Mark Vender
The Victorian government is proposing changes to the Victorian Energy Upgrades (VEU) program, including an extension of the term of the program, stronger enforcement powers for the regulator, and more flexibility around certificates.
Under the VEU program, households and businesses can access incentives to install energy-efficient appliances. In 2023, the program was updated to support the move to electric appliances for space heating and water heating. Since those changes were introduced, the VEU program has delivered rebates for 19,000 reverse-cycle air conditioners, and 39,000 hot water systems. Households that replace a gas ducted heating system with an electric one can receive a discount of up to $3,600 on the system.
According to the government, this will contribute to an estimated 28 million tonnes of greenhouse gas emissions saved between 2022–2025.
More changes are now planned to strengthen the program.
Long-term certainty
The biggest proposed change is to extend the program from its current legislated end-point of 2030 out to 2045. The government says this is intended to provide long-term certainty for investment and align with the Victoria’s target of net zero by 2045.
Other changes would strengthen the powers of the VEU regulator – the Essential Services Commission (ESC). Currently, the ESC’s enforcement powers focus on accredited providers that facilitate upgrades. Under the proposed changes, the ESC would have greater oversight of installers working with accredited providers under the program, in addition to other enforcement and compliance powers.
Changes are also proposed to the certificate scheme that underpins the VEU program. To improve the flexibility of the program and ease pressure on the supply and price of Victorian energy efficiency certificates (VEECs), the “vintage rule” will be relaxed. This rule requires certificates to be created by January 31 for the previous calendar year in order for obligated energy retailers to comply with their surrender obligations under the scheme.
These changes are outlined in the Victorian Energy Efficiency Target Amendment (Energy Upgrades for the Future) Bill 2024, which will be finalised in 2025.
Program review
In a separate but parallel process, the government has also started a strategic review of the VEU program, as announced in the 2024–25 State Budget.
In 2025, the program will set energy saving targets for the next two years (2026 and 2027) instead of the usual five-year period. This is intended to allow industry to continue expanding support for Victorian households and businesses, helping them save energy and money, while ensuring that the next long-term targets include the key recommendations from the strategic review.
The first round of consultation on the strategic review of the VEU program recently closed. The government will now consider stakeholder feedback from this consultation to inform the next stages of the strategic review. For more information and to stay up to date, visit the Engage Victoria webpage.
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