Renewed commitment to energy efficiency targets

What's new?

Victoria has renewed its commitment to energy efficiency targets with the introduction of updated targets for the next five years.  As a large energy consumer, government plays an important role in achieving these abatement targets - 5.4 million tonnes of carbon dioxide equivalent in 2016, steadily increasing each year to 6.5 million tonnes in 2020.  The Energy Saver Incentive, a scheme created by the Victorian Energy Efficiency Target Act (VEET Act) to facilitate the reduction of greenhouse gas emissions, also provides an opportunity for government to save money when undertaking certain energy efficiency activities.

How does the VEET scheme work, in a nutshell? 

1. The VEET Act:

1. Sets abatement targets; 
2. Imposes liabilities on energy retailers ('relevant entities'); and
3. Creates a scheme for the generation and sale of certificates as evidence of abatement.

2. An energy consumer (such as government) engages an accredited business ('accredited person') to do a 'prescribed activity'.  Prescribed activities are energy saving activities specified in the VEET Regulations,  including:

• incandescent lighting replacement;
• commercial lighting upgrades;
• installation of energy efficient heating or cooling; and
• purchase of energy efficient appliances.

3. For every 1 tonne of greenhouse gas abated as a result of a prescribed activity, the accredited business can generate 1 certificate representing this abatement.

  

4. The accredited business can then sell the certificates to energy retailers to enable the retailer to meet their VEET liability.

5. In anticipation of this sale, the accredited business may provide the energy consumer with a discount because the business can sell the certificates generated as a result of the energy saving activity undertaken on behalf of the consumer.  The discount is provided at the time the accredited business is engaged. 

How can the VEET scheme benefit government? 

The main benefit to government, as a large energy consumer, lies in the savings able to be made by engaging accredited businesses who offer discounts for energy saving activities, such as the installation of energy efficient lighting.    

Here are three practical tips that may help you take advantage of the scheme: 

• Check whether an activity is prescribed under the Regulations before developing a scope of work and engaging a contractor.
• Check whether a contractor is an accredited person before engaging them to undertake a prescribed activity. 
• Make accreditation under the VEET scheme a condition of any procurement process involving a prescribed activity. 

For more information visit: 

• Essential Services Commission's website: http://www.esc.vic.gov.au/Home; or
• Victorian Government's Energy Saver Incentive website: http://www.energyandresources.vic.gov.au/energy/about/legislation-and-regulation/energy-saver-incentive.

If you would like further advice in this area, please contact:

Eliza Bergin

Principal Solicitor

8684 0267

eliza.bergin@vgso.vic.gov.au