VEET Scheme Archives - Northmore Gordon

Energy Savings Big Win – Federal Tax Cuts + Energy Efficiency Programs

Northmore Gordon — Fri, 09 Oct 2020 05:42:24 +0000

Energy efficiency equipment payback drastically reduced. The payback period for many capital equipment purchases can be drastically reduced (40% or greater). Be it Boilers, Chillers, HVAC, UPS, Motors, VSD, Compressors and Blowers.

The Federal Budget announced on the 6th of October that nearly all businesses will be able to fully deduct capital equipment purchases in operation by June 2022. If you couple this with the state based energy savings scheme (NSW, ESS, VIC, VEU) then a business can substantially reduce their energy costs, and achieve a much shorter payback. With the added bonus of the higher reliability and lower maintenance that comes with new equipment.

Take for example the upgrade of a 6MW Gas-Fired Steam boiling is using say 45,000 GJ PA at recent prices of say $11.00 per GJ and hence $500,000 PA in gas charges. The upgrade to a new high efficiency boiler with economiser, O2 trim could cost around $800,000. The efficiency gains from moving from a 30 year old boiler to a modern one could be as high as 30%, but we’ll use a 25% reduction in gas usage for this example and hence annual gas savings of 11,250 GJ PA. Prior to the Federal Budget (and after June 2022) a new boiler asset would need to be depreciated over 20 years.

The figures for the new boiler commissioned by June 2022 are as follows

Immediate tax writeoff 30% x $800,000 = $240,000
Compared with tax write off over 20 years = $12,000 per annum
Energy Saving Certificates = $110,000
Capital Costs (after tax writeoff and certificates)
- $800,000 – $350,000 = $450,000
Annual Gas Savings of $11.00 x 11,250 = $124,000

Compare the three scenarios

No tax cuts & not claiming environmental certificates

Simple payback = $800,000 / ($124,000 + $12,000) = 5.9 years

Using tax cuts & not claiming environmental certificates

Simple payback = ($800,000 – $240,000) / $124,000 = 4.5 years

Using tax cuts & environmental certificates

Simple payback = ($800,000 – $240,000 – $110,000) / $124,000 = 3.6 years

Hence by performing the upgrade with the new Federal Budget changes reduces the outlay by more than 25% and brings down the payback period substantially. Also be aware that with the changes that allow companies to offset future losses against past profits for the financial years of 2020-2022 means that you can carry back losses (ie the capital cost) to reduce last year’s tax bill as well.

Boilers are one asset type that uses a large amount of energy and has the potential to save substantial energy, but the same applies to many other equipment upgrades that will drive substantial energy savings. Consider these aging assets for replacement by using the immediate tax depreciation and NSW Energy Saving Scheme or Victorian Energy Upgrades to drive much short payback periods.

Gas-fired Steam Boilers in Industrial process
Gas-fired Hot Water Boilers for Commercial Buildings
Chillers for Commercial HVAC
UPS and CRAC upgrades for Data Centres
Air Compressor upgrades
Variable Speed Drives for large motors and fans (very fast payback)
Warehouse and Orchard Coolroom upgrade
Installation of Large Scale Solar PV in Victoria under the VEU

All these assets can claim energy savings certificates using the Measurement and Verification methods under the different state-based schemes as well as under the Australian Carbon Farming Initiative (Carbon Solutions Fund).

Image courtesy of: couriermail.com.au

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Over 3 Million Tonnes Abated. Many thanks to our Partners.

Northmore Gordon — Wed, 23 May 2018 07:02:44 +0000

Wattly is pleased to announce that we’ve created over 3 million certificates under Victorian Energy Upgrades (VEU). With the help of our partner installation companies, Wattly has ensured that 3 million tonnes less CO2 will go into the atmosphere over the next 10 years.

Sales & Marketing Director, Craig Morgan said “LED lighting technology reduces energy consumption by over 80% compared to most existing lights. The potential for energy and cost savings is available to all sectors of the economy and will generate long-term reductions in carbon emissions. We have seen widespread adoption of LED lighting in retail, hospitality, healthcare, warehouses and factories throughout Victoria and NSW.”

“Energy Savings continue to be the most cost effective, and most over-looked way to help meet Australia’s commitments under the Paris Accord. The Victorian Energy Upgrades (VEU) program alone is responsible for a reduction of 5% of the total electricity consumed in the state of the Victoria compared to business as usual. This is very significant, and in fact twice the amount of energy produced by behind-the-meter Solar PV. We are looking forward to continuing to accelerate the reduction in emissions through commercial and industrial energy efficiency and the ongoing boom in Solar across Australia.

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VEET Scheme Update | VEET changes to VEU Program | 2017

Northmore Gordon — Thu, 28 Dec 2017 00:30:21 +0000

The VEET Scheme changes to the VEU Program

The Victorian Energy Efficiency Target (VEET) Scheme has decided to make a change and rebrand with a new name and new regulations. The VEET Scheme, also known as the Energy Saver Incentive began in 2008 with a purpose to make energy efficiency improvements more affordable, reduce greenhouse gas emissions and encourage energy efficiency. The VEET Scheme has been well-known for offering Victorian’s free lighting upgrades and has said to have helped more than 70,000 businesses and 1.7 million households.

Why are they changing the name to Victorian Energy Upgrades Program

The ESC website explains this well. To put it simply, there was confusion on who administers and regulates the program and who set the program policy. The government rebranded the public-facing aspect of VEET to the Victorian Energy Upgrades Program, but the internal administrative side remains known as the VEET Scheme.

Changes for the Victorian Energy Efficiency Target Regulations

Fundamentally the scheme didn’t change, the purpose and objectives are relatively the same. The big difference is the scheme is moving with the times and as the industry evolves, the relevant methods change. The new scheme will now include several new activities including a customised way to measure energy savings. The changes in the program will also give previously excluded large energy users the opportunity to benefit from Victorian Energy Upgrades.

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The VEET Scheme gets a new name and new regulations

Northmore Gordon — Thu, 28 Dec 2017 05:26:00 +0000

The VEET Scheme changes to the VEU Program

Why are they changing the name to Victorian Energy Upgrades Program

Changes for the Victorian Energy Efficiency Target Regulations

For further details on how the VEU Program can assist you with your next energy efficiency project, click here.

All other information about Victorian Energy Upgrades, can be found at esc.vic.gov.au/media-centre/new-name-new-regulations-veet-scheme

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VEET Schedule 34 Discount Factors – Consultation Paper & Government Gazette

Northmore Gordon — Wed, 27 Sep 2017 10:53:42 +0000

The Department of Environment Land Water and Planning (DELWP) has now released the anticipated VEET Schedule 34 consultation paper with the proposed discount factors.

As required by the VEET Act they have also released the Government Gazette “Notice of Intention to Declare a Discount Factor” and hence have put everything in place to introduce a discount factor for both Highbays and T8/T12 Fluorescent Lights from the 1st of January.

As suggested by EECCA they are proposing to implement the discount factor in two stages to give businesses time to adjust. Initial change on the 1st of January 2018 and a further change on 1st of April 2018.

Metal Halide, Mercury Vapour, and High-Pressure Sodium (eg highbays, floodlights, certain rectangular shop lights and some others)
- DF: 0.85 from 1st January 2018 to 31-Mar-2018
- DF: 0.7 from 1st April 2018
Fluorescent T8/T12 (retail, offices, warehouses, factories, schools, etc)
- DF: 0.9 from 1st January 2018
- DF: 0.8 from 1st April 2018

Given that the government released the issues paper on the 18th of August and has included some of the recommendations from submissions to the previous issues paper, it appears highly likely that once the consultation process has been completed that the government will go ahead with this change.

The discount factor is a multiplier (default value of 1.00) for the carbon dioxide equivalent emissions and hence the proposed multipliers will reduce the VEEC quantity for upgrades from the lamp types above. EG A typical MH highbay to LED receiving 17 VEECs will receive 0.7 x 17 = 11.9 VEECs from the 1st of April.

It isn’t clear from the consultation or gazette if the dates apply to the Activity Date (ie jobs completed by the dates above) or Creation Date (jobs submitted to the VEET portal by the dates above). In the past, the types of changes have applied to the Activity Date. We are seeking further clarity and will let you know once we hear back from DELWP.

Please don’t hesitate to contact Wattly for more information. Below is the table from the Government Gazette and links to the consultation paper and Gazette.

https://www.energy.vic.gov.au/energy-efficiency/victorian-energy-upgrades

*Note that this does not apply to Non-Building Based Lighting under Schedule 34

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VEET Scheme having a tremendous financial & abatement impact

Northmore Gordon — Thu, 03 Aug 2017 07:05:49 +0000

The VEET scheme, now rebranded as the Victorian Energy Upgrades (VEU) program is having a tremendous impact, saving money for Victorian households and businesses (over $400M this year alone) and reducing carbon emissions in a real and meaningful way. This year alone emissions savings equivalent to half a million cars being removed from the roads. Read full details below. Wattly is proud to be a major participant in the program, please see the case study of the upgrade of Metcash distribution centre, performed by one of our partners; incentives provided through Wattly under the VUE program.

Victorian Government Press Release

Metcash Distribution Centre Lighting Upgrade Video

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Wattly achieves 2 million VEET certificates created, 20th June 2017

Northmore Gordon — Mon, 19 Jun 2017 23:56:59 +0000

Wattly is pleased to announce that we’ve now created over 2 million certificates under the VEET scheme. With the help of our partner installation companies, Wattly has ensured that 2 million tons less CO2 will go into the atmosphere over the next 10 years. The bulk of this abatement has come from LED Lighting upgrades to both commercial and residential buildings.

Managing Director, Hamish McGovern said “LED lighting technology reduces energy consumption by over 80% from existing installed lighting. The potential for energy and dollar savings is available to all sectors of the economy and will generate long term reductions in carbon emissions. We’re now seeing widespread adoption of LED lighting in warehouses and factories throughout Victoria and NSW.” He went on to add, “The Victorian Energy Efficiency Target (VEET Scheme) has been highly successful in driving very fast adoption of LED lighting, at a low cost, and this would not have happened for decades without an incentive scheme such as VEET. We call on the Federal Government to setup a National Energy Saving Scheme so that all Australians can benefit from LED lighting and have a direct and significant impact on the energy crisis trifecta (of security, affordability and reduced emissions)”.

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Wattly achieves 1.5 Million VEET Certificates Created, Wednesday 30th November 2016

Northmore Gordon — Wed, 30 Nov 2016 05:16:56 +0000

Wattly is proud to announce that we’ve now created over 1.5 million certificates under the VEET scheme. With the help of our partner installation companies Wattly has helped to ensure that over the next 10 years 1.5 million tons less CO2 will go into the atmosphere than would otherwise have done so. The bulk of this abatement has come from LED Lighting upgrades to both commercial and residential buildings.

Managing Director, Hamish McGovern said “We are thrilled to have been able to achieve such a large number of upgrade activities over the past 12 months. The LED lighting upgrades will generate long term reductions in carbon emissions and significant energy savings to the businesses and household where they have been installed. We are confident that these upgrades will remain in place for many many years and help contribute to combating climate change”. He went on to add “It’s becoming much more widely accepted that more needs to be done in this space and the state governments, especially Victoria and NSW are leading the way. We’re looking forward to 2017 when the VEET scheme will support abatement in the industrial space and for large energy users where we see good opportunities to drive further reductions in carbon emissions”.

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VIC Moving away from coal fired electricity

Northmore Gordon — Tue, 27 Sep 2016 06:14:30 +0000

“Through burning brown coal Victoria has the highest carbon intensity of all the Australian states, with estimates of 1.34 tons of CO2 emitted for each MWhr of electricity generated. With the reduction in demand through the VEET scheme and increased renewals, we’re now seeing a shift away from a previously very high reliance on coal for Victoria’s electricity generation; closing Hazelwood will definitely reduce Victoria’s emissions. Interesting times ahead, we hope the increasing employment opportunities in the energy efficiency and renewals continues to increase and offset some of the jobs that will be lost at Hazelwood.”

See http://reneweconomy.com.au/2016/hazelwood-closure-open-path-solar-towers-storage-15812

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