An agreement to give the historic Reader's Digest Building an environmental upgrade was signed this week.

UPDATED 16 June 2015 – A fourth Environmental Upgrade Agreement in City of Sydney was signed this week, to fund a $1.2 million energy efficiency infrastructure upgrade for the historic Readers Digest Building in Surry Hills.

The upgrade will be done by NuGreen Solutions and PM Fox with support from AG Coombs and Lumex and is expected to achieve a 70 per cent cost saving on lighting and 60 per cent  saving on costs for heating, ventilation and air conditioning.

The EUA agreement was signed this week between City of Sydney and the building owner, Intrasia Oxley (RDB) Pty Ltd and the financing is being provided by National Australia Bank, the Clean Energy Finance Corporation and Eureka Funds Management through Eureka Environmental Upgrade Finance.

Under the EUA, the finance will be repaid through a City of Sydney levy for upgrade charges that is added to rates, with payments passed by the city to the finance providers.

The first stage of the project was a Level 1 and Level 2 energy audit undertaken by NuGreen solutions. This identified the opportunities for improvements to energy performance and was presented for EUA funding approval.

“When we first inspected the heritage building we immediately saw a number of opportunities that would really assist in upgrading the asset’s plant and equipment, and at the same time would be able to save the building landlord and tenants significant operational costs whilst reducing carbon emissions,” Non-executive director of Nugreen Geoff Gourley said.

NuGreen estimates the finished project will result in a 7,680 tonne reduction in CO2 emissions over the life of the program.

The current tenants of the building, Cellarmasters and William Angliss College will also benefit from better lighting and HVAC without having to make a capital outlay.

The upgrade includes removal of all existing fluorescent lighting and the retrofit of LED lighting, smart lighting and BMS controls throughout the base building and tenancy areas. Two new energy-efficient chillers will be designed and installed to replace an original chiller installed in the 1960s and two other chillers that use ozone-depleting R22 refrigerant. The two new chillers will use an environmentally-friendly refrigerant.

“When complete, this project will demonstrate the tremendous potential for older commercial properties to use innovative EUA finance to make lasting improvements to their energy consumption, delivering ongoing benefits for tenants and owners,” CEFC chief executive Oliver Yates said.

“Australia’s cities have a large number of B and C grade commercial properties, many of which are well over 20 years old. The owners of these properties have an opportunity with EUAs to make improvements that reduce operating costs, enhance the occupant experience and maintain the value of buildings against newer properties.

“Enhancing the energy efficiency of existing buildings through EUAs is one of the most cost-effective ways for the commercial property sector to reduce ongoing operational expenses and carbon emissions.”

The model is also being implemented in City of Melbourne where projects include the multi-million dollar RMIT EUA project.

In South Australia, a similar model is awaiting legislative endorsement. The Local Government (Building Upgrade Agreements) Amendment Bill 2015 was introduced into Parliament in February this year, however it is yet to be passed.

Eureka EUF is actively looking to lend capital to finance more EUA projects.

“The [Eureka Environmental Upgrade Fund] provides environmental upgrade finance that can be repaid over 7 to 10 years, which allows property owners to offset charges with energy savings achieved,” EFM director  Niall McCarthy said.

UPDATE 12 June : The EUA  is the fourth for the City of Sydney and the sixth in NSW

Update 16 June: South Australia has legislation before Parliament to approve Building Upgrade Agreement legislation