VEEC’s what does it all mean?

Wednesday, April 6, 2022
Veli Markovic


In 2001 the federal government created a program to incentivise the shift to renewable energy by 2030 (and reduceCO2-e emissions)

Most solar incentives are in the form of “renewable energy certificates” (RECs) that are earned by solar installations, and then traded in an open market

The value (i.e. $ face value of certificates) is created by the imbalance between:

  • Supply (number of solar installations) and 
  • Demand (number of certificates large energy users such as AGL and Qantas must purchase every year to offset their fossil fuel energy consumption)
  • For installations in Victoria, there are also a number of state government incentives

Solar incentives: what and why

The type of certificates relevant for solar in Victoria include:

STC’s: Small Scale Technology Certificate:

  • 1 x certificate per MWH calculated
  • Offered as a point of sale discount for systems up 100 kW
  • Relates to reduction in CO2

STCs are issued with qualifying solar power systems and solar panels and can be redeemed for a dollar value that is deducted from the cost of the solar system. The value of an STC at any one time depends on market conditions.

LGCs: Large Scale Generated Certificate:

  • 1 x certificate per MWH actually produced
  • Offered as a income stream for systems > 100 kW
  • Based on data readings of the actual renewable power generated by the power station

Created on a yearly, quarterly or monthly basis throughout the lifetime of the station until the RET ends in 2030.

VEECs: Victorian Energy Efficiency Credits:

 This is where things get interesting:

  • 1 x certificate per modelled tonne of CO2 
  • Usually offered on systems > 100 kW
  • Purely a Victorian scheme

Once created,  certificates can be sold to energy retailers who have a liability under the program to surrender a certain number of certificates each year.

They are electronic certificates:

  • Created when certain energy efficiency activities are undertaken in
  • Residential or non-residential premises
  • Each certificate represents one tonne of greenhouse gas emissions reduction (CO2-e).

The Victorian Energy Upgrades (VEU) program is a market-based scheme which:

  • Provides incentives for activities which reduce greenhouse gas emissions
  • The objectives of the program are the efficient use of electricity and gas
  • The reduction of emissions

Driving innovations and investment in businesses that supply goods and services that deliver energy reductions.

Commercial solar and LGC’s

Traditionally LGC’s are with commercial solar proposals over 100 kW:

  • Are offered with LGCs
  • The system owner receives a income flow
  • Based on the actual production of the solar system under consideration

All electricity generated from the date your system receives accreditation approval by the Clean Energy Regulator and meets electricity demand - either used onsite, fed into a storage device or exported to the electricity grid - is eligible to claim LGCs.

Commercial solar and VEEC’s

VEECs can be offered with any sized PV system but usually over 100 kW:

  • Is purely based on energy consumed on site!
  • Any excess solar exported to the grid is not taken into consideration with VEEC’s
  • New builds are ineligible. Need at least 24 months of interval data

The number of VEECs that a given activity is able to create depends on the amount of greenhouse gas emissions reduction the activity will cause as provided for in the Victorian Energy Upgrades Specifications 2018 (for 'deemed activities') and the Victorian Energy Efficiency Target (Project-Based Activities) Regulations 2017 (PDF) (for activities undertaken using project-based activity methods).

How to qualify for VEEC’s

To qualify for VEEC’s the following has to occur:

  • An accredited energy efficiency practitioner submits a scoping and project plan
  • Scoping plan is approved
  • The installation of the commercial solar system commences the VEEC’s process

There are many abatement methods or ‘prescribed activities’ in the VEU program. Undertaking project based activities (PBA) using measurement and verification (M&V) is an eligible prescribed activity under the PBA Regulations.

After the installation has been completed:

  • Have to measure the impact on site
  • Impact report is finalized and submitted
  • Commission approves, VEEC’s created and registered

As PBA M&V allows many different types of abatement technologies and energy reduction techniques, we do not provide a VEEC calculator for this purpose.

What it means to your business

We will assume the project size is 225 kW of solar:

  • If offering as a LGC proposition cost to customer is $300,000 ex GST - $40,000 over 9 years
  • If offering as a VEEC’s proposition cost to customer is $300,000 ex GST - $60,000 paid in approx 18 months
  • Not even taking the time value of money into account difference of $20,000

What next?

Going forward with the project:

  • Installation company or representative  conduct a site inspection
  • Gathers the available interval data and analyze
  • Present a project scope and plan
  • And then go from there.

If you’d like to see more of what Greenwood Solutions get up to in the real world of renewable energy, solar, battery storage and grid protection check out our industry and commercial pages:

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About the author

Veli Markovic

CEC Designer
Veli has nearly two decades of experience in the renewable industry. He is passionate about providing people with valuable education and is highly regarded throughout the industry as an educator and operator.
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