Madonna Ghajar, from Northmore Gordon remarked on the initiative, stating, “This initiative represents a crucial step toward a more sustainable future by harnessing the untapped potential of C&I rooftops. Integrating large-scale rooftop solar and battery systems not only provides Victorian businesses with a new revenue stream but also supports the broader energy market, aligning perfectly with Northmore Gordon’s commitment to advancing emission-free electricity through innovative solutions.”

Transforming Rooftops into Powerhouses

The discussion paper, titled “Business Power,” emphasizes the untapped potential of C&I rooftops across Australia, arguing that these spaces could be converted into substantial electricity generation and storage assets. VEPC’s calculations suggest that the country’s unused rooftop space is vast enough to supply at least 25% of Australia’s annual electricity needs, potentially transforming the national energy landscape.

VEPC Director Bruce Mountain underscored the transformative impact of this policy shift: “Electricity produced in cities and used locally reduces transmission losses. Businesses could generate solar power during the day, store it in batteries, and sell it back to the grid during peak hours.”

Financial Incentives for a Sustainable Future

To make this vision financially viable, VEPC proposes the introduction of new floor prices for electricity sold to the grid outside peak solar periods and for battery discharge during evening peaks. Specifically, the paper suggests a solar feed-in floor price of $100 per MWh and a battery discharge floor price of $200 per MWh. These incentives aim to make investing in rooftop solar and battery storage an attractive proposition for businesses, thereby accelerating the transition to a low-carbon economy.

This policy framework aligns with Northmore Gordon’s findings that solar with battery energy storage systems (BESS) generate additional value under the Victorian Energy Upgrades scheme when reducing excess export to the grid.  Northmore Gordon recommends that the Victorian Government explorers ways to increase VEEC generation for Solar with batters under the VEU. Supporting battery storage not only enhances grid stability but also improves cost efficiency, aligning with the broader goal of expanding emission-free electricity while minimizing the need for costly new transmission infrastructure.

Bridging the C&I Solar Gap

While residential solar adoption has surged in recent years, the uptake in the C&I sector has lagged. Between 2019 and 2023, residential rooftop solar capacity grew by approximately 2.5 GW annually, whereas the C&I sector added only about 500 MW per year. This discrepancy highlights a significant opportunity for growth in the commercial sector, which VEPC’s proposed policies aim to address.

A recent report by Victoria-based research firm Nexa Advisory further supports VEPC’s findings, estimating that an additional 28 GW of rooftop PV could be installed across C&I rooftops within the National Electricity Market. This expansion could play a crucial role in replacing coal generation set to be phased out over the next decade, all while minimizing the environmental and social impacts associated with large-scale solar and wind projects that require extensive new transmission infrastructure.

Mountain also pointed out that this shift could reduce the reliance on large-scale solar and wind farms located in rural areas, which require expensive new transmission lines to deliver power to urban centers. Instead, locally produced and stored energy could make better use of existing urban distribution networks, enhancing the efficiency of the energy system.

A Vision for the Future

The VEPC’s “Business Power” proposal is driven by the urgent need to expand emission-free electricity sources in Australia. As the country prepares for the closure of coal-fired power stations, this policy could play a pivotal role in ensuring a smooth transition to cleaner energy. By tapping into the potential of C&I rooftops, Australia could not only meet a significant portion of its electricity needs with renewable energy but also do so in a way that minimizes the social and environmental costs associated with traditional energy infrastructure projects.

Mountain concluded with a compelling vision: “In short, there seems to be little to be lost and a potentially large benefit to society.”

As Australia continues to lead the world in solar adoption, this policy shift could position the country as a global leader in integrating battery-backed solar solutions into the commercial sector, paving the way for a more sustainable and resilient energy future.

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What are PBA VEU Projects? 

The Victorian Energy Upgrades (VEU) program, formerly known as the Energy Saver Incentive, is a state government initiative aimed at helping businesses and households reduce their energy usage and greenhouse gas emissions. Within this framework, Project-Based Assessments (PBA) offer a flexible and comprehensive method for achieving significant energy savings. 

PBA VEU projects are custom energy-saving initiatives tailored to the specific needs of a business. Unlike standard energy efficiency upgrades that involve simple replacements or retrofits, PBAs take a holistic approach. They assess the entire facility or process to identify multiple opportunities for energy savings, often combining several measures to maximize efficiency and cost-effectiveness. 

How Do PBA VEU Projects Work? 

1. Initial Assessment: The process begins with a thorough assessment of your business operations. Energy experts analyze current energy usage patterns, equipment, and processes to identify potential areas for improvement. 

2. Project Proposal: Based on the assessment, a detailed project proposal is developed. This proposal outlines the recommended energy-saving measures, expected savings, implementation costs, and potential rebates available through the VEU program. 

3. Implementation: Once the proposal is approved, the implementation phase begins. This can involve a variety of actions, from upgrading lighting and HVAC systems to optimizing manufacturing processes or installing renewable energy sources. 

4. Verification and Reporting: After implementation, the project’s effectiveness is verified through monitoring and reporting. This step ensures that the projected energy savings are achieved and sustained over time. 

Why Should Your Business Consider PBA VEU Projects? 

1. Substantial Energy Savings: PBA VEU projects can lead to significant reductions in energy consumption, resulting in lower utility bills and operational costs. 

2. Tailored Solutions: Unlike one-size-fits-all upgrades, PBAs are customized to address the unique energy needs of your business, ensuring maximum impact. 

3. Financial Incentives: The VEU program offers financial incentives to help offset the initial costs of implementing energy-saving measures, making these projects more affordable. 

4. Environmental Impact: Reducing energy consumption not only saves money but also contributes to lowering your business’s carbon footprint, supporting broader sustainability goals. 

5. Enhanced Operational Efficiency: Beyond energy savings, PBAs often lead to improvements in overall operational efficiency, enhancing productivity and competitiveness. 

Examples of PBA Projects 

Solar PV Installation at The Australian Glass Group The Australian Glass Group (AGG) implemented a 581kW solar PV system on the roof of their head office and manufacturing site in Knoxfield. This project, facilitated by an agreement with the building owners, APN Property Group, allowed AGG to reduce energy costs significantly while contributing to a greener property portfolio. By participating in the VEU program, AGG measured and verified annual carbon savings of 421 tonnes of CO2. The PBA approach enabled AGG to use Green Power from their solar PV system and realize a return on investment over three times higher than if they had claimed Large-scale Generation Certificates (LGCs). The quicker turnaround on financial returns and the reduced upfront costs made the project particularly attractive. 

Energy Management System for a Water Corporation – A water corporation aiming for 100% renewable energy by 2025 and net zero emissions by 2030 engaged Northmore Gordon to develop an organization-wide Energy Management System. The project included a detailed review of current energy management practices, an assessment of top energy-consuming sites, and an identification of over 65 improvement opportunities. The implementation of these measures, supported by the VEU PBA method, significantly reduced project payback times and helped the corporation align with its ambitious energy and environmental targets. 

Biomass Boiler Upgrade at an Industrial Site – Northmore Gordon facilitated a project that replaced natural gas-fired boilers with a biomass boiler system fueled by locally sourced sawdust. This upgrade included the installation of a 3 MW thermal biomass boiler and associated infrastructure. The project complied with the Victorian Energy Upgrade Program, maximizing financial incentives through the creation and trading of VEECs. This comprehensive service, from M&V planning to energy savings calculation, ensured the project delivered substantial energy and cost savings. 

HVAC System Overhaul at Aurora Place – Aurora Place undertook a major energy efficiency project to upgrade its HVAC system. The project involved replacing chillers, upgrading cooling towers, and installing variable speed drives and other control system enhancements. Northmore Gordon’s M&V work allowed for the creation of energy savings certificates (ESCs) under the NSW Energy Savings Scheme (ESS). These certificates generated significant revenue, which was reinvested into further building improvements. Despite challenges such as aging equipment and the impact of COVID-19, the project achieved annual energy savings of 309,000 kWh and provided substantial financial returns. 

These examples demonstrate the diverse applications and substantial benefits of PBA VEU projects across various industries, highlighting Northmore Gordon’s expertise in delivering tailored energy efficiency solutions. 

Project-based assessments under the Victorian Energy Upgrades program represent a strategic approach to energy efficiency, offering businesses a pathway to substantial savings and sustainability. By conducting a thorough assessment and implementing customized measures, PBAs ensure that your energy-saving efforts are both effective and enduring. 

If you’re looking to enhance your business’s energy efficiency, consider exploring the potential of PBA VEU projects. Not only will you benefit from reduced energy costs, but you’ll also be contributing to a greener future. For more information on how Northmore Gordon can assist you with PBA VEU projects contact us directly. 

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The 330kW of additional capacity installed at the site provided green energy to lighting, HVAC, and IT equipment in the dealership, as well as machinery used in the workshop. The VEU program can credit any projects that save electricity or gas from the grid, so this site with a high level of self-consumption is suited to capitalise on the value from the Project Based methodology.

While export of excess solar generation is allowed in the program, it can’t be counted in the energy savings, meaning sites that have 6 or 7-day per week operations, have high daytime loads, or are able to shift loads into the solar generation curve – colds storage, retail, warehousing, and manufacturing – are able to maximise the value from participating in the VEU program over the traditional approach of claiming LGCs for the renewable generation. The added bonus of using the VEU program is that the Federal Government carbon account rules allow keeping the green power credentials of your project towards your corporate sustainability goals.

“Solar VEECs now cover well over 40% of the cost of a large-scale solar system; it’s very compelling.  Even businesses excluded on the VEU SAP list would benefit opting in. They’d reduce their power consumption (and hence their VEU liabilty) and gaining access to large reductions in the capital cost of the solar system.   Add 30% back from full depreciation in the first financial year to > 40% covered and it’s a no brainer.  With the full capital expensing* likely to be extended to June 2023 companies should be doing this now to ensure systems are fully commissioned by then”

Hamish McGovern – Northmore Gordon, Group Commercial Director

With the VEEC price continuing to hit all-time highs, the solar PBA approach can yield 3 times the value of LGCs in net present value, while also bringing forward the incentive cash flow in 12 to 15 months from the commissioning of the system. The announcement in last year’s Federal Budget also allows businesses to fully deduct capital equipment purchases that are in operation by June 2022, further improving the project ROI. The additional benefit of using measurement and verification is that your saving are verified against an internationally recognised standard so you can be certain that the saving you have paid for have been achieve.

Talk to Northmore Gordon today to take advantage of the Victorian Energy Upgrades program – the leaders in PBA VEEC creation.

Sources: *ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/JobMaker-Plan—temporary-full-expensing-to-support-investment-and-jobs/

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The successful project claimed VEECs for avoided carbon emissions from 581kW system installed on the roof of The Australian Glass Group’s (AGG) head office and manufacturing site in Knoxfield. The building owners – APN Property Group – agreed to an addendum on the existing lease to allow AGG to save on energy costs with an agreed ROI, while greening their property portfolio.

The PV system has had the annual carbon savings measured and verified at 421 tonnes of CO₂ per annum. Using the VEU program has also enabled AGG to continue to use Green Power from the solar PV system on their roof. If the system had claimed LGCs and sold those LGCs they could no longer claim the site was reducing their emissions from electricity based on the federal carbon accounting rules. 

Using the VEU Project Based Assessment (PBA) has given a return of more than 3x what would have been realised for the customer had they claimed LGCs. The time to cash was dramatically reduce to 15 months from project commissioning instead of claiming LGCs out to 2030. The high value of the VEECs combined with the 15-month time frame for realising the certificate value, reduced the upfront cost of the system, payback period, and increased the ROI of the project. 

“Solar VEECs are really ramping up VIC. Today, 30-40% of the cost of a large-scale solar project can be covered through VEECs – it’s a game changer. Whilst the VEU PBA method is complex, Northmore Gordon pioneered measurement & verifications under the VEU and we now have substantial experience across a wide range of sites and implementations. For our customers this means less risk and the best possible outcome.”

Hamish McGovern – Northmore Gordon, Group Commercial Director

Northmore Gordon is the leader in VEEC creation under the VEU PBA method, which was launched in 2017, with 64% of all VEECs created using the method to date, corresponding to 121,000 tonnes of CO₂-e abated from Victorian projects. The Victorian Energy Upgrades program is the state’s flagship energy efficiency program that has driven a reduction of 74.9 million tonnes of CO₂-e in Victoria since 2009. Each VEEC is worth 1 tonne of CO₂-e not emitted.

Talk to Northmore Gordon today to take advantage of the Victorian Energy Upgrades program.

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