VEU Changes Coming in 2023

This year some of the Victorian Energy Upgrades program (VEU) activities have changed. Below is a summary of these changes coming into effect for 2023.

Highlights:

• Reduction to the EEF for VEEC calculations
• Activity 21 ends on 1st February
• Proposed certificate generation for gas hot water replacements
• Changes coming to high-efficiency ducted and non-ducted RCAC

Changes to Retrofitting Activities

Under the VEU, there are a number of factors that contribute to the overall calculation for the number of certificates (VEECs) available to create for each installation scenario. One of the factors that contribute to the calculation is the Electricity Emissions Factor (EEF), which reduces each year to reflect the increase in the creation of electricity from renewables as they come online. The overall effect is an approximate reduction of 14% across all VEU activities from February 1st onwards.

For some activities, including the various installation scenarios under Activity 15 – Weather Sealing, the calculation will be largely unaffected by the reduction. However, for others, this will have a significant impact on the number of VEECs available – none more so than Activity 30B – In-Home Displays (IHDs) – with the number of VEECs halving from two to one. IHDs have contributed in excess of 50,000 VEECs per month over the last year and this reduction will leave few still installing in the market.

Continuing this trend, 1st February will mark the end of another high-volume creator, Activity 21 – Residential Incandescent Lighting. Originally scheduled for termination in 2020, this was delayed in order to accommodate the impacts of the pandemic on the industry.

Water Heating & HVAC

Moving away from the retrofitting space and towards hot water and air conditioning, the VEU has released some indicative time frames and proposed certificate creation calculations for both Activity 1D – Hot Water Heat Pumps and Activity 10 – Reverse-Cycle Air Conditioning.

Whilst the EEF reduction will impact upon creation for replacing electric resistance hot water systems, the VEU has proposed the introduction of VEEC creation for the replacement of gas hot water systems – in particular, gas storage.

The announcement earlier last year was released amidst the national discourse surrounding Victoria’s reliance upon natural gas and the need for an increase in uptake for electrification across the state. Given over 60% of Victoria’s hot water systems are gas-powered, this represents an enormous opportunity for VEEC creation.

Similarly, an issues paper was released with a proposed reformation of the space heating and cooling activities – Activities 5, 9 & 23 will be removed, and Activities 7 & 10 will be merged into Activity 6 – High-Efficiency Ducted or Non-Ducted Reverse-Cycle Air Conditioning (RCAC). Research data within the paper highlight the activity’s importance with 59% of residential energy usage made up of space heating and cooling – compared to just 18% for water heating. This underlines the scale of not only the opportunity but the challenge the government faces in transforming Victoria’s residential heating and cooling.

Closing Thoughts

While some activities are scaling down, the proposed changes represent a significant opportunity for installers and providers within this industry as the state moves away from gas and sets some focus to the large impact of residential heating and cooling. Ecovantage looks forward to working with new and existing partners to realise these opportunities.

If you have any questions regarding the activities above, partnering with Ecovantage, or any other VEU related queries, please reach out to Ben Lumley, Victorian Account Manager