ClimateWorks and the Sustainable Melbourne Fund have today (Thursday) launched a website to assist building owners access environmental upgrade finance, also known as environmental upgrade agreements, in a move to tackle the slow take-up of the innovative building upgrade financing mechanism.
ClimateWorks Australia project manager Eli Court said the BetterBuildingFinance.com.au website was part of a public engagement program to raise awareness of how businesses could use EUF to undertake sustainable upgrades to their buildings, and gave building owners, tenants and service providers the means to compare the advantages of using EUF for financing a building upgrade rather than using a traditional loan.
The website is well-designed and intuitive, providing the major benefits of EUF through infographics and easy to understand language. There’s also a place to put in your postcode to find EUA experts, your local council contact and banks able to finance the deal.
“The website includes example business cases for building upgrade projects in a range of real buildings across Victoria, South Australia and New South Wales, and an online calculator to show building owners and tenants how this type of financial arrangement could work in their building,” Mr Court said.
One of the case studies presented to showcase the benefits of EUF is a commercial building in North Sydney that has been recently acquired, where the owners plan to upgrade the building to retain existing tenants, attract new tenants, improve yields and increase the asset value in the medium term.
The business case shows that by using EUF, a significant upgrade, including energy efficient lighting, a new HVAC system and solar PV ,could be undertaken at no upfront cost to the owner, delivering almost $40,000 in annual energy savings and an improved indoor environment.
With a 15-year fixed interest rate and tenants contributing 80 per cent of the energy savings towards repayments, the upgrade could be undertaken with a net annual finance cost to the owner of less than $9000.
“The existing tenants would still benefit from energy cost savings of almost $8000 annually, along with improvements to the lighting and heating and cooling performance of their workplace,” Mr Court said.
The launch coincides with the introduction of legislation in the Victorian Parliament to make EUF available to all Victorian local government areas. It has previously been available for the City of Melbourne and five local government areas in New South Wales, though legislation has been drafted for South Australia and there’s interest from a number of other regions.
“ClimateWorks welcomes the Victorian legislation and looks forward to its passage into law. ClimateWorks has long advocated for mechanisms like this to help unblock barriers to cost-effective measures that can save energy and reduce greenhouse gas emissions,” Mr Court said.
“This type of finance is highly secure due to a structure where the local council collects the repayments on behalf of the financier, similar to council rates. This reduces the risk to the financier, who is able to offer better finance terms including zero up-front costs, no requirement for the owner to provide additional security, and competitive fixed interest rates over 10 years or longer.
“EUF legislation also provides a transparent mechanism for owners and tenants to share the costs in proportion to the benefits they receive. Without this mechanism, it can be difficult to negotiate upgrades that require investment by the building owner, but which primarily benefit the tenants, for example through energy savings and improved workspaces.”