Market Update | 23 May 2025

• VEU Program announced decreased targets for the 2026 and 2027 calendar years 
• VEU Program announced an extension of the legislated scheme end date to 2045
• CER announces webinar for the Cheaper Home Batteries program

Victorian Energy Upgrades (VEU) Program Drops Targets & Extends to 2045.

Showing its long-term commitment to energy efficiency activities, the Victorian Government has recently passed the Victorian Energy Efficiency Target Amendment Bill 2025, which sees the VEU program extended from its previously legislated end-date of 2030 to 2045.

The program’s emissions reduction targets for the upcoming two years have also been lowered, following a prolonged period of under-creation under the current targets. 2026 and 2027 targets have been set at 4.4 million and 4.6 million VEECs, respectively, representing a marked decrease compared with 2025’s target of 7.3 million. The VEU is projecting that approximately 6 million VEECs will be created each year, aiming to rebuild the market’s liquidity surplus that has been steadily eroding over the last two years. Doing so is hoped to bring price stability to a market which has seen extended periods of volatility over the past two years.

The government is also raising the shortfall penalty for liable retailers to $100.00 per VEEC – up from $90.00, which will raise the tax effective theoretical cap from approximately $120.00 to $130.00. This is a routine periodical raise. 

The market seemingly responded to the release of this target reduction quite rapidly, with an approximate 10% reduction in the spot price occurring in the immediate days following. While the target for 2025 has not changed, the announcement also confirmed that VEECs created up until the surrender date will be able to be surrendered against the previous compliance year’s target.

Previously only VEECs of the set vintage were able to be surrendered, so providing retailers with greater flexibility in meeting their surrender obligations is hoped to ease pressure on competition for purchasing in the Spot market – another measure aimed to bring downwards pressure on the VEEC price. The VEU has also indicated that, moving forward, the program will shift focus onto higher value electrification upgrades.

The Victorian Essential Services Commission (ESC) has recently had its powers extended to enable further control over other parties and individuals participating in the scheme, like installers and scheme participants (installation companies). Previously, its powers were relatively limited to Accredited Persons (APs) – so this change aims to further enhance installation and documentation compliance across all involved parties.

Cheaper Home Batteries Scheme Updates.

The Clean Energy Regulator (CER) has provided further updates on the Federal government’s proposed new battery incentive program. The incentives will be available through the Small Scale Renewable Energy Scheme (SRES) and will provide a discount of approximately 30% on the cost of a battery, which is expected to gradually decrease until the program finishes in 2030.

The start date has been confirmed for 1 July 2025 and a stakeholder forum hosted by the CER has been scheduled for 27 May. Safety has been identified as a key priority for the scheme, however the specific compliance requirements have yet to be confirmed and will be released following finalisation of the regulations. 

The CER has flagged that bulk uploads will not be available within the REC registry until September. This means that STC Agents will initially need to manually upload the documentation. In the short term this may impact the speed of claim lodgement.

A note also for participants in NSW, it has yet to be confirmed if the NSW government’s Peak Reduction Certificates (PRCs), which already provide a discount of approximately 10-15% on the cost of a battery in NSW, can be claimed in addition to the new federal incentives. 

At Ecovantage, we consistently analyse market activity, policy changes, consultation releases, and creation rates in conjunction with wider landscape activity. This allows us to keep our clients at the forefront of all relevant changes, and to leverage the advantage that this presents. Thank you for your continued support, and please reach out if you have any general or project-specific questions.