The Suleman Property Group in Melbourne is benefiting from innovative Environmental Upgrade Agreement (EUA) financing to make a tired 15-storey office block in the CBD 30 per cent more energy efficient.
In 2010, the Victoria Government passed legislation enabling Melbourne City Council to be the first city to sign environmental upgrade agreements for the environmental retrofit of commercial buildings. They are now also available in select local council areas in New South Wales where state legislation supports such agreements.
The benefits of EUA financing include longer terms – terms can go as long as 10 years – plus amortisation and improved financial performance compared to debt or equity. The EUA can be transferred if the land changes hands and the financing is repaid through property taxes or charges collected by council. Furthermore, depending on individual circumstances, the financing may have no impact on existing credit lines and banking relationships.
The $720,000 upgrade to 470 Collins Street has been financed by The Australian Environmental Upgrade Fund, which was established in June 2011 by Low Carbon Australia, National Australia Bank and Eureka Funds Management. The funds will help pay for a new cooling tower, two new efficient condensing systems, a new building management system and energy efficient lighting.
City of Melbourne Lord Mayor Robert Doyle is fully behind the approach as council seeks to encourage Melbourne’s older commercial buildings to come up to standard through retrofitting.
“It is one of a number of buildings in the financial precinct to take advantage of council support to improve their energy efficiency,” he said. “We can see a fundamental shift occurring in the commercial building sector, where owners are starting to realise the incredible benefits of retrofitting. Latest research also suggests that each $1 billion invested in building energy efficiency equates to around 7,700 jobs. That’s economic uplift.”
National Australia Bank head of property finance Andrew Balzan said the use of EUAs demonstrates the attractiveness of financing with longer repayment dates for this market.
“We’re pleased to be part of this pioneering environmental finance market which is enabling building owners to carry out projects now that will make a difference for years to come,” he said. “EUAs provide project finance which can remove the need for up-front capital and be paid back through rate notices.”
Low Carbon Australia chairman Mike Rann said EUAs are just one of the innovative ways Low Carbon Australia is providing finance for businesses looking to improve the energy efficiency of their operations and improve the performance of their buildings through new low carbon technologies.
“Major retrofits of Australia’s commercial buildings over the next decade could cut building emissions by 30 per cent which was significant as the built environment accounts for nearly a quarter of Australia’s greenhouse gas emissions,” he said. “With our support, businesses are improving their productivity and competitiveness while reducing their energy bills as they move to a low carbon economy.”
Since Low Carbon Australia was set up as an independent body by the Australian Government in 2010, it has contracted investments in excess of $36 million, generating a flow of new financing and markets to currently make available more than $115 million in new finance for energy efficiency in the marketplace.