Green finance unlocks energy savings for landmark building

The City of Sydney has signed a $1.2 million Environmental Upgrade Agreement to transform the energy efficiency of a landmark commercial office building in Surry Hills.

The agreement will fund a complete upgrade including lighting and air-conditioning systems for the Reader’s Digest building at 26–32 Waterloo Street, Surry Hills, and is expected to slash base building energy use by around 60%.

The EUA is signed by The City of Sydney, Eureka Environmental Upgrade Finance and the building owner, Intrasia Oxley (RDB) Pty Ltd. It was made possible by changes to the Local Government Act to encourage building upgrades.

An EUA encourages building owners to bring forward environmental upgrade works and uses the energy savings themselves to pay back the finance.

Lord Mayor Clover Moore said EUAs allow building owners to take advantage of long-term environmental finance to install up-to-date technologies and significantly improve performance of buildings.

“Cities use over two-thirds of the world’s energy and emit more than 70% of greenhouse gas emissions. Action in cities provides the greatest opportunity for deep cuts,” the Lord Mayor said.

“It’s great news that the owners of the Reader’s Digest building have taken advantage of this innovative funding mechanism. It will allow them to upgrade their building, slash emissions and use the energy savings to finance the works.”

Under the EUA, Eureka EUF will provide Intrasia the funds to pay for the upgrade, which Intrasia will then pay back through a fixed quarterly council charge over a 10-year period.

The legislation in NSW allows the council charge to be treated as a recoverable building outgoing for tenants. This means the building owner can recoup the council charge from the tenants in the same way that other council charges, like council rates, are recouped.

The legislation ensures the amount of money recouped from the tenant does not exceed the savings in energy bills the tenant receives from the upgraded systems.

“It doesn’t matter what your cost of capital is. Only under an EUA do building owners have the ability to utilise the tenant’s energy savings and thereby pay less than the value of the works,” Eureka Director Niall McCarthy said.

“An EUA allows everyone to win. The tenants pay the same or less in outgoings than they currently do but in a building which is more efficient and productive to work in. This means that upgrading a building outside of leasing cycles is easier, benefiting both owners and tenants sooner rather than later.”

Intrasia Oxley Executive Director Braith Williams said the EUA enabled his firm to access competitive funding to upgrade the building.

“This EUA allows us as building owners to ensure the building services are maintained to a high and efficient standard so we can deliver improved amenity to our tenants,” Williams said.

“The agreement will increase the building’s energy efficiency, reduce its carbon footprint and provide long-term savings for both the tenants and owners.”

The Readers’ Digest building was built in 1967 and is the fourth EUA signed by the City of Sydney, and one of six in total that have been signed across NSW. The EUAs are part of the City of Sydney’s commitment to reduce carbon emissions by 70% by 2030.

For more information about EUAs, click here.

Image caption: (From left) Braith Williams, Rachael Scott (Eureka), Lord Mayor Clover Moore and Jason Williams (Intrasia Oxley) outside the Reader’s Digest building.