Navigating the 2025 VEU Changes: What They Mean for Your Business

Originally published: 15 August 2025. Context checked: 21 October 2026.

Victorian Energy Upgrades program changes

Victoria extended the Victorian Energy Upgrades (VEU) program and adjusted its 2026 and 2027 targets in 2025. Those changes still matter when planning an upgrade, but a historical target or certificate price is not a quote for a project today. Check the current activity specifications, implementation date, provider arrangements and market terms before including certificates in an investment case.

What changed in 2025?

The Victorian Government extended the VEU program's legislative end date from 2030 to 2045. That gives a longer policy horizon for energy upgrades; it does not guarantee that any activity, certificate volume or market price will remain unchanged throughout that period. The government set targets of 4.4 million Victorian Energy Efficiency Certificates (VEECs) for 2026 and 4.6 million for 2027. It also announced a $100 shortfall penalty rate to encourage liable energy retailers to meet their obligations.

The penalty is not a tradable VEEC price floor. VEEC prices depend on market supply and demand and the terms of a transaction. At the time of the announcement, the government expected about six million VEECs to be created each year, a surplus through 2027 and lower prices than in recent years. Those were projections, not guaranteed prices. See the Victorian Government's 2026–27 targets and penalty explanation.

Match the upgrade to an eligible activity

The program includes defined upgrade activities and project-based methods for some larger or tailored projects. Measurement and verification uses energy information before and after an upgrade to quantify savings under an applicable method; benchmark rating uses relevant NABERS ratings. Neither route makes a technically useful project automatically eligible. The specific activity, premises, product or method, implementation timing, accredited provider and required evidence all matter.

The 2025 article discussed changes to project-based specifications and commercial heat-pump hot-water Activity 44. Those details are historical. Specifications may be revised, and requirements can differ by activity and project date. Before committing to equipment or relying on a certificate estimate, ask an accredited provider to identify the exact project-based method and current specification or the current hot-water activity guidance that applies. Preserve baseline information and clarify who will collect and submit each required record.

Build a decision-ready business case

Start with the site's energy use, operating requirements and proposed upgrade. Separate expected physical savings from tariff changes, maintenance effects, grants and certificates. For certificates, show the assumed quantity, price date, gross value, charges and proposed net amount to the customer. Record whether each figure is measured, modelled, quoted or conditional. Compare the project's merits with and without the incentive, because eligibility, creation timing and market value may change.

Program longevity alone is not a reason to rush procurement or “lock in” a certificate price. A project should be timed around its technical case, current activity requirements, evidence deadlines and a real commercial offer. Northmore Gordon's energy audit, measurement and verification and certificate services can help frame the evidence and investment questions. The Greenham case study illustrates a historical project; its grants and certificate outcomes do not establish eligibility or value for another site.

What to check now

Bring the proposed equipment, site location, project stage, likely implementation date and available energy data to an initial assessment. Confirm the current VEU activity and document version, accredited-provider role, any pre-installation steps, evidence responsibilities and certificate ownership before making a funding claim. The Victorian Government's VEU overview and its links to current activities are starting points for the rules. Contact Northmore Gordon for project-specific scoping.

Why did the Victorian Government extend the VEU program to 2045, and what does this mean for long-term energy project planning?

Victoria extended the VEU program's legislative end date from 2030 to 2045 in 2025. This supports longer-term planning, but it does not freeze activity rules, VEEC supply or certificate prices. The government set 2026 and 2027 targets of 4.4 million and 4.6 million VEECs respectively and, at the time, expected a certificate surplus. Build each project case against the current activity and commercial terms, rather than assuming the 2025 article's market outlook still applies.

What does the $100 shortfall penalty and the 2026–27 VEEC target reduction mean for certificate pricing and my project timeline?

The $100 amount is a shortfall penalty rate for liable energy retailers, not a floor price for tradable VEECs. The government expected a certificate surplus and modelled lower VEEC prices for 2026–27 than in recent years; that forecast was not a guaranteed transaction price. The article's $105, $85 and $95 examples describe periods in 2025 and should not be used as current quotes. Ask for a dated certificate-price assumption, eligibility and quantity estimate, fees, ownership and proposed net customer proceeds. Time the project around its technical case, evidence requirements and an actual offer, not a promise to 'lock in' historical prices.

How should I interpret the Activity 44 changes, and does this affect my hot-water system eligibility?

The 2025 article described changes to commercial and industrial heat-pump hot-water Activity 44. That description is historical, not a current eligibility decision for a particular system. Check the current activity specification, equipment and storage requirements, premises, implementation date and provider obligations before procurement. An accredited provider can confirm whether the proposed upgrade fits the applicable VEU pathway and what evidence must be collected. A qualifying thermal load alone does not establish the certificate quantity or customer discount.

What are the new Measurement & Verification and Benchmark Rating specifications, and how do they affect project complexity?

VEU project-based activities can use measurement and verification or benchmark rating, each with its own current specification and evidence requirements. M&V quantifies savings from pre- and post-upgrade energy information; benchmark rating uses applicable NABERS ratings. A project still has to meet the activity, premises, timing, accredited-provider and documentation rules. The 2025 article discussed then-new specifications, but a project starting now should use the version applicable to its implementation and plan the baseline and records before work begins.

How does the new EMIS activity support my energy productivity journey, and when can I apply?

The 2025 article described an Energy Management Information System (EMIS) activity as a future proposal for 2026. That statement should not be treated as confirmation that the activity is open now, that a particular metering installation is eligible, or that certificates can be reserved. Check the current VEU activity list and specification with an accredited provider. A metering plan can still be valuable independently: it identifies the data, instruments, intervals and responsibilities needed to manage energy use and support any later measurement method.

What role do project-based activities play compared to prescribed activities, and how do I choose between them?

A prescribed activity has defined eligibility and calculation requirements for particular upgrades. A project-based method may suit a tailored or complex project if it meets that method's requirements, but complexity or a larger desired certificate quantity does not itself establish eligibility. Compare the actual equipment, site, timing, baseline and evidence with the current activity documents, then choose the applicable pathway with an accredited provider. Show engineering savings and conditional certificate estimates separately.

How can Northmore Gordon's approach to grants and certificates increase my project funding like it did for Greenham?

The Greenham case is a historical example of combining technical assessment with grants, certificates and project delivery. Its reported funding and carbon-credit outcomes belong to those projects and dates; they are not a forecast for another business. For a new project, assess each grant or certificate scheme separately, including current eligibility, timing, ownership, evidence and double-counting restrictions. Northmore Gordon can help structure the engineering and commercial case while the relevant program and provider determine formal eligibility.

Given the 2026–27 target reduction and current VEEC pricing, what is my business case for acting now rather than waiting?

A lower target does not by itself prove that VEEC supply will tighten or that acting early will secure a better price. In its 2025 announcement, Victoria expected a certificate surplus through 2027 and modelled lower prices than in recent years. The article's 2025 trading figures and grant references are historical, not current offers. The business case for action should come from the site's operating needs, forecast energy and emissions savings, implementation readiness and a dated commercial proposal. Compare options with and without conditional certificates or grants.

How do I ensure my project meets the new VEU specifications and avoids the compliance risks the article warns about?

Start with the current activity specification and confirm the premises, equipment, installation timing, accredited-provider role and required records. For a project-based method, plan the appropriate baseline and measurement work before changes occur. Keep dated evidence of the design, commitments, installation and operation. An ineligible or inadequately evidenced claim may be rejected; the exact consequences depend on the applicable rules and circumstances. Do not assume the 2025 article's specifications remain current or that technical savings alone guarantee VEECs.

What should I include in an investment case for a VEU-eligible project to make it decision-ready?

A robust investment case separates energy savings (quantity, boundary, method), tariff/demand benefits (specific tariff and load), maintenance savings (estimated value), certificate proceeds (eligibility, quantity, price date, charges), and grants (specific programme, approval status). State operating requirements upfront, compare alternatives against identical assumptions, distinguish replacement capex from incremental investment, and identify which items are quoted versus estimated. Crucially, present the project's merits with and without conditional certificate or grant support, so management understands the decision if funding is delayed or unavailable. Our investment-case guidance helps you structure these components, validate commercial assumptions, and identify gaps (e.g., missing baseline data or unclear M&V boundaries) before seeking approvals. This disciplined approach increases approval confidence and resilience to funding volatility.

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