Guest blog series: Shay Singh, Executive Manager, Better Building Finance
As governments, businesses and communities chart the course to economic recovery, we have a golden opportunity to make sure it’s a sustainable and equitable one.
With financial hardships experienced across the board, solutions like Environmental Upgrade Agreements (EUA) (also sometimes called Environmental Upgrade Finance EUF) that secure ongoing financial savings, while improving the efficiency and sustainability of infrastructure could be an important piece of the puzzle.
Essentially, an EUA is a loan for implementing building efficiency and overall sustainability improvements that’s repaid through council rates over periods of up to 20 years. Businesses don’t have to pay upfront costs for upgrades, and the loan stays with the building, meaning owners are less resistant to upgrading buildings as they aren’t out of pocket and in most arrangements share these costs with tenants, who benefit the most. This eliminates the issue of split incentives, where the owners of a building aren’t incentivised to upgrade a building because they are not the direct beneficiaries. This is an especially beneficial arrangement given the economic impacts businesses and individuals are facing in light of COVID-19.
As such, this program offers a great opportunity for local governments to attract significant private investment into their local economies, boost local jobs and achieve serious climate goals in the process.
Take the Mornington Peninsula Shire in Victoria. Their region has been the most successful of the almost 50 councils who offer EUA financing, securing almost $2M of investment to the region. And the sweetener is that this investment has enabled a megawatt of solar power generation, removing almost 40,000 tonnes of emissions from entering the atmosphere. That’s equivalent to taking over 8,500 cars off the road for one year.
One of the businesses to jump on this opportunity is Hussey & Co, a lettuce farm that delivers produce to Australia and overseas. With 74 acres of land and multiple industrial processing facilities, it relies heavily on energy to stay in business. After reviewing the cost savings from their first solar installation, Hussey & Co’s business owners were so impressed they decided to take out another Environmental Upgrade Agreement almost immediately, saving them an additional $86,000 per year.
Recent legislative updates have already reduced some of the red-tape associated with these tripartite agreements, and ongoing engagement at all levels of government will continue to open up the market for investment.
Better Building Finance, the EUA third-party administrator for almost 40 councils, has recently introduced online application tools and will be rolling out more resource-saving products for councils in the near future, making transactions easier and smoother for all parties.
Now is the perfect time to prioritise projects that both offer a simple, steady financial option for councils and building owners, while securing a healthier and more vibrant future for communities.
To find out more, read other case studies and to start the conversation, visit https://betterbuildingfinance.com.au/.