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What Impact can M&V have on a Project’s Viability?

The Victorian Energy Upgrades (VEU) program offers Victorian businesses compelling incentives to invest in energy efficiency upgrades. A key component of this program in the larger commercial and Industrial market is the Project-Based Activities (PBA) method for creating Victorian Energy Efficiency Certificates (VEECs). This approach goes beyond standardised solutions and allows businesses to tailor upgrades to their specific needs, making energy efficiency projects more financially attractive and providing proven analysis of a project’s outcomes.

Understanding VEECs & PBA

VEECs are tradable certificates representing one tonne of greenhouse gas emissions reduction. Energy retailers that operate in Victoria are obligated to purchase a certain number of VEECs annually. Businesses implementing energy-saving projects can create VEECs through simple methods such as deemed commercial lighting or hot water upgrades, or via the broader PBA Measurement and Verification (M&V) method. PBA M&V uses industry-standard techniques to quantify the actual energy savings achieved by the upgrade and allows these savings to be registered as VEECs, which can then be monetised as part of the project’s revenue stream.

Undertaking PBA M&V contributes to the viability of commercial and industrial energy efficiency measures in two key ways:

  1. Flexibility and Customisation: Unlike pre-defined “deemed” activities with fixed VEEC rewards, the PBA method allows businesses to pursue a wider range of upgrades. This caters to the unique energy consumption patterns of different commercial facilities, such as offices, manufacturing, and data centres.
  2. Financial Incentive: VEECs are able to be sold to retailers or other market participants, generating revenue that can help offset the capital costs invested in the upgrade. This directly improves the project’s payback period and increases its return on investment (ROI) examples of this performed by Ecovantage are:

HVAC: Manufacturing.

Baseline Annual Electricity Consumption:


Baseline Equipment:

Multiple 90kW DX units

Upgrade Equipment:

Multiple indirect evaporative cooling units
$1,000,000 Capital outlay
750 MWh Annual energy savings
12.1 years Simple Payback without certificates
3,822 VEECs
$363,090* VEEC revenue
7.7 years Simple Payback with certificates

BMCS: Shopping Centre.

Baseline Annual Electricity Consumption

8,000 MWh

Baseline Equipment:

Direct digital control BMCS
Existing BMCS only controls some areas of the centre
Original field devices interfaced to digital control BMCS > 10 years old

Upgrade Equipment

New BMCS throughout the entire centre
New energy and water meters to interface with the new net work infrastructure 
$1,200,000 Capital outlay
1,000 MWh Annual energy savings
10.9 years Simple Payback without certificates
5,133 VEECs
$487,635* VEEC revenue
6.5 years Simple Payback with certificates

Boiler & Process Heating: Manufacturing.

Baseline Annual Gas Consumption

47,000 GJ

Baseline Equipment:

6 MW natural gas boiler
Natural gas-operated screen printing machine
Gas-operated washing machine

Upgrade Equipment

Disconnect natural gas boiler
Digital printing machine 
Multi-tank washing machine
$1,000,000 Capital outlay
6,000 GJ Annual energy savings
8.4 years Simple Payback without certificates
2,838 VEECs
$269,610* VEEC revenue
6.1 years Simple Payback with certificates

Lighting: Manufacturing.

Baseline Annual Electricity Consumption


Baseline Equipment:

Metal halides
High pressure sodium

Upgrade Equipment

LED flood lights
$54,000 Capital outlay
310 MWh Annual energy savings
1.6 years Simple Payback without certificates
1,620 VEECs
$153,900* VEEC revenue
Immediate Simple Payback with certificates

Heat Pumps: Hospital.

Baseline Annual Electricity Consumption

1,835 MWh

Baseline Equipment:

> 30 year old R22 heat pumps (water-to-air and water-to water)

Upgrade Equipment

High efficiency heat pump system (water-to-air and water-to-water)
Install BMS
$1,020,000 Capital outlay
452 MWh Annual energy savings
20.6 years Simple Payback without certificates
2,292 VEECs
$217,740* VEEC revenue
16.2 years Simple Payback with certificates

*before AP fees

As illustrated by these examples a project that effectively leverages a Measurement and Verification claim can reduce the simple payback period by over 20%, significantly improving the Net Present Value (NPV) of funds used and the Internal Rate of Return (IRR).

For businesses to fully leverage VEECs and PBA, some key considerations are essential:

  • Eligibility: The project must be located in Victoria and target a business or non-residential premise. The upgrade should not be mandated by law and must demonstrably reduce energy consumption.
  • Accreditation: Businesses need to collaborate with an accredited VEU provider like Ecovantage who can guide them through the PBA process, ensure compliance, and facilitate VEEC creation and registration.
  • Planning and Scoping: A thorough scoping plan outlining the project details, energy savings estimates, and M&V methodology is crucial for PBA approval.
  • Site Measurement and Verification: Accurate and reliable data collection throughout the project, including pre- and post-upgrade periods, is essential for successful M&V and VEEC creation.

VEECs generated through the PBA M&V method offer a powerful tool for boosting the economic viability of commercial energy efficiency upgrades in Victoria. The financial incentives, flexibility, and long-term benefits associated with VEEC-creating projects make it an attractive proposition for businesses seeking to reduce energy costs, improve their environmental footprint, and gain a competitive edge. By collaborating with accredited VEU providers like Ecovantage, businesses can unlock the potential of VEECs and make the journey towards a more sustainable future significantly more affordable.

Talk with one of our specialists about how best to create VEECs, ESCs, REPS Gjs or ACCUs and other Carbon Credits under a Measurement and Verification claim.

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