Funding boost for green property upgrades
￼￼In a boost for those undertaking ‘green’ commercial property upgrades, $80 million in funding for Environmental Upgrade Agreements (EUAs) has been committed by The Australian Environmental Upgrade Fund (TAEUF).
The fund, a partnership between Commonwealth authority Clean Energy Finance Corporation (CEFC), National Australia Bank (NAB) and Eureka Funds Management (EFM), says EUA finance is linked to the property rather than the owner, allowing capital to be accessed at a competitive rate and for a longer term.
Loan repayments are made as an agreed environmental upgrade charge which is paid to the local council along with the rates charges for the land, and the council passes the repayments on to the finance providers.
The savings delivered by the lower operating costs resulting from the green upgrades offsets the upfront cost. This means that repayments may be cost-neutral or have only a small impact on cash flow.
In addition, the upgrade costs may be shared between building owners and tenants, with the costs offset by the post-upgrade reduction in the tenants’ energy and water bills.
EUAs have already been used in the upgrading of 0-star National Australian Built Environment Rating System (NABERS) buildings to 4 and 5-star properties, which research shows generate an average 10.3 per cent return.
EUAs are currently offered by the Cities of Melbourne, Sydney, North Sydney, Parramatta, Newcastle and Lake Macquarie, with Penrith and Wollongong in the planning stages, and Brisbane and South Australia considering them.
In a statement, the group said its finance was already being used in a number of projects:
- The CQ hotel at 123 Queen Street, Melbourne, halved its energy costs through a $1.3 million energy efficiency upgrade, installing an on-site generator to provide electricity, heating and cooling, occupancy sensors and double glazing. It is targeting a 4-star NABERS, up from 2.5.
- 470 Collins Street in Melbourne undertook a $720,000 EUA upgrade that has cut its energy costs by up to 30 per cent by installing a new cooling system, new building management system and energy efficient lighting.
- The former Ansett building at 501 Swanston St Melbourne is undergoing a $7 million environmental retrofit designed to halve its energy use through an upgrade to the plant room, chillers and boilers, new energy efficient elevators and solar film on windows. Utility cost savings of more than $80,000 a year are expected.
- In Parramatta, tenants and owners of 10 Valentine Avenue are achieving savings of about 70 per cent on lighting bills, following a lighting upgrade that has also improved the quality of office spaces, the building’s value and its competitiveness.
- A $2 million upgrade to a Sydney CBD office and commercial retail building is expected to halve its grid electricity use through the installation of new lighting, building metering, improved heating and cooling and an upgrade of elevators and hydraulic services.