A range of government grant programs are available to assist companies with funding energy-efficiency projects. Eligibility requirements can differ significantly across programs and jurisdictions, so reviewing funding guidelines is an important first step.
Funding sources are not limited to grant programs. They also include co-financing packages, loans, tax incentives and other innovative financing solutions. Many are designed to support transition to a low carbon economy or to help overcome barriers to energy efficiency uptake.
Funding options available
Search for support, funding, assistance packages and loans for your business from all levels of government at business.gov.au. See also GrantConnect, the Australian Government's centralised grants hub.
The R&D tax incentive provides tax offsets to encourage more Australian companies to invest in research and development.
A range of loan financing options are available. These include traditional loans but also arrangements for companies to avoid upfront costs, with repayments made using the savings generated from an energy efficiency project.
Other financing arrangements
Financing arrangements can be tailored for you. Types include:
Leasing equipment enables companies to avoid upfront costs and manage energy efficiency projects within operational budgets.
On-bill financing allows businesses to install and upgrade energy efficiency equipment which is financed by the energy utility. Repayments are made by the business through their monthly power bill and ownership is transferred on final payment of the finance. Up-front capital is not required and repayments can be equal to or less than the energy cost savings achieved.
Energy performance contracts (EPCs)
EPCs are commonly used as a financing method in the commercial building sector. Energy service companies guarantee reduced energy bills for commercial tenants by identifying potential savings in a building’s operations, commissioning and funding a retrofit of the building, and using the energy saved to fund the upfront costs. This financing model overcomes the inherent barrier of split incentives where building tenants benefit from retrofits through reduced energy bills, but building owners are responsible for the upfront infrastructure costs.
Environmental upgrade agreements
Siimilar to EPCs, environmental upgrade agreements involve external financers covering the upfront cost of a retrofit, which is then recovered from the building owner through a council levy. Building owners can also pass on part of the environmental upgrade charge to tenants. The council forwards these levy payments to the finance provider. These structured payments remain with the property if ownership changes.
Mandatory obligation schemes
Mandatory obligation schemes require liable entities (generally energy retailers) to meet certain targets in relation to energy efficiency or renewable energy use.
Some of the schemes enable the trading of certificates for eligible activities which are bought by liable entities to enable them to reach their targets.
The schemes provide a financial incentive for energy users to invest in clean energy initiatives, on top of the ongoing benefits which accrue to the business through the energy savings or emission reductions generated by the project.
Various national and state-based schemes exist:
Companies generating energy on site using renewable energy sources may be eligible to create large-scale generation certificates (LGCs) through the LRET. LGCs can be sold or traded to liable entities, in addition to the any sale of electricity to the grid. To be eligible, companies must generate their electricity from approved renewable sources and feed that into the electricity grid.
Australian Capital Territory
EEIS aims to maintain momentum on targets for low cost and high electricity and gas savings, give greater certainty to energy retailers about their obligations under the scheme, and harmonise the Australian Capital Territory system with those of other jurisdictions.
New South Wales
Energy Saving Scheme (ESS)
ESS provides financial incentives to companies who undertake eligible projects that either reduce electricity consumption or improve the efficiency of energy use. Electricity retailers and other liable parties must obtain and surrender Energy Savings Certificates to meet their energy efficiency targets, which are calculated in tonnes of carbon dioxide equivalent.
REES is a South Australian Government initiative that requires energy retailers to help households and businesses save on energy use and costs, and lower their greenhouse gas emissions.
The VEU Registry is an online system that:
- facilitates the creation, registration, transfer and surrender of Victorian energy efficiency certificates (VEECs)
- facilitates the submission and approval of product applications for listing of products in the Register of Products
- tracks the ownership and status of all certificates
- maintains various public registers as required by the Victorian Energy Efficiency Target Act 2007
Energy Efficiency and Renewables Finance Guide NSW Government
General questions about environmental upgrade agreements NSW Government
A Best Practice Guide to Energy Performance Contracts Energy Efficiency Council