consumption in Victoria.
These benefits include cost savings, faster returns on investment, and opportunities for further improvements in energy efficiency.
Lower Upfront Costs
VEECs act as financial incentives, reducing the initial costs of energy-saving upgrades. When a project generates VEECs, businesses can apply the value of these certificates as a discount on the capital costs of upgrades like:
- Replacing inefficient lighting with LEDs.
- Upgrading HVAC systems or insulation.
- Installing solar hot water or other renewable solutions.
This makes energy-efficient upgrades more affordable and easier to implement.
Faster Payback Periods
Reinvestment Opportunities
The financial savings generated by energy-efficient upgrades can be reinvested into additional projects. For example:
- After upgrading to energy-efficient lighting, a business might use the savings to install renewable energy systems like solar panels.
- This cycle of reinvestment helps businesses continuously improve energy efficiency and further reduce operational costs.
Tailored Benefits for High-Energy Consumers
Environmental and Reputation Benefits
Adopting energy-saving measures and participating in the VEEC program enhances your business’s reputation. Customers and stakeholders increasingly value companies that prioritise sustainability and take steps to reduce their carbon footprint.
If your business is in Victoria and consumes substantial electricity, gas, or both, participating in the VEU program and earning VEECs can be a smart move for your operations and bottom line.
How can VEECs make your business more energy efficient?
VEECs (Victorian Energy Efficiency Certificates) can make your business more energy-efficient by helping you identify energy-saving opportunities and implementing upgrades.
With expert support, you can reduce energy use, lower operating costs, and improve sustainability while benefiting financially.
To generate VEECs, you need to work with an Accredited Provider. Cyanergy is an Accredited Provider under the Victorian Energy Upgrades (VEU) program and offers assistance in creating VEECs through eligible energy projects.
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