Environmental Upgrade Finance

What is environmental upgrade finance?

EUF Infographic

Environmental Upgrade Finance (EUF) is a commercial finance product that enables a financier to lend money to a building owner to purchase energy efficiency and renewable energy equipment. The financier secures the loan through the council’s charge on the land and repayment are made through your council rates. EUF supports projects that result in an environmental saving and can be passed on to tenants via council rates.


How can an EUF help your energy efficiency project?

No upfront capital or security

EUF allows energy efficiency and renewable energy projects to be undertaken without a business requiring up-front capital or using existing business assets as security. The obligation to pay becomes a charge on the land repayable through council rates.

Realising savings now

Businesses that use EUF for their energy efficiency projects can realise immediate cash flow benefits. Energy Efficiency projects can result in higher energy savings than financing costs.

Tax and accounting
As the building owner owns the asset, you may be able to claim depreciation of the asset and the debt may be deductable at the company tax rate. For a tenant, EUF finance does not appear on your business’s balance sheet. Seek specific tax and accounting advice for your particular situation.

Things to consider

Project risk
Where the tenant agrees to make payments, it bears economic risks and the building owner bears technical risk as the owner of the equipment. If a building is sold, the EUA can be transferred to the purchaser.

How do I get a EUF loan?

  1. Undertake an energy audit: This will help your business identify actions that will improve energy efficiency and reduce operating costs. Work with your energy assessor to determine the likely kilowatt per hour (kWh) savings per year for each recommended action.
  2. Seek quotes: Seek quotes from qualified contractors for actions recommended in the energy audit.
  3. Identify annual savings: Once the kWh savings have been identified, determine your cost per kWh. This allows you to determine the expected annual cost savings.
  4. Calculate finance terms: Understand the length, repayment frequency and expected interest rate of the EUF. This will help you forecast finance costs and determine if the savings of the project are equal to or exceed the finance costs.
  5. Determine tax treatment: Discuss how to treat this loan and assets with your accountant to determine your after-tax position for the project.
  6. Seek finance quotes: Seek finance quotes from financiers (a list is available on the Better Building Finance webpage below). Understand term of the loan interest rates, the minimum and maximum loans and repayment frequency.
  7. Apply to Better Building Finance for EUF: Request and lodge application forms to Better Building Finance, which administers EUF on behalf of councils. A list is available on the Better Building Finance webpage.
  8. Apply for EUF: Select a preferred financier. Secure the finance and arrange the contractor.
  9. Sign EUF: Better Building Finance will prepare relevant documentation to be signed.

As part of the process with your local council, they will provide relevant documentation, including a contract, to be signed.

Download an example EUA contract

Better Building Finance

Better Building Finance administer the EUF on behalf of councils – a list of councils is provided on the Better Building Finance website. Better Building Finance is owned and managed by the City of Melbourne’s Sustainable Melbourne Fund. Better Building Finance has developed a range of detailed information sheets, case studies, sample council documentation, list of financiers and contractors which understand the benefits and requirements of EUF.

EUF lenders

Select financiers have developed EUF products which specifically targets the energy efficiency needs of manufacturers and commercial property owners. A list is available on the Better Building Finance webpage.

Visit betterbuildingfinance.com.au for more information on available councils and lenders.

Finance and government subsidies

Businesses can also receive a discount on energy efficient products that are installed by accredited Victorian Energy Upgrade (VEU) providers. A list of these products and providers can be found on the ESI website.

Visit victorianenergysaver.vic.gov.au/training-and-support-for-business for more information.

Download the Environmental Upgrade Finance factsheet

Victorian EUF Market Summary

September Quarter 2018/2019

The EUF market in Victoria is leading nationally, with 47 projects financed of $24.86 million as of September QTR 2018/2019. Of the total capital value invested so far, there are 31 renewable solar projects (74 per cent), 10 energy efficiency projects (22 per cent) and 1 project that has implemented both renewable and energy efficiency measures (2 per cent).

Currently, a total of 29 Victorian Local Government Authorities (LGAs) have been onboarded to facilitate EUF agreements.

The two sectors of Commercial Buildings and Manufacturing, Warehouse, Distribution and Storage take the major share of projects (90 per cent) with a respective capital invested value of $14.53m and $7.63m. In terms of impact, it is expected that all 47 projects will deliver a combined GHG emission saving of 288,039 tCO2-e over the life of all the projects.



A significant uptake of EUFs was seen in the last two years where a total of 26 projects were added between 2016/2017 to 2017/2018. This was driven by an amendment to the Local Government Act 1989 enabling all Victorian councils to offer EUFs.

Most of the projects in this period (73 per cent) were renewable solar projects which reflects the emphasis on suitability of EUF for small-to-medium sized industrial and agribusiness roof-top solar. 82 per cent of all EUF projects in Victoria so far are below $750k indicating that there is a strong demand from SMEs to take up energy efficiency and renewables.

Pie chartPie chart

The data for this update has been provided by Better Building Finance.

Want to know more? Get in touch with:

Michael Lambden

Sustainable Finance Lead

+61 3 8626 8732


Correct as at January 2018.

Sustainability Victoria
Level 28, Urban Workshop,
50 Lonsdale Street, Melbourne VIC 3000
Phone (03) 8626 8700
Published by Sustainability Victoria.
Sustainable Finance – Environmental Upgrade Finance
© Sustainability Victoria January 2018

Disclaimer: The information provided in this document is general advice only. It does not take into account your particular needs or objectives and does not constitute legal or accounting advice. Accordingly, any comments or statements made are not a recommendation that a particular course of action is suitable for you and you need to seek your own legal, tax and accounting advice in relation to your specific circumstances.

This information is true and correct as of January 2018