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VEEC prices have soared – Will they stay high?

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The VEECVictorian Energy Efficiency Certificate market has hit record highs, trading near $110 per certificate, with demand outpacing supply. Businesses relying on the Victorian Energy Upgrades (VEU) program are asking: Will prices hold, climb even higher, or drop?

In this article, we break down the key drivers, market outlook for the next 6–12 months, and smart strategies to manage price risks.

Who should pay attention?

The current VEEC price trends directly impact businesses planning energy efficiency upgrades under the VEUVictorian Energy Upgrades is a Victorian government energy efficiency program that gives every Victorian household and business the opportunity to receive rebates or discounts on energy saving products. program. Industries that can benefit the most include:

Whether you’re a Small to Medium Enterprise upgrading equipment or a large enterprise managing multiple sites, understanding the VEEC market can help you maximise financial returns on your projects.

What determines the VEEC price?

The VEU program requires energy retailers to meet annual targets by purchasing VEECs, which are created when businesses complete eligible energy-saving activities. Supply and demand dynamics dictate certificate pricing.

Currently, VEEC supply is lagging behind the run rate required for the 2025 target of 7.3 million certificates, pushing prices toward the tax-effective penalty price of $128 per VEEC.

Why is the VEEC price near $110?

Several key factors have driven VEEC prices to their current levels:

  1. Increasing annual targets – Rising from 6.3M in 2020 to 7.3M in 2025, increasing demand.
  2. Declining emission factors – More energy savingsElectricity or gas savings or both. are now required to generate the same number of VEECs compared to 2019.
  3. Diminishing opportunities – Key activities like replacing electric resistance hot water systems with heat pumps have fewer VEECs per upgrade due to emissions factor adjustments.
  4. Market uncertainty – Regulatory announcements and program updates create volatility, influencing buyer behaviour.

Will the VEEC price go higher?

It’s possible that the price could touch $120, but further increases are unlikely unless there is an extreme supply shortage. The market is already close to the penalty price, and buying activity is slowing down.

What could cause the VEEC price to drop?

VEEC prices remain volatile, fluctuating by around $10 regularly. The key trigger for a significant price drop would be a new (our existing) method, that unlocks high-volume certificate creation.



Examples to changes in the VEEC price include:

Until a scalable, cost-effective method is introduced—perhaps residential battery storage or expanded industrial energy efficiency projects—substantial price reductions are unlikely.

Though keep in mind past Government announcements, changes in activities, and policies have had big price impacts and the government has now released the strategic review of the VEU.

Eligible activities under the VEU Program

Businesses can earn VEECs by implementing energy-saving projects, including:

How Northmore Gordon helps businesses navigate VEEC price risks

At Northmore Gordon, we work closely with businesses across multiple sectors to optimise their energy efficiency projects and navigate the complexities of the VEEC market.

Read our case study

A large manufacturing client sought to replace its gas-fired boiler system with a high-efficiency heat pump. Northmore Gordon:

• Conducted an energy audit to quantify VEECs generated.

• Locked in forward contracts to hedge against price fluctuations.

• Secured government incentives, reducing project payback time to just 2.5 years.

As a result, the company reduced gas consumption by 60%, cut emissions, and saved over $200,000 annually.

Recommendations for managing VEEC price risks

For businesses planning energy efficiency projects, it’s essential to proactively manage price risks. Here’s how:

  1. Secure forward contracts – Lock in VEEC prices with Northmore Gordon for future projects to mitigate potential price increases.
  2. Diversify eligible activities – Explore underutilised methods such as M&V projects to create VEECs efficiently.
  3. Stay informed – Monitor government announcements and VEU policy updates via Northmore Gordon’s market insights.
  4. Leverage expert guidance – Work with Northmore Gordon’s energy consultants to identify cost-effective solutions, manage compliance, and maximise VEEC creation.

Looking ahead: What’s next for the VEEC market?

The VEEC price is likely to stay high unless the government introduces new, large-scale efficiency measures. Over the longer term, high prices are not sustainable and could lead to policy adjustments or additional supply-side interventions.

For businesses, the key to success is staying ahead of market shifts. By leveraging expert guidance, securing contracts early, and exploring diverse energy efficiency options, companies can protect themselves from volatility and maximise returns on their sustainability investments.

Take action with Northmore Gordon

Need expert guidance on your VEEC strategy? Whether you’re looking to secure forward contracts, explore energy-saving opportunities, or navigate compliance requirements, Northmore Gordon can help.

Contact us today to discuss your energy efficiency goals and VEEC strategy. Let’s turn sustainability into a competitive advantage for your business.

Want to find out more? Contact Madonna Ghajar at m.ghajar@northmoregordon.com

Disclaimer: The information in this article is general only and has been prepared without taking into account your businesses particular circumstances and needs. You should assess or seek advice from Northmore Gordon Environmental (AFSL 533927) on whether it is appropriate for your businesses objectives.

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How high have VEEC prices risen according to Northmore Gordon's article?

The VEEC (Victorian Energy Efficiency Certificate) market has hit record highs, trading near $110 per certificate, with demand outpacing supply.

Why is the VEEC price near $110?

Several factors have driven VEEC prices to current levels: increasing annual targets (rising from 6.3M in 2020 to 7.3M in 2025), declining emission factors requiring more energy savings to generate the same number of VEECs compared to 2019, diminishing opportunities such as fewer VEECs per upgrade for activities like replacing electric resistance hot water systems with heat pumps, and market uncertainty from regulatory announcements and program updates influencing buyer behaviour.

What is the current VEEC supply and target situation driving prices toward the penalty price?

VEEC supply is currently lagging behind the run rate required for the 2025 target of 7.3 million certificates, pushing prices toward the tax-effective penalty price of $128 per VEEC.

Will VEEC prices go even higher, according to the article?

It's possible that the price could touch $120, but further increases are unlikely unless there is an extreme supply shortage, since the market is already close to the penalty price and buying activity is slowing down.

What could cause VEEC prices to drop significantly?

VEEC prices remain volatile, fluctuating by around $10 regularly. The key trigger for a significant price drop would be a new (or existing) method that unlocks high-volume certificate creation. Until a scalable, cost-effective method is introduced—perhaps residential battery storage or expanded industrial energy efficiency projects—substantial price reductions are unlikely.

What historical examples of VEEC price changes does the article give?

From 2020-2021 new targets combined with supply shortages pushed the price up to $80. Government interventions, such as introducing refrigerated display cabinets in 2022, temporarily increased supply and softened prices to $49. The phase-out of lighting activity and a supply shortage later pushed prices back up. Lower 2026/2027 VEEC targets initially led to a price drop but were later offset by ongoing supply shortages. Space heating and cooling upgrades are growing but remain high-cost activities requiring sustained high VEEC prices to be viable.

Which industries or businesses should pay attention to VEEC price trends under the VEU program?

Industries that can benefit the most include manufacturing (optimising industrial processes and equipment), retail and commercial buildings (solar installations and HVAC systems), aged care and healthcare (upgrading heating and cooling for patient comfort), cold storage and food processing (improving refrigeration efficiency), hospitality and accommodation (reducing energy use in commercial kitchens and laundries), and animal processing and agriculture (lowering energy costs in refrigeration, heating, and irrigation).

What eligible activities can businesses use to earn VEECs under the VEU Program?

Businesses can earn VEECs through appliance upgrades (high-efficiency refrigerators, freezers, TVs, clothes dryers, induction cooktops, in-home display units), water heating upgrades (energy-efficient water heaters and water-efficient showerheads), space heating and cooling system upgrades, lighting upgrades, gas efficiency improvements (gas efficiency controls and appliance upgrades), and commercial and industrial upgrades (lighting, cold rooms, and other energy-consuming equipment).

How did Northmore Gordon help a manufacturing client manage VEEC price risk?

For a large manufacturing client seeking to replace its gas-fired boiler system with a high-efficiency heat pump, Northmore Gordon conducted an energy audit to quantify VEECs generated, locked in forward contracts to hedge against price fluctuations, and secured government incentives, reducing the project payback time to just 2.5 years. As a result, the company reduced gas consumption by 60%, cut emissions, and saved over $200,000 annually.

What recommendations does Northmore Gordon give for managing VEEC price risks?

The recommendations are: secure forward contracts to lock in VEEC prices for future projects and mitigate potential price increases; diversify eligible activities by exploring underutilised methods such as M&V projects; stay informed by monitoring government announcements and VEU policy updates via Northmore Gordon's market insights; and leverage expert guidance by working with Northmore Gordon's energy consultants to identify cost-effective solutions, manage compliance, and maximise VEEC creation.

What is the outlook for the VEEC market going forward?

The VEEC price is likely to stay high unless the government introduces new, large-scale efficiency measures. Over the longer term, high prices are not sustainable and could lead to policy adjustments or additional supply-side interventions. The government has also released a strategic review of the VEU program, and past government announcements and policy changes have had significant price impacts.

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