Budget Explainer: Energy For Households & Small Businesses
The latest Federal Budget was a big one, and the Federal Government has set its sights on making the energy transition happen.
Major investments have been earmarked for several large-scale renewable energy projects, as well as the Powering the Regions Fund and the establishment of the Net Zero Authority. But what did the Budget hold for energy usage and costs at the household, small business, and community levels?
It’s fair to say that this Budget is Australia’s first real electrification budget. The Federal Government is keen to see homes switch to all-electric energy appliances which can leverage the renewable energy generated by the big projects mentioned above. With cost of living and energy front of mind for many Australians, the good news is that the Budget contained major changes and support for going all-electric and reducing energy bills.
Essentially, there are three major budget measures set to impact household energy and to deliver greater electrification.
1. Small Business Energy Incentive
As part of a larger Small Business Support package, this Federal incentive aims to provide financial support for small- to medium-sized businesses looking to upgrade their energy appliances to models which are more energy efficient. Specific assets such as heating and cooling systems, batteries, induction cooktops and fridges will be eligible for a 20% tax deduction, with a maximum deduction of $20,000. Upgrading to more efficient appliances will save you on energy usage, costs, and help the environment. The full details of what will and won’t be eligible are still being finalised in consultation with stakeholders, so keep an ear out for news on how to upgrade energy appliances in your small business as time progresses.
2. Energy Price Relief Plan
The Budget has pledged up to $3 billion in electricity bill relief for households and small businesses most in need. This relief will be directed towards more vulnerable households, such as seniors and recipients of Family Tax Benefits, and will be delivered in partnership with state and territory governments. This relief will likely be in the form of a direct reduction on the electricity bills of those households and small businesses.
The Federal Government is also planning to invest in new ways to monitor the coal and gas markets, with the aim of applying greater downward pressure on electricity prices as a whole. A temporary gas price cap of $12 per gigajoule is in the works, as well as Federal support for the NSW and Queensland governments to implement a price cap of $125 per tonne of coal used for electricity generation.
These market reforms and household relief plans are good news for those struggling to pay their power bills. As they will be delivered in partnership with state and territory governments, it’s worth watching for news at the state level as well as Federal.
3. Household Energy Upgrades Fund
The Budget also revealed plans to help households upgrade their appliances to energy-saving alternatives. The new Household Energy Upgrades Fund will deliver $1 billion to the Australian Government’s “green bank”, the Clean Energy Finance Corporation (CEFC), to provide 110,000 low-interest loans for energy-saving home upgrades. These loans will be delivered by the CEFC in partnership with private lenders, and aim to allow homes to upgrade their appliances to more efficient models, reduce energy bills, and benefit from cleaner energy.
The Household Energy Upgrades Fund will also supply $300 million in energy bill support to 60,000 social housing properties. This will be done through the funding of energy-performance upgrades and be rolled out in cooperation with state and territory governments.
Also included under the Fund are plans to update and grow our national energy efficiency standards. These updated standards are expected to provide Australians with better information about the energy performance of their households as a whole. Currently the Nationwide House Energy Rating Scheme only covers new builds, but the Federal Government intends to widen this scheme to cover existing homes as well. The Scheme rates homes not just on their appliances and energy systems within the home, but on the physical structure and design of the building itself as well. This will make understanding the energy efficiency of a home a much clearer process easier as the Standards are updated.
With the average energy rating for Aussie homes sitting at a whopping 2/10 – largely due to little or no insulation, draughts, and single glazed windows – these new energy efficiency standards are a very welcome addition.
Overall, the new Federal Budget has announced plans to upgrade the energy appliances of households, small businesses, and social housing properties, as well as delivering direct electricity bill relief to vulnerable energy users. While it’s worth keeping in mind that Budget measures are never set in stone, they offer a good forecast of how the Government intends to tackle current issues and approach current opportunities. If you’d like to read more about these Budget measures, follow this link to the Treasury website.