An innovative way for building owners and tenants to fund renewable energy upgrades as affordable as possible will be expanded thanks to a project supported by the Australian Renewable Energy Agency as posted on their website.
ARENA is partnering with SMF or Sustainable Melbourne Fund to make it easier for tenants and owners of commercial and other non-residential buildings to take full advantage of finance mechanism called an Environmental Upgrade Agreement. EUAs are tri-party finance mechanisms that can be used in financing upgrades to commercial and non-commercial residential industrial buildings.
The building owner can take out a loan to pay for the renewable energy and the environmental upgrades to their existing building. Now, instead of directly paying the lender, the local council can act as a collections agent, using the existing council rates process in collecting the loan repayments which is then passed on the lender.
Council rates must be paid ahead of the creditors, thus EUAs provide greater security for lenders who may offer lower interest rates to the landlord. This means renewable energy will be more affordable to install. ARENA CEO Ivor Frischknecht said that the funding will make sure EUAs will be implemented all across Victoria.
The upgrades can range can include chiller and boiler upgrades and waste pollution reduction systems, through to onsite power generation and power storage, including solar power systems and storage batteries. It is supported by $425,000 ARENA grant. It will be a two-year project that will cost $915,215 and will see SMF work in partnership with Local Governments in developing and setting up their own funding mechanism that includes standard procedures and review mechanisms in setting up tri-party EUA agreements easier. SMF will also work with local businesses in developing projects that can be funded.
EUAs were previously offered only to the City of Melbourne, but recent local government legislative changes now allow them to be offered all across Victoria by all councils. This is paving the way for any similar EUA arrangements to be replicated across other states like South Australia and New South Wales.