5 Feb 2021

Cherry Energy

News & Information

Reimagine savings with energy effieicncy incentives

Climate change is becoming an increasingly more critical issue for the planet and its inhabitants. It is well understood that a solution to climate change cannot be implemented over-night and requires an immense amount of support from government, businesses, organisations and individuals around the world.

In Australia, the last few years have seen an increase in federal, state and local government support for combatting climate change through energy efficient incentives nationally and in their respective states.

Below is an overview of commercially viable incentives for businesses.

  1. The federal government stimulus package – available for energy efficiency investments*
  2. Federal government Large-scale Technology Certificates (LCG’s) & Small-scale Technology Certificates (STC’s) for solar PV systems
  3. State government funding including
    • the Victoria Energy Upgrades (VEU) and Energy Saving Scheme (ESS) in NSW for LED lighting upgrades
    • the Business Recovery Energy Efficiency Fund in VIC
    • Retailer Energy Efficiency Scheme (REES) in SA
  4. Funding through an Environmental Upgrade Finance (VIC) and Building Upgrade Finance (NSW)

The federal government’s stimulus package consists of an instant or accelerated asset tax write off to help your company save money during the current, unpredictable environment. All assets (under $150,000) installed before the 30th of June 2022 will benefit from accelerated depreciation deductions enabling businesses to deduct 100% of the cost upon installation*. For a 250kW solar system, you can reduce your FY21 tax payable by approximately $60,000, plus get additional energy savings on top of that!

Small-scale Technology Certificates (STC’s) and Large-scale Technology Certificates (LGC’s) are federal government incentives for solar installations. STC’s are for solar systems under 100kW while LGC’s are for those 100kW and above. Incentives available depend on the value of the certificates at the time and the value of the certificates depend on market demand. Every new solar system that gets installed should qualify for either STC’s, which businesses get as an upfront discount to subsidise the cost of your solar system, or LGC’s. STC’s and LGC’s are created per megawatt hour of eligible electricity generated/created so the size of your solar system will determine how many certificates are generated.

The Victorian Energy Upgrade (VEU) and Energy Savings Schemes (ESS) issue certificates (VEEC’s and ESC’s respectively) that subsidise the cost of LED lighting upgrades in VIC and NSW respectively. Like STC’s and LGC’s, VEEC’s or ESC’s for LED lighting upgrades have a value that depends on market demand. Currently the value of VEEC’s and ESC’s are at an all-time high and in some instances, quality LED lighting upgrades can be free or heavily discounted. Both come as an upfront discount and subsidise the cost of your upgrade.

The South Australian Retailer Energy Efficiency Scheme (REES) provides funding to local homes and small businesses for energy saving practices such as upgrading your lighting to LEDs. This incentive is only available from select energy retailers and their contractors.

The Business Recovery Energy Efficiency Fund in VIC was implemented to help VIC businesses become more efficient and improve competitiveness, including but not limited to the installation of “energy efficient equipment” and “replacing emissions-intensive equipment with low-emissions alternatives.

If you do not have the capital to pay for installing these products, there are a number of different finance options available that provide cash flow positive solutions from day 1. Options can include:

  1. Building Upgrade Finance (BUF) or Energy Upgrade Finance (EUF), obtained through some local councils, are allocated as an operation expense and paid off through rates. The loan is available for solar, LED and battery storage and stays with the property.
  2. Power Purchase Agreements (PPAs) are made between a business and a PPA provider who installs a solar system. The business buys electricity generated by the system through the PPA provider at an agreed reduced rate and duration. At the end of the agreement, the business may purchase the solar system for as little as $1!
  3. A lease agreement for solar, some with $0 upfront payments, can be taken out over a specific period. At the end of the period, the business will own the asset while continuing to save money from reduced energy bills.

When choosing an energy efficiency company to partner with, there are a few significant considerations such as their financial backing, experience, accreditations, safety procedures, reliability and quality of products. Accreditations, such as Clean Energy Council (CEC) Approved Retailers, ensure the company adheres to the Solar Retailer Code of Conduct and other industry requirements. The safety practices of the retailer reflect the values of the company and the importance they place on their, and your, staff safety. Some companies will come with additional backing through shareholders and partners and provide peace of mind that they will be a strong and long-term partner, in particular to honour warranties on products that can be up to 25 years. Lastly, the quality of the products. Check that the products offered are Tier 1 and approved by the Clean Energy Council to ensure the highest quality and longest life so you can save money now and into the future, worry free. Warranties should be important to businesses. Look for products that have Australian offices and with local warranty and customer service support.

Energy efficiency does not have to be difficult but doing your research and going with the right company will save you money, time and effort and, importantly, reduce carbon emissions!

*Subject to terms and conditions. Please speak to your financial advisor or accountant regarding the above information.

 

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