Environmental Upgrade Agreements
Author: Cherry Energy Solutions
Environmental Upgrade Agreements (EUAs) are a Victorian and NSW council-based financing mechanism enabling building owners, tenants and investors to better access long term finance for environmental upgrades, including LED lighting and solar energy, to existing commercial and non-residential buildings on attractive terms.
- The building owner agrees to carry out environmental upgrade works.
- The building owner, council and finance provider voluntarily enter into an EUA.
- The finance provider agrees to advance funds for the environmental upgrade works.
- The council collects repayments for the environmental upgrade works through the rates system and then passes the repayments on to the finance provider.
- The building owner can ask tenants to contribute towards the cost of the upgrade through the savings achieved with the energy efficiency upgrade.
BUILDING OWNERS & LANDLORDS
Under an EUA, a lender provides finance to a building owner using the land or building as security and the local council collects repayments through the rates system.
Security The use of the council rates system means that an EUA loan is prioritised over other debts attached to the land or building. The loan is therefore highly secure, making it possible to access capital at competitive rates over a longer period of time.
No Upfront Costs Upgrades can be made at zero upfront cost, with lower monthly repayments than previous energy costs, resulting in dramatically improved cash flow.
Flexibility The EUA is tied to the property and does not increase the personal debt of the building owner. If the property is sold, the EUA charge may be transferred to the new owner.
Win-Win EUAs provide a mechanism to address differing incentives between landlords and tenants. Landlords can share the costs of improving the building in agreement with tenants who will benefit from the funded works through reduced energy bills. Victorian Legislation requires tenant consent before this can occur.
The tenant stands to benefit from day one of their environmental upgrade.
Energy Efficiency Tenants can enjoy the benefits of a more comfortable, ambient and environmentally friendly tenancy with reduced operating costs and energy bills.
Win-Win If the tenant is asked to contribute money towards the EUA, they can simply redirect some of the money currently being spent on energy towards a better performing tenancy. They will remain cash flow positive as the loan repayments will be lower than the energy savings.
EUAs can be used by councils to encourage business owners to increase the performance of their building and to save water, energy and greenhouse gas emissions. The council’s role is to levy the EUA loan repayments through the council charge system (rates) and remit that payment to the finance provider.
Reduced Environmental Impacts Upgraded buildings attract investment, reduce environmental impacts, reduce pressure on infrastructure and increase the competitiveness and liveability of local building stock.
Opportunities Building upgrades can boost local jobs and business opportunities for efficiency products and services.
EUA ADVANTAGES FOR BUSINESS
Upgrading buildings for greater energy efficiency is also a cost-effective way for businesses to:
- Reduce operating costs by cutting energy bills
- Reduce the risk associated with increasing energy costs
- Increase renewable energy
- Improve building value
- Reduce greenhouse gas emissions
- Improve working conditions
How can Cherry help you to make the most of the EUA scheme?
If your building is in an area eligible for EUAs, we will present EUAs as a financing option in the quote for your energy efficiency upgrade.
At present, council areas offering EUAs include:
City of Melbourne
City of Greater Bendigo
Hobsons Bay City Council
Wyndham City Council
Greater Shepparton City Council
City of Greater Geelong
Macedon Ranges Shire Council
Mount Alexander Shire Council
Wyndham City Council
Central Goldfields Shire
Horsham Rural City Council
Maribyrnong City Council
City of Moreland
City of Monash
Mornington Peninsula Shire
South Gippsland Shire Council
City of Greater Dandenong
Brimbank City Council
Mildura Rural City Council
Moira Shire Council
Yarra Ranges Council
Baw Baw Shire
Darebin City Council
Moonee Valley Council
City of Kingston
New South Wales
City of Newcastle
City of Sydney
Lake Macquarie City
For customers in Victoria, our partnership with the Sustainable Australia Fund allows a seamless process in providing finance for EUAs. We will process and complete the applicati
on on your behalf and take care of all paperwork.
In summary, an EUA provides a secure and transparent mechanism for tenants to either pay for the costs of the EUA using their energy savings to make repayments OR share the costs in proportion to the benefits they receive with the landlord. There is no residual payback owed by the tenant and the system basically pays for itself.
So what are you waiting for? Click here to get in touch regarding EUAs today.