The Victorian Energy Upgrades (VEU) scheme runs on an obligation. The government sets a target, retailers have to meet it, and VEECs are how they prove it. Everything else, the discounts, the price and the installer’s rate, flows from that.
The target
Each year liable energy retailers must surrender a number of VEECs. As reported at the time of writing, the Victorian Government set the emissions reduction targets at 4.4 million VEECs for 2026 and 4.6 million for 2027. One VEEC represents a tonne of greenhouse gas emissions reduction. The retailer’s share depends on its share of the market.
Targets have to be prescribed in regulations for each year, so later years, including toward 2030, are set through that process. That is why I do not quote a 2030 number; look at the current Victorian Energy Efficiency Target regulations.
The penalty
If a retailer does not surrender enough, it pays a shortfall penalty per missing certificate. The reported rate has been raised to $100, intended to keep all retailers buying and to give a buffer when prices swing. Because paying more than the penalty to avoid the penalty makes no sense, the penalty works as a practical ceiling on the VEEC price. The market has stayed well under it, with spot roughly $85 to $95 in 2026 at the time of writing; see the VEEC spot price.
The NSW equivalent, with its own penalty and target, is covered in the NSW ESS target and penalty.
How retailers surrender VEECs
Retailers buy certificates on the market or through contracts, then surrender them to the Essential Services Commission to meet their annual liability. A retailer that buys cheaply in advance can lock in cost, which is why forward trading exists; see spot vs forward VEEC prices. Retailers may pass costs through in bills, which is part of how the program is funded.
Scale and the 2030 outlook
A target in the millions of certificates is a large market. At prices around $85 to $95, the annual value runs into the hundreds of millions of dollars, which is the money that ends up as discounts and installer revenue. Beyond 2030, the program has been reported as legislatively extended, with long-term planning for businesses. Reported modelling suggested prices for 2026 and 2027 should ease from recent highs, given the higher penalty and supply, but that is a forecast, not a promise; see why VEEC prices have been so high.
What this means for installers
You are on the supply side of a compliance market. Understand the target, watch the price, and choose a trader whose rate and settlement fit your cash flow. See VEEC trading and pricing.
What this means for customers
The discount on your upgrade comes from this obligation. It can change as targets and prices change, so get the figure in writing and compare it against the VEU rebate vs Solar Victoria rebate.