Large Energy User Electrification Support Program

The Department of Energy, Environment and Climate Action (DEECA) is supporting large energy users through the Large Energy User Electrification Support Program (Program), which aims to drive electrification in industry, reduce energy use, emissions and energy costs, and build industry capability. Sustainability Victoria will deliver this important program on behalf of the Victorian Government.

The Program will provide funding for approved specialists to complete electrification feasibility assessments (Projects) for eligible Victorian commercial and industrial business facilities that use between 10 and 100 terajoules of gas per annum.

Applications open on 13 May 2024 and will close on 20 August 2024, unless funding is exhausted earlier.

The following are the guidelines for applying for this fund.

Information bulletin

Read questions and answers about this program in the information bulletin.

1. Fund overview

1.1 Fund objectives

The Large Energy User Electrification Support Program aims to help drive electrification in the commercial and industrial sectors.

The Program aims to achieve the following outcomes:

• Acceleration of commercial and industrial electrification.
• Strengthened access to Victorian Energy Upgrades (VEU) incentives for businesses wishing to undertake bespoke upgrades, through project-based activities.
• Increased understanding of how business facilities currently exempt from the VEU program may save on energy bills and emissions by opting in to the VEU.
• Enhanced industry capability in commercial building and industrial process electrification.
• Enhanced ability of businesses to identify pathways to reduce greenhouse gas emissions associated with energy use at their facility.
• Accelerate the creation of Victorian Energy Efficiency Certificates under the VEU program.

Electrification of selected processes, operations or equipment can result in outcomes including:

• increased energy efficiency
• energy cost savings
• reduced greenhouse gas emissions
• reduced exposure to gas price fluctuations
• reduced exposure to gas supply constraints
• greater opportunities to utilise renewable electricity.

The Projects will provide a foundation for businesses to undertake VEU project-based activities and access VEU incentives.

1.2 Funding available

Grants of $14,000 to $60,000 (or $66,000 if regional) ex GST are available per Project.

Projects involve an Approved Supplier conducting an electrification feasibility assessment on up to four separate technologies, as specified in Table 1. Funding is limited to one instance of each technology type per facility, regardless of the number of opportunities to assess the same technology.

The amount of funding each technology receives depends on the complexity of the assessment, as detailed in Table 1. A site process and energy consumption assessment are a mandatory component and must include an assessment of up to four technologies.

For facilities over 150km from Melbourne CBD, a 10% regional bonus (ex GST) on the funding value for each assessed technology will be added to accommodate additional Supplier costs.

The maximum funding per facility is $60,000, regardless of the technologies assessed. Facilities eligible for the regional bonus have a raised cap of $66,000. Facilities may receive assessment services exceeding $60,000 in value from an Approved Supplier, but reimbursement will not exceed $60,000 (or $66,000 if regional) per facility.

Projects featuring innovative technologies aimed at reducing high gas usage are encouraged.

Table 1: Feasibility assessment funding values

1.3 Co-contribution

Applicants are not required to provide a financial Co-contribution.

Applicants must provide in-kind support, including providing the selected Approved Supplier with information and data as required and facilitating access to the facility.

Applicants may elect to provide a Co-contribution to fund extension of Project services scope beyond the funded $60,000 (or $66,000 if regional), with the agreement of the Approved Supplier. Sustainability Victoria must be notified if the Applicant elects to provide a financial Co-contribution. If a facility elects to complete an extended Project, where possible, the applicant should provide Sustainability Victoria with the full scope of work.

2. Eligibility

2.1 Who can apply

Each application must specify one Victorian commercial or industrial business facility that can demonstrate average gas consumption of between 10 and 100 terajoules per annum. This can be demonstrated through gas bills, meter data or National Greenhouse and Energy Reporting Scheme data, taken from the last 3 years.

Applicants must:

• have a current Australian Business Number (ABN)
• have been operating for a minimum of 2 years by the application submission date (to be validated by the date that the organisation’s ABN was activated)
• engage an Approved Supplier (refer to published Approved Supplier List) to complete the Project.

We encourage applications from Aboriginal and Torres Strait Islander organisations.

2.2 Who cannot apply

The following organisations are ineligible to apply:

• Commonwealth, State, or local government entities.
• Any organisation that is applying for feasibility assessments at premises owned by a Commonwealth, State, or local government entity.
• Educational institutions (including Independent, Catholic, and Government Schools).

2.3 What will be funded

Each Project will involve an Approved Supplier completing an electrification feasibility assessment of up to four electrification opportunities. A site process and energy consumption assessment are mandatory components of the feasibility study.

Feasibility studies can also include other technologies as part of the overall feasibility study if this supports the business case for aggregated upgrades, however the key focus must remain on electrification technologies that can deliver significant benefits. Applications that propose a project solely focused on other technologies will not be approved.

Sustainability Victoria withholds the right to exclude a proposed technology from the approval of a project if insufficient evidence of its significance to the Eligible Facility is provided.

Projects must:

• involve completion of an electrification feasibility assessment that meets the Program requirements and is accepted by Sustainability Victoria.
• be undertaken at a single business facility
• be located in Victoria
• meet regulatory or planning requirements
• be completed by 2 December 2024.

You can submit multiple applications, with a separate application for each Eligible Facility. Each application must be for a different facility. An application must not be for multiple facilities.

To ensure a diverse representation of technology, industry sector, size, and region, Sustainability Victoria reserves the right to temporarily withhold recommendations for applications in the event that many similar applications are received.

2.4 What will not be funded

The following projects are ineligible for funding:

• Activities located outside the State of Victoria.
• Projects at business facilities that consume, on average less than 10 terajoules or more than 100 terajoules of gas per annum or are unable to substantiate their gas consumption.

The following costs are ineligible for funding:

• Lease or purchase of land.
• Capital works (with the exception of some energy metering activities, if approved).
• Routine or ongoing maintenance activities.
• Recurrent operating costs, for example rent and utility costs, and/or activities establishing expectations of recurring expenses.

3. Assessment process

3.1 Assessment criteria

Applications will be assessed as received until 20 August 2024 or until funding is exhausted, whichever occurs first.

The assessment panel will assess applications based on merit according to the criteria below.

What?

Weighting: 30%

Demonstrate how your Project will:

• increase awareness of electrification opportunities in commercial and industrial sectors
• build capability within your facility to pursue electrification
• focus on processes and equipment that are significant contributors to total gas use in the facility
• deliver on the objectives of the fund and the desired outcomes.

What technologies and processes are anticipated to be the focus of the Project?

Applicants operating multiple sites with similar processes are required to submit a justification for conducting the same or comparable assessment at different sites. Insufficient justification may affect the application’s eligibility.

Why?

Weighting: 30%

Describe why the project is needed:

• What barriers to electrification are you experiencing?
• How would an electrification feasibility assessment help overcome these barriers to electrification?
• How do you anticipate using the feasibility assessment findings, including consideration of engagement with Victorian Energy Upgrades and project-based activities?

Who?

Weighting: 20%

• What resources and capabilities will you contribute to the project?
• Describe who in the business will support the supplier, including providing information, data and facility access.
• Describe your businesses’ commitment to decarbonisation and how electrification aligns with the businesses forward plan.

How?

Weighting: 20%

Describe how the Project will be delivered:

• What are considerations that may influence your ability to complete the Project?
• How will you ensure the Project can be delivered according to your timeline and milestones? 
• What are the associated risks with the Project?
• What risk management strategies and practices are in place ensuring assessment will be completed within the specified timeframe?    
• Do you own or lease the site where the feasibility assessments will be undertaken? 
• Is there any other funding contributing to this Project?

3.2 Due diligence checks

A risk-based approach will be used to assess the Applicant’s social, economic and environmental risks in relation to the Project. This assessment will include the Applicant’s Related Entities and may include Project Partners and Project Participants (see Section 9: Program definitions).

Applicants (and their Related Entities and, if applicable, their Project Partners and Project Participants) must:

• have had no Environmental, Safety or Workplace Breaches in the last five years or, if there was a breach, SV may assess that the Applicant’s breach poses a satisfactory level of risk
• have not been the subject of an enforceable undertaking or successful litigation by the Fair Work Ombudsman for a breach of the Fair Work Act 2009 or a fair work instrument within the last five years;
• demonstrate financial capability to undertake the Project
• have adequate insurance as outlined in the funding agreement and below:
  • Public liability $10 million minimum
  • WorkCover
• have not failed to satisfactorily progress or complete previous projects funded by SV or DEECA within funding program timelines and without sufficient reason
• manage any conflicts of interest adequately.

Assessment of satisfactory level of risk will include but not be limited to SV’s consideration of:

• the seriousness of any finding/s
• whether the finding/s has been resolved to the satisfaction of the relevant enforcement agency, or the Applicant can demonstrate it is working effectively to resolve the finding
• the efforts made by the Applicant including implementation of management systems, to ensure no further finding/s occur
• whether, since the finding, the Applicant has had a satisfactory level of compliance with relevant Environmental and Safety Laws and Workplace Laws.

SV may conduct due diligence checks on the Project Partners and/or Project Participants involved in the delivery of the project. The Applicant must ensure that any Project Partners and/or Project Participants agree to cooperate with this requirement and will provide information at SV’s request.

SV reserves the right not to award funding to Applicants where the due diligence risk (including that of Project Partners and Project Participants) is unsatisfactory or not able to be managed.

4. Funding conditions

Successful Applicants approved for funding must do the following.

4.1 Before starting the project

• Participate in an inception meeting to discuss project and funding agreement, in conjunction with chosen Approved Supplier. SV will provide access to the list of all Approved Suppliers on its website for Applicants to choose from, if they have not already chosen one.
• Agree to realistic evidence-based and performance-based milestone payments, in conjunction with chosen Approved Supplier.
• Sign SV’s funding agreement within 30 days of approval.
• Provide a project plan, in conjunction with chosen Approved Supplier.

4.2 During and after the project

• Deliver the Project as outlined in the application and comply with the funding agreement.
• Contribute to regular Project progress updates or meetings.
• Notify SV immediately about any delay or change to the Project.
• Provide update reports to SV at agreed milestones with evidence of expenditure, progress and performance.
• Provide adequate monitoring and evaluation of the Project according to the funding agreement.
• Collect and provide baseline and ongoing project outcome and evaluation data to Sustainability Victoria.
• Contribute to the Project’s promotional activities (for example, provide SV with support by reviewing and approving written stories or videos).
• Participate in and contribute to SV activities to distribute the findings to broader stakeholders (for example, government and industry).
• Acknowledge that the Department of Energy, Environment and Climate Change (DEECA) has contributed funding, delivered by Sustainability Victoria, in all communications related to the project.

Under the Program, Projects funded will be required to include all of the following:

• Assessment of electrification feasibility for up to four gas-fired technologies or processes that are significant contributors to the facility’s gas consumption, see Section 3.2 – What will be funded, for more details on Eligible Technologies.
• Site process and energy (gas, electricity, other fuels) consumption map, outlining the Eligible Facility’s significant energy uses and covering the selected technologies for assessment.
• Consideration of ‘payback’ periods in making the business case for electrification of commercial technologies.
• Detail on the value of incentives available for the electrification upgrades under the Victorian Energy Upgrades program.
• An explanation of possible next steps for the Successful Applicant to access incentives under the VEU program.

Successful Applicants may be required to contribute to case studies or other promotions about the funded projects.

5. Timeline

Dates may change.

There is no date for the announcement of application outcomes. We will provide Applicants with updates as much as possible and when necessary.

6. How to apply

Before applying, ensure you read these program guidelines carefully. If you are applying in conjunction with an Approved Supplier, make sure they are part of Department of Energy, Environment and Climate Action’s Approved Supplier List for the Program.

The grant program involves a merit-based application process.

• Ensure that your organisation can apply.
• Ensure the supplier you have chosen is an Approved Supplier.
• Ensure that your project meets the criteria for funding.
• Read SV’s funding agreement. You must meet the terms and conditions to ensure funding.
  1. for grants $50,000 or less read the Short-form grant funding agreement.
  2. for grants more than $50,000 read the General grant funding agreement.
• Read SV’s Terms of participation in grant programs.
• Create an account and start your application on the SmartyGrants website.
• Submit your application from 13 May to 20 August 2024 until funds exhausted.

Applicants who do not agree with the Grant Funding Agreement Terms and Conditions will be asked to provide full details of proposed amendments that would render the contractual provision acceptable to the Applicant in the SmartyGrants application form.

Applicants should note that significant or substantive variations will not be viewed favourably unless the Applicant is able to demonstrate the necessity for such variations. Should Applicants be successful, no further amendments to SV’s standard terms and conditions will be considered beyond the variations included in the application form.

Your application

• Allow adequate time to plan, research, gather supporting documentation and draft your application.
• Even though this is not a competitive grant, we cannot review drafts or provide feedback.
• You must use SmartyGrants, unless you have written permission from SV.

7. Assistance available

7.1 Contact us

We cannot review drafts or provide feedback.

Email: grants.enquiries@sustainability.vic.gov.au

In the subject line, use the grant name 'Large Energy User Electrification Support Program'.

7.2 Book a meeting

Book a 15-minute chat with one of our team members to further discuss the program.

This booking service is intended for key stakeholders only:

• Large Energy Users
• Approved Suppliers
• Technology Suppliers
• Energy Consultants
• Industry Associations or Peak Bodies
• Government Departments or Agencies

Media and public enquiries should use our general contact form. Meetings are limited and offered on a first-come, first-served basis.

8. Why the Victorian Government is providing this funding

Electrification and energy efficiency offer the most immediate, least-cost opportunities for reducing gas consumption. Electrification will be required to meet Victoria’s 2030 emissions target and to achieve net zero emissions by 2045.

Rapid Electrification is an energy transition priority among Victorian businesses

As Victoria works towards this target, Gas Substitution is required. Gas Substitution is the removal of equipment and processes that consume fossil gas and replacing with alternatives. Industrial applications make-up approximately 30 per cent of Victorian gas usage, which is a key area for electrification opportunities.

Moving decisively to electrify industrial uses where cost-effective alternatives exist offers significant opportunities to reduce gas consumption in the short term, helping to maintain reliability of supply for gas uses across the economy. This in turn will put downward pressure on prices, while renewable alternatives are developed for these ‘harder to electrify’ uses.

The Victorian Government has already taken an important first step in electrification by announcing that from 1 January 2024, new residential buildings requiring a planning permit will no longer be allowed to connect to the reticulated gas network. This signals the government’s clear policy intent to limit the continued growth in fossil gas consumption and continued expansion of the network, on a pathway towards reducing Victoria’s overall reliance on fossil gas.

In addition, the Victorian Government is continuing to assist Victorian households to improve energy efficiency and switch to efficient electric appliances through a range of programs including the Residential Efficiency Scorecard, comprehensive online information and advice through Solar Victoria and Sustainability Victoria, as well as financial assistance provided through Solar Homes and Victorian Energy Upgrades program.

What is the Victorian Energy Upgrades program?

Victorian Energy Upgrades reduce emissions and lower energy prices for all Victorians.

The Victorian Energy Upgrades (VEU) program was established under the Victorian Energy Efficiency Target Act 2007 to reduce greenhouse gas emissions in Victoria, encourage the efficient use of electricity and gas, and invest in industries that provide energy demand management technology and services. The VEU program provides incentives for residential and business consumers to reduce their energy use by upgrading appliances, processes, or buildings.

Energy savings from the VEU program are expected to reduce Victorian electricity consumption by 7% in 2025 and avoid $3.8 billion in energy system costs.

The VEU program works by creating financial incentives for households and businesses to undertake energy saving activities. When accredited businesses (known as accredited providers) undertake eligible energy efficiency activities in homes or businesses, they create Victorian Energy Efficiency Certificates (VEECs). Each VEEC represents one tonne of greenhouse gas emissions saved over the lifetime of the activity or product installed. VEECs can then be sold to energy retailers who must meet an emission savings target each year based on their annual electricity and gas sales.

The VEU program includes energy saving activities for both households and businesses. Activities currently available in the program include water heating upgrades, space heating upgrades, building shell upgrades such as weather sealing, and the installation of in-home displays.

Project-based activities (PBAs) unlock incentives for large and custom Victorian Energy Upgrades projects suited for commercial and industrial businesses. PBAs allow businesses the flexibility to access incentives and offset costs through a more bespoke approach to energy efficiency improvement. PBAs have seen an average annual increase of over 50 per cent since they launched in 2018.

What is gas substitution and electrification?

Gas substitution is the removal of equipment and processes that consume fossil gas such as natural gas or liquified petroleum gas and replacement with alternatives.

It can include:

• electrification – that is replacing equipment that uses gas, with equipment that uses electricity. This can be done with heaters and hot water units for example. Some of this electricity equipment is much higher efficiency than the existing gas equipment, meaning both efficiency and substitution is achieved.
• fossil gas alternatives such as biomethane or hydrogen.

Through electrification projects, businesses can harness benefits including:

• reduced energy consumption, achieved through an increase in efficiency by switching from gas to electricity
• reduced exposure to gas price volatility
• reduced overall energy costs
• reduced greenhouse gas emissions of their facility
• greater understanding of the operational and financial aspects of a facility’s significant energy use
• greater understanding of the business case for electrification.

Eligible activities under this program will be limited to electrification activities. Activities involving substitution of fossil gas with renewable gas and hydrogen are excluded.

Moving decisively to electrify industrial uses where cost-effective alternatives exist offers significant opportunities to reduce gas consumption in the short term, helping to maintain reliability of supply for gas uses across the economy. This in turn will put downward pressure on prices, while renewable alternatives are developed for these ‘harder to electrify’ uses.

9. Definitions

Applicant

The Applicant who applies for the funding and is responsible for all details in the submission of an application and the contractual obligations under the funding agreement with Sustainability Victoria if successful for grant funding.

Approved Supplier

A business that was successful in the Department of Energy, Environment and Climate Action’s Expression of Interest to become an Approved Supplier. Refer to the List of Approved Suppliers.

Co-contribution

The Applicant’s cash or in-kind contribution to the total project value.

Electrification

The conversion of a machine, appliance, or system from solid, liquid, or gaseous fuel to the use of electrical power.

Eligible Facility

Facility that meets the eligibility criteria set out in “Section 2.1 – Who can apply?” of these Guidelines.

Environmental, Safety or Workplace Breach

An environmental or safety breach is any past or current prosecution, reportable incident, investigation, notice, penalty, warning, regulatory intervention or enforcement action from the Environment Protection Authority (EPA), Victorian WorkCover Authority (WorkSafe) or Fair Work or failure to comply with any environmental, safety and workplace laws.

Environmental and Safety Laws

Environmental and Safety Laws are the Occupational Health and Safety Act 2004, Environment Protection Act 2017 or any other legislation, regulation, order, statute, by-law, ordinance or any other legislative or regulatory measure, code, standard or requirement relating to the protection and safety of persons or property or which regulate the environment including laws relating to land use planning, pollution of air or water, soil or groundwater contamination, chemicals, waste, the use, handling, storage or transport of dangerous goods or substances, greenhouse gas emissions, carbon trading, or any other aspect of protection of the environment.

Gas Substitution

Gas Substitution is the removal of equipment and processes that consume fossil gas such as natural gas or liquified petroleum gas and replacement with alternatives. It can include:

• Electrification – that is replacing equipment that uses gas, with equipment that uses electricity. This can be done with heaters and hot water units for example. Some of this electricity equipment is much higher efficiency than the existing gas equipment – meaning both efficiency and substitution is achieved.
• Gas alternatives such as biomethane, biogas or other biofuel, or hydrogen (excluded from the Large Energy User Electrification Support Program).

In-kind Contribution

An In-kind Contribution is a contribution of a good or a service other than cash.

In-kind Contributions should include the cost for activities that are directly related to delivering your project. Examples include:

• staff time to manage project implementation (project management and installation costs that utilise existing internal resources)
• time spent on project activities by volunteers
• donated goods or services related to the project.

The following activities cannot be considered as In-kind Contributions:

• Operating expenses that are not directly associated with delivering the Project
• Opportunity costs such as staff ‘downtime’ during the installation of equipment or implementation of activities.

Applicants must fairly justify how they determined the dollar value for In-kind Contributions.

Related Entities

Entities which are related to the Applicant, including:

• Holding companies of the Applicant
• Subsidiaries of the Applicant
• Subsidiaries of holding companies of the Applicant
• Companies with common directors or shareholders as the Applicant
• Companies that are a beneficiary under a trust of which the Applicant is a trustee
• Trustees of a trust under which the Applicant is a beneficiary
• Companies that conduct business at the same address as the Applicant, or the same address as the location of the activity for which the funding is sought.

Related Person/s

Related Person means a director, officer, employee, agent, board member or contractor of the Applicant or a Related Entity.

Workplace Laws

Workplace laws are the Fair Work Act 2009, or any other legislation, regulation order, statute, by- law, ordinance or any other legislative or regulatory measure, code, standard or requirement relating to the provision of fair, relevant and enforceable minimum terms and conditions for all persons and to prevent discrimination against employees.