VEEC price increase
The VEEC price has gone from strength to strength over the past 3 months with a number of supply and demand factors conspiring to drive the price up.
Since their election in November 2014, the Victorian State government has been engaged in a review of the Victorian Energy Efficiency Target (VEET). Expectations of a strong target were high and were reinforced when it was revealed that the Department of Economic Development, Jobs, Transport and Resources, having completed modelling on a range of different target levels, were asked by the government to model a higher target.
Meanwhile, VEEC creation levels had remained consistently around the level necessary to meet the 2015 target. Creation however was overwhelmingly dominated by activity 21C, halogen replacements which, represents 75 per cent of creation for the year. Even as the VEEC price increased, creation levels for Halogen replacement activities remained reasonably stable. Accredited Parties involved in 21C were reporting that sales leads were increasingly difficult to obtain and that high levels of saturation were being experienced in some areas.
On 25 August the government announced the target for an additional 5 years, at the higher end of the industry's expectations. The target will remain at 5.4 million VEECs for 2016, increasing each year to 6.5 million in 2020, with the biggest single year increase in 2017, which will increase to 5.8 million VEECs.
The recent surge in the price can be attributed to the government’s announcement to extend and expand the scheme as well as stable levels of creation. With the current domination in creation by 21C and limitations around future creation, it is clear that new activities will be needed in order to meet the new targets.
Now that the target has been released, the Department is focusing on those activities. Based on the experience of NSW, commercial lighting is an activity which has enormous potential and as yet, has provided little abatement in Victoria. Project based activities, which have also been successful in NSW also have considerable scope for energy abatement.
Manager Environmental Markets