EUA Expansion for Victoria

Parliament-of-Victoria-Melbourne-

On Wednesday the Victorian parliament is set to debate legislation to enable EUAs to be available in all 79 Councils and Shires throughout the state.  Should this bill be passed an enormous economic opportunity for the State of Victoria will open up.  It is estimated that an additional 16,115 buildings will be able to use the EUA mechanism. The amendment to the Local Government Act 1989 will allow EUAs to be rolled out across the state and as reported earlier this year, has the potential to create $4.5billion of investment and create 18,000 jobs state wide.

Upgrading buildings to reduce energy consumption appeals to building owners, tenants and local councils.

For building Owners:

Every building wastes money.  Investing in energy efficiency or renewable energy for your building helps to stop your building leaking money. From the perspective of a building owner, a good investment is one that provides positive returns and EUAs are a good tool to capture the value of energy efficiency. EUAs address a key failing of standard bank lending in that tenants can contribute to the repayment of energy efficiency projects. EUAs are equally applicable to industrial building stock as well as commercial office space with lenders able to provide long term, low interest finance. With close to 60% of Victoria’s NLA used in the Manufacturing, Warehouse, Distribution and Storage industry sectors SMF is very excited about this potential.

For Tenants:

As discussed in a previous article, savvy tenants understand the benefits of EUAs. EUAs allow a tenant to replace variable energy costs with a fixed interest repayment, and with long term (up to 20years) low interest finance, repayments can be lower than current energy costs. SMF’s internal modelling indicates a project saving $7,500 after one year can escalate to be a $50,000 saving after three years based on projected cost increases.

For Councils:

An investment made into energy efficiency at the facility level, is an investment made into growing the local economy, generating jobs, refreshing buildings and preventing money escaping the local economy. It has been said that an energy efficiency investment is an investment in jobs that are hard to export.  The establishment of an EUA program by local government creates jobs and unlocks investment into local communities.

About SMF:

As the innovator of this finance structure, SMF is very excited about the potential of this amendment. SMF has over 10 years’ experience in building retrofit finance and has developed strong relationships with lenders, councils and the property sector.