The Victorian Energy Upgrades program (VEU) is a state scheme that makes large energy retailers responsible for funding energy efficiency. It is run by the Essential Services Commission (ESC) under the Victorian Energy Efficiency Target Act. Retailers must surrender a set number of Victorian Energy Efficiency Certificates (VEECs) each year, accredited providers create those certificates by installing approved products in homes and businesses, and the certificate price is what funds the discount you see at the door.
That structure is the whole point: the government sets the target and the rules, the market finds the cheapest abatement, and no state budget line pays for the discounts. This guide covers who does what, how the program is regulated, and what the extension to 2045 means for anyone building a business or buying an upgrade.
The three parties
Liable entities (retailers). Energy retailers that sell above a size threshold get a share of the annual target based on how much energy they sell. They meet it by surrendering VEECs. If they fall short they face a shortfall penalty set by the legislation, which is why they buy certificates ahead of the deadline.
Accredited providers. These are businesses accredited by the ESC to create VEECs. They deliver the activity (for example, installing a heat pump hot water system), record the evidence, create the certificates and sell them. Many installers work under an accredited provider rather than being one themselves.
Consumers. Households and businesses get the upgrade at a discount. The discount is the provider’s pass-through of the VEEC value, typically on the invoice. It is not a government cheque.
The regulator’s role
The ESC accredits providers, approves products, publishes activity requirements, audits certificates and enforces the Act. It also runs the VEU Registry, where certificates are created, transferred and surrendered. The Victorian Government sets targets and the policy design. When people say “the VEU program has changed”, they usually mean one of three things: a new target, a changed activity specification, or new compliance rules from the regulator.
What counts as an eligible activity
Activities are defined in regulation and each has specific requirements: eligible products, installation standards, evidence and the formula that converts expected energy savings into certificates. Residential activities have included hot water, heating and cooling, and other efficiency upgrades, and the ESC publishes the current list and requirements on its site. Rules differ between activities, so always read the specification for the one you are delivering or buying.
Heat pump hot water is the activity most often confused with a federal rebate. A heat pump can earn both STCs and VEECs in Victoria on the right job; see VEECs and STCs on the same job and our answer on heat pump VEECs in Victoria.
How the money flows
Take a simple, illustrative case. An accredited provider installs an eligible upgrade that creates 20 VEECs. At a spot price of $90, those certificates are worth $1,800. The provider sells them to a retailer (directly or via a trader), and passes some or all of that value to the customer as a discount, retaining the rest to cover costs and margin. The retailer includes the compliance cost in its overall pricing.
| Step | Who | What happens |
|---|---|---|
| 1 | Provider | Delivers the activity and records evidence |
| 2 | Provider | Creates VEECs in the VEU Registry |
| 3 | Buyer | Pays the provider; certificates are transferred |
| 4 | Retailer | Surrenders certificates to meet its target |
| 5 | ESC | Audits and enforces |
The 20-VEEC example is hypothetical; real counts depend on the activity, product and location. See the ESC’s calculator or activity page for actual numbers.
The 2045 extension and the strategic review
Victoria has extended the program’s legislated life from 2030 to 2045, to align with its net zero emissions target. Interim targets for 2026 and 2027 have been set while a strategic review considers the longer-term design. For installers, the extension is good news for the business case of building skills and capacity around approved activities. For households, it means the discount pathway for upgrades such as heat pumps is likely to remain.
The reviews also carry risk: activities can be amended or removed, and the shift from gas to electric products shapes which upgrades the scheme favours. Keep an eye on the ESC’s notices.
Interaction with other programs
VEU sits beside, not inside, other incentives. Solar Victoria programs are income-tested and run separately; the federal STC scheme covers solar, batteries and eligible hot water. Some jobs can draw on more than one, subject to each scheme’s rules. Our answer on VEU rebate versus Solar Victoria rebate lays out the difference.
Compliance and what goes wrong
Because VEEC value flows from the ESC’s acceptance of each certificate, the compliance burden falls on providers. The common failure points are products that are not on the approved list at the time of installation, missing or unclear evidence of the installation, installers who are not appropriately licensed or qualified for the activity, and certificates created for work that did not meet the specification. The ESC can audit, reject certificates, and take enforcement action against providers. A provider who loses accreditation or has certificates reversed can be left with a debt to a buyer.
That is why buyers of certificates look closely at the provider’s record, and why some traders pre-check claims before accepting them. If you are buying an upgrade as a household, the equivalent protection is simple: use a provider who can show current accreditation and a written statement of what they installed, with model numbers.
Who benefits most
Households with ageing electric or gas hot water systems and inefficient heating are the biggest beneficiaries, because the energy savings and therefore the certificate counts are largest. Installers who specialise in a small number of high-volume activities do better than generalists because they can standardise evidence and reduce failed claims. Retailers get a market mechanism rather than a mandate to run their own installation programs. For the state, the scheme delivers abatement without a dedicated budget line, which is a large part of why it has been extended.
What to do next
- Households: check the ESC website for eligible products and a list of accredited providers before accepting a “VEU discount”.
- Installers: read the activity specification for what you deliver, and decide whether to become a provider or work under one.
- For market and selling options see VEEC trading, our how it works page and the resources library.