A Bright Business Idea

The VEET Scheme

With the recently introduced Carbon Tax and millions allocated nation-wide toward wind, solar and other forms of clean renewable energy, Australians are more aware than ever before of the urgency of reducing and conserving energy. More and more construction designs challenge conventional building methods, techniques and materials, and address energy conservation head-on. Recent years have seen construction innovations such as harvesting rainwater for irrigation and toilet-flushing, encouraging abundant natural light, utilising passive heating and cooling techniques, incorporating plants for natural beautification and air filtration, and building structures that blend harmoniously with their environments.

Fortunately, an increasing number of Australian-based businesses are also getting on board with energy savings across different states. Since it was established under the Victorian Energy Efficiency Target Act 2007, and commenced on 1 January, 2009, the Victorian Energy Efficiency Target – better known as the VEET Scheme – has expanded and been amended to encourage Victoria’s businesses to save energy, and money.

Administered by the Essential Services Commission (ESC), the VEET Scheme is promoted as an Energy Saver Incentive, or ESI. This past May saw the introduction of four new amendments, to be undertaken exclusively in business and non-residential premises. These include replacing an electric motor with a high efficiency motor, switching a refrigerated display cabinet for one which is high efficiency, replacing refrigeration fans, and commercial lighting upgrades.

As many business owners will readily acknowledge, a considerable amount of money goes toward electrical bills for lighting. A quick count of light fixtures in a retail store will reveal illumination used at entrances and exits, accompanied by ceiling fixtures, wall-mounted lights, and often numerous spotlights and other lights used in display areas. Under the VEET Scheme, commercial buildings can benefit from upgrades which involve a shift toward more energy-efficient types of lighting – such as Light Emitting Diode (LED) – or the removal of unnecessary lamps from multiple lamp fittings. Along with commercial lighting upgrades, provisions under VEET also include offices, hotels and restaurants, service stations and car parks, and health care buildings (and exclude street and traffic lights, and lighting in public parks).

Pulling the Plug on Inefficient Lighting

Switching from inefficient types of lighting can result in dramatic reductions in energy use for businesses. A key example of an inefficient source of lighting remains the standard pear-shaped incandescent globe, a technology which has been widely used for a century. Sold in a variety of wattages, these commonly used bulbs incorporate an electric element. Once the element is heated, it gives off light, yet almost all its energy is converted into heat, making incandescents the least efficient form of lighting.

Worldwide, the use of these bulbs has been on the downslide for years. Standards for efficient lighting have existed in Europe and Australia since 2009, in California and British Columbia since 2011, and 2014 will see a continued rollout of federal standards for higher wattages across the United States. In Australia, there is a ban on importing incandescent globes. Some reports predict that by 2020, switching to energy-efficient lighting will save Australians approximately $380 million every year.

VEET for Business

Since it was expanded this year, the timing is ideal for businesses in Victoria to make changes to dramatically lower energy costs, reduce their carbon footprint, and enjoy savings of up to 40 per cent off their electricity bills through the installation and use of approved, energy-saving lighting solutions.

The VEET Scheme works this way: a system of Victorian Energy Efficiency Certificates – better known as VEECs – are created through Accredited Persons, who in turn provide customers with an identifiable benefit for the certificates. These benefits can include reduced product prices, free installation, or a cash-back arrangement. The Accredited Person takes the VEECs to energy retailers, who are compelled to meet an annual target number of certificates. Designed to support households and Victoria’s commercial and industrial sectors in their pursuit to reduce harmful greenhouse gas emissions, the value of every tradeable VEEC is the representation of one tonne of carbon dioxide equivalent which has been abated by an approved energy-efficiency project. Market-driven, the value of a single VEEC varies, and has recently fluctuated between $25 and $35.

It may seem somewhat complicated, but the VEET Scheme is a viable way for Victorian businesses to save money and make energy efficiency improvements affordable, have their lighting needs evaluated and improved to keep pace with exciting new technologies, encourage investment, employment, research and innovation, and be responsible for reducing greenhouse gases and helping to preserve the nation’s future – the greater the reductions, the greater the potential savings.

Keeping on Target

When it was introduced on 1 January, 2009, the VEET Scheme’s exclusive focus was Victoria’s residential sector. With targets set for three-year periods, the goal for 2009 to 2011 was a reduction of 8.1 million tonnes of carbon dioxide equivalent. Already into the second period, which will run from 2012 to 2014, the target is 5.4 million tonnes of carbon dioxide equivalent per year, the equivalent of making an additional 450,000 households carbon neutral for a year.

There are online calculators (https://www.veet.vic.gov.au/Public/Public.aspx?id=Calculators) available from the Essential Services Commission (ESC) – which administers the VEET scheme – which can be used to determine the number of VEECs which can be received. There are a number of restrictions to the VEET Scheme, including where activity takes place. To be eligible, energy-saving efforts must occur in one of four regions in Victoria: metropolitan, regional cold, regional mild, and regional hot, which will affect the number of VEECs which can be received. These are then sold on the open market to a number of parties, such as Victorian electricity and gas retailers who, according to Green Energy Trading, “must purchase and surrender certificates in proportion to their acquisitions of gas and electricity or pay a penalty.” Another stipulation is that VEECs must be claimed within a six-month period of the end of the calendar year in which the system was installed.

Although VEET is not a rebate scheme, it does allow Victorian energy businesses such as lighting companies, or Accredited Persons, to create certificates when energy-efficiency improvements are made. With each certificate representing a tonne of greenhouse gas abatement, monies generated from the sale of these certificates can then be used to discount products installed, called the Energy Saver Incentive. To qualify, only accredited businesses can create VEECs through the provision of approved products; in the case of other products – such as replacing old appliances with new, energy-efficient ones – the old appliance must be permanently decommissioned and rendered unusable before VEECs can be created.

Initially benefitting homeowners upgrading such products as water heaters, incandescent lights, televisions, clothes dryers, pool pumps and more, the 15 energy-saving activities covered by the VEET Scheme now include four aimed specifically at Victoria’s business and non-residential sector.

For more information on the Victorian Energy Efficiency Target, certificates, and more, businesses are encouraged to contact the Essential Services Commission’s VEET Support Service by phone at (03) 9651 4911, email queries to veet@esc.vic.gov.au, contact the Essential Services Commission at Level 2, 35 Spring St, Melbourne, VIC 3000, or visit the website at www.veet.vic.gov.au.

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December 19, 2018, 5:31 PM AEDT