The Clean Energy Finance Corporation (CEFC) is providing $120 million through the National Australia Bank (NAB) for a major new investment program to incentivise Australian businesses to cut their energy and operating costs and lift business performance.
The program is designed to help accelerate the switch to greener vehicles, cut heating and cooling costs and increase the uptake of solar.
NAB will make this $120 million CEFC-supported program available across a broad commercial base, with a particular emphasis on agribusiness and regional Australia.
CEFC CEO Oliver Yates said cutting energy costs has never been more important for Australian businesses.
"Australia spends more than $120 billion a year on energy – that’s a 67 per cent increase over 10 years," he said.
"With the right equipment, businesses can lower energy and operating costs, cut heating, cooling and lighting bills and even create energy from waste.”
Yates said the investment program is available to provide an incentive for businesses to act now, undertaking both small and large scale projects, up to $5 million.
"It has been designed so the benefits of the $120 million in new CEFC funding will flow through to the businesses who invest in high efficiency and clean energy equipment," he said.
The CEFC-NAB program will also focus on equipment such as variable speed pumps in the irrigation sector and upgrades to industrial and commercial refrigeration which can significantly cut energy use.
Investments in biogas, bio-digesters and micro turbines, and fuel switching equipment and processes, will also be eligible for finance.
Recognising the increasing role of solar energy in cutting power bills, the new program is also supporting the installation of rooftop solar PV, solar thermal for hot water and heat pumps and solar PV to displace diesel generation.
"The CEFC is looking to incentivise business to invest in high performance, energy efficient technologies, including vehicles and equipment, so commercial operators in rural and regional Australia can benefit from lower energy and operating costs, while reducing emissions," Yates said.
The program is also designed to support financing for a range of eligible projects under the government’s Emissions Reduction Fund (ERF), demonstrating the potential of the CEFC to help Australian business towards a more competitive economy in a
carbon constrained world.
For businesses seeking to participate in the next ERF auction, they need to act now, according to business consultancy RSM Bird Cameron.
Tim Pittaway, principal, RSM Bird Cameron, said now that the first ERF auction has taken place businesses are better-informed about how the process works, and how they can get involved.
“The first auction saw just over half of projects succeed in the auction; the winners largely from land-based projects such as farming, waste management and forestry," he said.
“However, there are currently other methodologies under review, which are likely to be approved before the next auction. This will make way for other industries to participate. This includes energy efficiency and transport methodologies, which will mean opportunities for manufacturers and other supply chain companies.
“This will have a two-fold effect. It will mean those in land-based activities will need to have a stronger business case when bidding in the next auction to be successful. It also means other industries looking to get involved need to start preparing
now to compete against those that have participated in the first round, learning from the experience.
“Ultimately it all comes down to the business plan and the price companies are willing to go in at.”
RSM Bird Cameron expects this extra activity in the space may drive down the carbon abatement price slightly from the average of $13.95 in the first auction.
Any business wanting to bid needs to register the project with the Clean Energy Regulator (CER) ahead of the auction deadline and be prepared to comply with the reasonable assurance audit requirements involved in being awarded a contract as bids in the auction are legally binding.
"Businesses will need to factor in these costs when budgeting for the project. While not excessive, these types of projects can require three to five reasonable assurance audits in their lifecycle, depending on their size and expected abatement," Pittaway said.
"It is important for businesses to seek out a registered greenhouse and energy auditor and talk to the CER, as they dictate the audit requirements.
“RSM Bird Cameron suggests engaging an auditor early in the process as it will help businesses demonstrate compliance with the chosen method, and provide documentation on the project and how abatement will be achieved.”