Large Energy User Electrification Support Program

The Department of Energy, Environment and Climate Action (DEECA) is supporting large energy users through the Large Energy User Electrification Support Program (Program), which aims to drive electrification in industry, reduce energy use, emissions and energy costs, and build industry capability. Sustainability Victoria will deliver this important program on behalf of the Victorian Government.

The Program will provide funding for approved specialists to complete electrification feasibility assessments (Projects) for eligible Victorian commercial and industrial business facilities that use between 10 and 100 terajoules of gas per annum.

Applications open on 13 May 2024 and will close on 20 August 2024, unless funding is exhausted earlier.

The following are the guidelines for applying for this fund.

Fund overview

Fund objectives

The Large Energy User Electrification Support Program aims to help drive electrification in the commercial and industrial sectors. 

The Program aims to achieve the following outcomes:

• Acceleration of commercial and industrial electrification.
• Strengthened access to Victorian Energy Upgrades (VEU) incentives for businesses wishing to undertake bespoke upgrades, through project-based activities.
• Increased understanding of how business facilities currently exempt from the VEU program may save on energy bills and emissions by opting in to the VEU.
• Enhanced industry capability in commercial building and industrial process electrification.
• Enhanced ability of businesses to identify pathways to reduce greenhouse gas emissions associated with energy use at their facility.
• Accelerate the creation of Victorian Energy Efficiency Certificates under the VEU program.

Electrification of selected processes, operations or equipment can result in outcomes including:

• increased energy efficiency
• energy cost savings
• reduced greenhouse gas emissions
• reduced exposure to gas price fluctuations
• reduced exposure to gas supply constraints
• greater opportunities to utilise renewable electricity.

The Projects will provide a foundation for businesses to undertake VEU project-based activities and access VEU incentives.

Funding available

Grants of $14,000 to $60,000 (or $66,000 if regional) ex GST are available per Project.

Projects involve an Approved Supplier conducting an electrification feasibility assessment on up to four separate technologies, as specified in Table 1. Funding is limited to one instance of each technology type per facility, regardless of the number of opportunities to assess the same technology.

The amount of funding each technology receives depends on the complexity of the assessment, as detailed in Table 1. A site process and energy consumption assessment are a mandatory component and must include an assessment of up to four technologies.

For facilities over 150km from Melbourne CBD, a 10% regional bonus (ex GST) on the funding value for each assessed technology will be added to accommodate additional Supplier costs.

The maximum funding per facility is $60,000, regardless of the technologies assessed. Facilities eligible for the regional bonus have a raised cap of $66,000. Facilities may receive assessment services exceeding $60,000 in value from an Approved Supplier, but reimbursement will not exceed $60,000 (or $66,000 if regional) per facility.

Projects featuring innovative technologies aimed at reducing high gas usage are encouraged. 

Table 1: Feasibility assessment funding values

Co-contribution

Applicants are not required to provide a financial Co-contribution.

Applicants must provide in-kind support, including providing the selected Approved Supplier with information and data as required and facilitating access to the facility.

Applicants may elect to provide a Co-contribution to fund extension of Project services scope beyond the funded $60,000 (or $66,000 if regional), with the agreement of the Approved Supplier. Sustainability Victoria must be notified if the Applicant elects to provide a financial Co-contribution. If a facility elects to complete an extended Project, where possible, the applicant should provide Sustainability Victoria with the full scope of work.

Eligibility

Who can apply

Each application must specify one Victorian commercial or industrial business facility that can demonstrate average gas consumption of between 10 and 100 terajoules per annum. This can be demonstrated through gas bills, meter data or National Greenhouse and Energy Reporting Scheme data, taken from the last 3 years.

Applicants must:

• have a current Australian Business Number (ABN)
• have been operating for a minimum of 2 years by the application submission date (to be validated by the date that the organisation’s ABN was activated)
• engage an Approved Supplier (refer to published Approved Supplier List) to complete the Project.

We encourage applications from Aboriginal and Torres Strait Islander organisations.

Who cannot apply

The following organisations are ineligible to apply:

• Commonwealth, State, or local government entities.
• Any organisation that is applying for feasibility assessments at premises owned by a Commonwealth, State, or local government entity.
• Educational institutions (including Independent, Catholic, and Government Schools).

What will be funded

Each Project will involve an Approved Supplier completing an electrification feasibility assessment of up to four electrification opportunities. A site process and energy consumption assessment are mandatory components of the feasibility study.

Feasibility studies can also include other technologies as part of the overall feasibility study if this supports the business case for aggregated upgrades, however the key focus must remain on electrification technologies that can deliver significant benefits. Applications that propose a project solely focused on other technologies will not be approved.

Sustainability Victoria withholds the right to exclude a proposed technology from the approval of a project if insufficient evidence of its significance to the Eligible Facility is provided.

Projects must:

• involve completion of an electrification feasibility assessment that meets the Program requirements and is accepted by Sustainability Victoria.
• be undertaken at a single business facility
• be located in Victoria
• meet regulatory or planning requirements
• be completed by 2 December 2024.

You can submit multiple applications, with a separate application for each Eligible Facility. Each application must be for a different facility. An application must not be for multiple facilities.

To ensure a diverse representation of technology, industry sector, size, and region, Sustainability Victoria reserves the right to temporarily withhold recommendations for applications in the event that many similar applications are received.

What will not be funded

The following projects are ineligible for funding:

• Activities located outside the State of Victoria.
• Projects at business facilities that consume, on average less than 10 terajoules or more than 100 terajoules of gas per annum or are unable to substantiate their gas consumption.

The following costs are ineligible for funding:

• Lease or purchase of land.
• Capital works (with the exception of some energy metering activities, if approved).
• Routine or ongoing maintenance activities.
• Recurrent operating costs, for example rent and utility costs, and/or activities establishing expectations of recurring expenses.

Funding conditions

Successful Applicants approved for funding must do the following.

Before starting the project

• Participate in an inception meeting to discuss project and funding agreement, in conjunction with chosen Approved Supplier. SV will provide access to the list of all Approved Suppliers on its website for Applicants to choose from, if they have not already chosen one.
• Agree to realistic evidence-based and performance-based milestone payments, in conjunction with chosen Approved Supplier.
• Sign SV’s funding agreement within 30 days of approval.
• Provide a project plan, in conjunction with chosen Approved Supplier.

During and after the project
 

• Deliver the Project as outlined in the application and comply with the funding agreement.
• Contribute to regular Project progress updates or meetings.
• Notify SV immediately about any delay or change to the Project.
• Provide update reports to SV at agreed milestones with evidence of expenditure, progress and performance.
• Provide adequate monitoring and evaluation of the Project according to the funding agreement.
• Collect and provide baseline and ongoing project outcome and evaluation data to Sustainability Victoria.
• Contribute to the Project’s promotional activities (for example, provide SV with support by reviewing and approving written stories or videos).
• Participate in and contribute to SV activities to distribute the findings to broader stakeholders (for example, government and industry).
• Acknowledge that the Department of Energy, Environment and Climate Change (DEECA) has contributed funding, delivered by Sustainability Victoria, in all communications related to the project.

Under the Program, Projects funded will be required to include all of the following:

• Assessment of electrification feasibility for up to four gas-fired technologies or processes that are significant contributors to the facility’s gas consumption, see Section 3.2 – What will be funded, for more details on Eligible Technologies.
• Site process and energy (gas, electricity, other fuels) consumption map, outlining the Eligible Facility’s significant energy uses and covering the selected technologies for assessment.
• Consideration of ‘payback’ periods in making the business case for electrification of commercial technologies.
• Detail on the value of incentives available for the electrification upgrades under the Victorian Energy Upgrades program.
• An explanation of possible next steps for the Successful Applicant to access incentives under the VEU program.

Successful Applicants may be required to contribute to case studies or other promotions about the funded projects.

Timeline

Dates may change.

There is no date for the announcement of application outcomes. We will provide Applicants with updates as much as possible and when necessary. 
 

Why the Victorian Government is providing this funding

Electrification and energy efficiency offer the most immediate, least-cost opportunities for reducing gas consumption. Electrification will be required to meet Victoria’s 2030 emissions target and to achieve net zero emissions by 2045.

Rapid Electrification is an energy transition priority among Victorian businesses

As Victoria works towards this target, Gas Substitution is required. Gas Substitution is the removal of equipment and processes that consume fossil gas and replacing with alternatives. Industrial applications make-up approximately 30 per cent of Victorian gas usage, which is a key area for electrification opportunities.

Moving decisively to electrify industrial uses where cost-effective alternatives exist offers significant opportunities to reduce gas consumption in the short term, helping to maintain reliability of supply for gas uses across the economy. This in turn will put downward pressure on prices, while renewable alternatives are developed for these ‘harder to electrify’ uses.

The Victorian Government has already taken an important first step in electrification by announcing that from 1 January 2024, new residential buildings requiring a planning permit will no longer be allowed to connect to the reticulated gas network. This signals the government’s clear policy intent to limit the continued growth in fossil gas consumption and continued expansion of the network, on a pathway towards reducing Victoria’s overall reliance on fossil gas.

In addition, the Victorian Government is continuing to assist Victorian households to improve energy efficiency and switch to efficient electric appliances through a range of programs including the Residential Efficiency Scorecard, comprehensive online information and advice through Solar Victoria and Sustainability Victoria, as well as financial assistance provided through Solar Homes and Victorian Energy Upgrades program.

What is the Victorian Energy Upgrades program?

Victorian Energy Upgrades reduce emissions and lower energy prices for all Victorians.

The Victorian Energy Upgrades (VEU) program was established under the Victorian Energy Efficiency Target Act 2007 to reduce greenhouse gas emissions in Victoria, encourage the efficient use of electricity and gas, and invest in industries that provide energy demand management technology and services. The VEU program provides incentives for residential and business consumers to reduce their energy use by upgrading appliances, processes, or buildings.

Energy savings from the VEU program are expected to reduce Victorian electricity consumption by 7% in 2025 and avoid $3.8 billion in energy system costs.

The VEU program works by creating financial incentives for households and businesses to undertake energy saving activities. When accredited businesses (known as accredited providers) undertake eligible energy efficiency activities in homes or businesses, they create Victorian Energy Efficiency Certificates (VEECs). Each VEEC represents one tonne of greenhouse gas emissions saved over the lifetime of the activity or product installed. VEECs can then be sold to energy retailers who must meet an emission savings target each year based on their annual electricity and gas sales.

The VEU program includes energy saving activities for both households and businesses. Activities currently available in the program include water heating upgrades, space heating upgrades, building shell upgrades such as weather sealing, and the installation of in-home displays.

Project-based activities (PBAs) unlock incentives for large and custom Victorian Energy Upgrades projects suited for commercial and industrial businesses. PBAs allow businesses the flexibility to access incentives and offset costs through a more bespoke approach to energy efficiency improvement. PBAs have seen an average annual increase of over 50 per cent since they launched in 2018.

What is gas substitution and electrification?

Gas substitution is the removal of equipment and processes that consume fossil gas such as natural gas or liquified petroleum gas and replacement with alternatives.

It can include:

• electrification – that is replacing equipment that uses gas, with equipment that uses electricity. This can be done with heaters and hot water units for example. Some of this electricity equipment is much higher efficiency than the existing gas equipment, meaning both efficiency and substitution is achieved.
• fossil gas alternatives such as biomethane or hydrogen.

Through electrification projects, businesses can harness benefits including:

• reduced energy consumption, achieved through an increase in efficiency by switching from gas to electricity
• reduced exposure to gas price volatility
• reduced overall energy costs
• reduced greenhouse gas emissions of their facility
• greater understanding of the operational and financial aspects of a facility’s significant energy use
• greater understanding of the business case for electrification.

Eligible activities under this program will be limited to electrification activities. Activities involving substitution of fossil gas with renewable gas and hydrogen are excluded.

Moving decisively to electrify industrial uses where cost-effective alternatives exist offers significant opportunities to reduce gas consumption in the short term, helping to maintain reliability of supply for gas uses across the economy. This in turn will put downward pressure on prices, while renewable alternatives are developed for these ‘harder to electrify’ uses.