Better buildings on the way with expanded renewable finance program
Businesses across South Australia and New South Wales will soon have access to a new low-cost finance scheme to install renewables and improve their energy efficiency.
ARENA has announced $630,000 for the Sustainable Australia Fund to expand its Better Building Finance program, which is already operating in Victoria.
Established by the City of Melbourne in 2010, the fund provides low cost, long-term finance that businesses can pay back through their council rates. Commercial and non-residential buildings are eligible for loans ranging anywhere from $10,000 to tens of millions.
The fund has been modelled on the American Property Assessed Clean Energy (PACE) scheme, which finances energy upgrades in commercial, industrial and residential buildings. To date, more than $5 billion in loans have been issued for 220,000 home upgrades in 20 American states.
In the decade since the Sustainable Melbourne Fund launched, more than 85 buildings have been upgraded across 37 Victorian municipalities, sharing in $30 million in loans. In 2018 alone, Better Building Finance facilitated $10.5 million of investment across 26 projects that will collectively abate 178k tonnes of emissions over their lifespan.
Better Building Finance Executive Manager Shay Singh said the program was first established to help owners of older, lower grade buildings in Melbourne’s CBD make energy improvements.
Singh says that while owners may have the asset, often the funds are not available to install renewables or improve energy efficiency.
“The council identified this mechanism as a way to assist those businesses to undertake some level of retrofit to upgrade their building,” Singh said.
“The idea was rather than looking for grants all the time, here’s a way the council can use the local government act to secure debt for the building owner. Therefore they can get a long term loan that is affordable, because the repayments are lower than a short term loan.”
There is an initial group of 23 councils ready to sign up to the program as it expands into South Australia and New South Wales. In the longer term, Singh says the aim is to make the fund available nationwide, and talks are underway in Western Australia and Queensland.
“It has to be enabled through the local government act, so there are early engagement works happening there,” Singh said.
“Hopefully within the next 12 to 24 months – I would say more like 24 months, we should have legislation enabled across all states. That will be ideal.”
The Victorian model will now be replicated in South Australia and New South Wales, replacing the existing council-led scheme with the Sustainable Australia Fund’s third party administrator system. This will make it easier for councils to participate by taking away the need to establish their own programs and employ staff to manage it.
“That became a big impost on council resources, and therefore the program hasn’t really gone anywhere,” Singh said.
Unlike a bank loan that is likely to cap fixed term loans at a maximum of five to seven years, an Environmental Upgrade Agreement between the building owner, financier, and local council can be fixed for 20 years.
“Your repayments are much lower. For a lot of small to medium businesses, cashflow is their main challenge.”
Singh said that there has been strong demand for solar PV installations, but the fund has also supported a range of heating and cooling upgrades, as well as insulation, double glazing and bioenergy projects.
The expansion of the Sustainable Australia Fund has received support from ARENA as part of the agency’s work with industrial energy users to reduce their emissions.
ARENA CEO Darren Miller said the expansion shows how successful the program has been in Victoria.
“The Better Building Finance model removes any administrative burdens from councils, making it affordable and easy for them to help local businesses benefit from renewables,” Darren Miller said.
“This project will help to support businesses to reduce emissions, find alternative energy sources and help to understand barriers in the uptake of renewables in the agricultural, commercial and industrial sectors.”
If your business is interested in financing a project through the Sustainable Australia Fund. Fill in the form to confirm whether Environmental Upgrade Agreements are available in your area, and find information about the scheme and contacts to talk to staff about your project.