$80m in finance available for green retrofits

Finance is now available for energy-efficiency retrofits of commercial property. Significant additional Environmental Upgrade Agreement (EUA) finance is available through an agreement between the Clean Energy Finance Corporation (CEFC) and National Australia Bank (NAB).

The CEFC has committed up to $30 million in partnership with NAB for a joint total amount of up to $80 million in finance for EUAs to help overcome the funding challenges faced by those undertaking commercial property upgrades.

“This CEFC and NAB commitment to this financing structure will support growth of EUA finance in Australia and provide a boost for commercial property owners and managers seeking to reduce their buildings’ energy consumption and costs,” said CEFC CEO Oliver Yates.

The EUA is innovative in that it is finance linked to the property rather than the owner. According to the CEFC, the finance already has a track record of upgrading buildings with a zero-star NABERS rating to perform as 4- and 5-star properties.

Industry research shows that 4- to 6-star equivalent buildings generate an average 10.3% return; in comparison, lesser-rated buildings have a 7.8% return.

Yates says EUAs allow for longer-term finance and enable property owners to make payments through council rates notices, providing flexibility that makes them an attractive finance option for many in the property sector.

EUAs are currently offered by the Cities of Melbourne, Sydney, North Sydney, Parramatta, Newcastle and Lake Macquarie. Penrith and Wollongong are planning the provision of EUAs; EUAs are also under consideration in Brisbane and South Australia.

“EUAs can support major upgrades, with the finance effectively being repaid through energy savings. Through the mechanism created, EUAs lower financing costs for building owners and genuinely seek to bring forward investment in energy efficiency, which is a good thing,” said NAB Associate Director Environmental Finance Solutions Ashley Robertson.

EUA financing is provided for eligible projects, approved individually on a case-by-case basis through The Australian Environmental Upgrade Fund, a partnership between CEFC, NAB and Eureka Funds Management. Eureka acts as trustee and program manager for the fund.

According to Eureka Executive Director Niall McCarthy, EUAs are suitable for projects including lighting upgrades, solar PV, building management systems and upgrades to air-conditioning systems, but can also provide the opportunity for enhanced return on larger projects such as on-site power generation.