12 August 2024
On 22 July 2024, the Department of Energy, Environment and Climate Action (the department) released the Victorian Energy Upgrades (VEU) Specifications 2018 (Version 17.0) (the Specifications) which included changes to the Cold Rooms (Part 43) Activity, effective as of 1 August 2024.
These changes include:
- Changes to the incentive level based on size:
- cold rooms under 4 sqm internal floor area, no longer eligible
- cold rooms between 4-9 sqm internal floor area, incentives halved (approx. 20 VEECs)
- cold rooms above 9 sqm internal floor area, less than 24 sqm internal floor area, no change to incentives (approx. 40 VEECs)
- cold rooms 24 sqm or above internal floor area, incentives doubled (approx. 80 VEECs).
- Strengthened definitions of ‘below zero degrees’ cold room freezers to provide the Essential Services Commission (ESC) with authority to scrutinise use cases.
These changes came into effect 1 August 2024. Products installed after this date that do not meet the requirements will not be eligible to create VEECs.
The department was made aware that some accredited providers were seeking to promote very small cold rooms (less than 4 sqm) for installation under the VEU program. The growth of small cold rooms introduced into the market in recent months, and the number of small cold rooms installed under this activity, called into question the initial underlying assumptions about typical sizes of cold rooms and abatement calculations for this activity.
Small cold rooms generally use more energy when used to replace fridges or refrigerators, and frequent access to stored goods considerably increases the energy consumption of the cold room. The department notes that plug-in refrigerated cabinet upgrades are not eligible under the VEU program at this time, and the installation of small cold rooms as an alternative to plug-in refrigerated cabinets does not align with the policy intent of the activity. As such, the department has made swift changes to ensure that:
The objectives of the Victorian Energy Efficiency Target Act 2007 are supported, including the reduction of greenhouse gas emissions. This includes minimum sizes for cold rooms to ensure the activity represents genuine emissions savings.
- The energy savings are representative of the scale of upgrade and businesses are being provided with fit for purpose products that represent genuine energy savings.
- The policy intent of the activity is maintained and the integrity of the VEU program is upheld.
- Unacceptable risks relating to accessibility and safety from confined spaces are mitigated.
The department notes the Cold Rooms Activity was initially designed with the assumption most of the upgrades would fall within a 9 – 24 sqm size range, as these are the most commonly installed sizes in Australia according to industry data. As such, the activity was initially designed with one size range to reduce administrative burden. A response to consultation released in April 2021 noted that the activity would be monitored, with a view to implement changes, if cold room sizes disproportionately skewed the emission savings for the activity.
As general practice, the department aims to engage in public consultation for changes to the Specifications where businesses may be affected by incoming changes. However, in this instance and for the above reasons, changes to the Cold Rooms Activity have been made without consultation to respond to the emerging risk of activities that do not align with the objectives of the VEET Act or the policy intent of the Cold Rooms Activity, potentially threaten the integrity the VEU program and could risk customers being left out of pocket.
For customers that may be affected by the recent update to the Cold Rooms Activity please contact your Accredited Provider for further discussion.
The department invites stakeholders to report concerns or matters that may affect the integrity of the VEU program to energy.upgrades@deeca.vic.gov.au or to contact the Essential Services Commission at veu@esc.vic.gov.au.
Page last updated: 13/10/24