Victoria
New South Wales
South Australia
QueenslandAs 2023 draws to a close, the Ecovantage team has taken some time to pause to reflect on where the Victorian Energy Upgrades (VEU) Program is in its current state and where we feel it’s off to, specifically with relation to Victorian homes and residential upgrades.
With below-target creation and a record high VEEC spot price, the pressure of ‘What is Next for the VEU Program’ has been mounting in the past months. Despite 2023 drawing to a close, a series of direction updates for the VEU Program have been released in the past week, in a welcome spread of transparency for the industry. The Essential Services Commission (ESC) and the Department of Energy, Environment and Climate Change (DEECA) held a forum where the new Roadmap (Image 1) was explained. Second to this, the new Gas Substitution Roadmap was released alongside an announcement of Induction Cooktops set to be incentivised in the coming year.
Based on creation volumes from January 1 2023 to date, the Program appears to be enduring what may be described as a transitional period from previously high volume activities to new and upcoming activities. Historically lighting retrofits have contributed to a majority of annual certificate supply, however, this changed significantly with the Activity’s removal in January this year.
More recently, along with hot water, retrofit activities like weather sealing, showerheads and in-home displays have provided Accredited Persons (APs) with alternative avenues for creation. However, the trend of lower levels of creation are expected to continue, with natural market saturation, February’s upcoming emissions factor reduction of around 12%, and the anticipated ban on door-knocking, all contributing drivers of lower VEEC creation volumes.
So where does this leave us and where do we expect the growth to come from?
There are two primary activities that we expect to play a huge role in the near term of the Program, as the government increases its focus on the degasification of Victorian homes – hot water and air conditioning.
To date, the current incentives under both activities have allowed for modest creation levels, however, this is set to be reviewed as part of a wider review of the quality of products and installation under each activity. This is slated to be coupled with the proposed introduction of co-payments, as highlighted in the VEU Forum earlier this month.
Together with the upcoming ban on telemarketing and door-knocking, this is a clear message to program participants that the program is taking its stance on quality installations seriously, and that incentives will only be increased once the current concerns around quality installations and outcomes have been addressed. With the likely introduction of minimum co-payments, the days of low or no-cost products, which have previously led to low customer engagement and poor outcomes, are very likely over.
This change in approach by the ESC to encourage program participants to prioritise providing customers with a more bespoke product solution can be further evidenced in the new Home Energy Rating Assessment activity. This activity allows consumers to gain access to a quality assessment of their home through the National Home Energy Rating Scorecard (NatHERS) tool by an accredited assessor, while also allowing Accredited Providers an opportunity to offer a suite of products to upgrade their home and move away from gas.
Finally, looking further down the line, the final pieces to the degasification puzzle appear to be on the horizon with consultations scheduled for both insulation and the replacement of gas-powered cooking appliances with newer more efficient electric items. Once complete, this will enable Victorian homes to be more efficient, electrified homes enabling more affordable energy costs, lower emissions and less exposure to extreme weather conditions.
So for anyone looking for a better understanding of the market trends, forces and regulatory changes in the Victorian schemes, the Ecovantage Account Management team is here to help – 1300 721 335.
Ben Lumley | Programs & Account Manager VIC
Ben specialises in VEU Activities (Residential Retrofits, Residential & Commercial Heat Pumps, Air Conditioning, Commercial Lighting), and ESS Activities (IHEAB Heat Pumps).
