A2EP submission on proposed changes to the VEU Program for industrial heat decarbonisation
- 12 hours ago
- 2 min read
The Australian Alliance for Energy Productivity (A2EP) has welcomed the Victorian Government’s proposed expansion of the Victorian Energy Upgrades (VEU) Program to support industrial heat decarbonisation, while recommending a range of refinements to ensure the program is practical, commercially viable and aligned with the realities of industrial project delivery.
In our submission to the Victorian Government's consultation on the proposed changes, we express support for the inclusion of key decarbonisation technologies - including electric thermal energy storage (eTES), gas efficiency upgrades and behind-the-meter biogas - and sees the program as an important opportunity to accelerate emissions reductions across Victoria’s industrial sector. However, success will depend on reducing administrative complexity, improving commercial certainty and ensuring program rules reflect how industrial projects are actually developed and financed.
We have included a number of recommendations in the following key areas.
Improve project-based assessment (PBA) pathways
A2EP recommends updating the proposed project journey mapping to better reflect the staged, iterative and commercially driven nature of industrial projects. Key improvements include:
Clearer guidance during early project development and feasibility stages.
More proportionate evidence, metering and compliance requirements.
Better alignment with industrial capital approval and financing processes.
Earlier engagement with industrial sites and stakeholders.
Stronger capability-building for installers and project delivery partners.
Clearer definition of the role of Accredited Persons (APs) as assurance and compliance providers rather than project originators.
Support electric thermal energy storage (eTES)
A2EP strongly supports recognising eTES as an eligible activity under the VEU Program, highlighting its potential to decarbonise high-temperature industrial heat applications and improve renewable energy integration. The submission calls for:
A dedicated measurement methodology tailored to industrial eTES projects.
Recognition of renewable electricity sourced through power purchase agreements and other credible procurement arrangements.
Updated assumptions for gas boiler and eTES efficiencies.
Support for hybrid and partial fuel-switching applications.
Recognition of system-wide benefits such as demand shifting, renewable integration and reduced peak demand.
Improved participation pathways for large industrial energy users, including Scheduled Activity Premises (SAPs).
Recognise gas efficiency as a transition pathway
While electrification remains the long-term objective, A2EP argues that gas efficiency improvements can deliver immediate and cost-effective emissions reductions where electrification is not yet feasible. Recommendations include:
Simplifying testing, measurement and evidence requirements.
Aligning program requirements with existing Energy Safe Victoria obligations.
Expanding eligible upgrades to include boilers, controls, economisers and broader steam system improvements.
Allowing more flexible measurement approaches that reflect real-world operating conditions.
Improving guidance and consistency across program participants.
Enable behind-the-meter biogas
The submission supports the introduction of a dedicated biogas methodology to encourage onsite fossil fuel displacement. A2EP recommends:
Creating a dedicated biogas sub-method under the program.
Recognising process heat and combined heat and power applications.
Simplifying certificate interactions and accounting requirements.
Avoiding mandatory green gas certification where fossil fuel displacement can be directly demonstrated onsite.
Adopting practical approaches to feedstock and persistence requirements.
Maintaining a flexible and implementable framework that encourages uptake.
A call for practical industrial decarbonisation
The VEU Program for Industrial Heat Decarbonisation has significant potential to support Victoria’s emissions reduction goals while strengthening industrial competitiveness. To maximise its impact, the program must provide commercially meaningful incentives, reduce compliance barriers, recognise real-world project delivery pathways and broaden participation among large industrial energy users.
