March 7, 2025
To: Victorian Department of Energy, Environment and Climate Action
Subject: Feedback on the Victorian Energy Upgrades (VEU) Program Review
Thank you for allowing us to share our thoughts on the strategic review of the VEU program.
Victoria is experiencing significant changes in its energy landscape. Local gas resources are running low, gas prices are rising more quickly than electricity prices, and the costs and emissions related to electricity are becoming more unpredictable. While the VEU program’s main goals are still relevant, some updates can make it more effective:
- Key market trends in the next five years will include increased electrification, a higher demand for flexibility, and challenges with gas supply.
- While focusing on emissions remains important, the program’s goals and metrics should evolve to include the value of demand flexibility, and it might be beneficial to set a secondary target for reducing gas use.
- The VEU program should expand its offerings to include more options for electrification and demand flexibility, while limiting the focus on improving gas efficiency.
- The review could consider relaxing the additionality requirements for residential water heating and heating electrification.
For more detailed information, please refer to our complete response in the following pages. Feel free to reach out if you have questions or would like to discuss our ideas.
Best regards,
Amandine Denis-Ryan, CEO, IEEFA Australia
Jay Gordon, Energy Finance Analyst, Australian Electricity, IEEFA
Joshua Runciman, Lead Analyst, Australian Gas, IEEFA
