Understanding Environmental Charges on Your Energy Bill

Many businesses notice environmental charges in their electricity rates but aren’t always sure what they mean. These charges are part of national and state programs designed to increase renewable energy, improve energy efficiency, and reduce emissions across Australia. 

Below is a simple, easy-to-understand guide to the main schemes and how they affect you. 

National Renewable Energy Schemes 

These two schemes apply to everyone across Australia. 

Large-scale Renewable Energy Target (LRET) 

LRET encourages the development of big renewable energy projects such as wind farms, solar farms, hydro generators, and biomass plants. 
Whenever these power stations generate renewable electricity, they create certificates that energy retailers must buy. 
Because retailers recover these costs through electricity prices, businesses see a portion of this in their energy rates. 

In simple terms: 
LRET helps build large renewable power stations, and part of the cost flows through to your electricity charges. 

Small-scale Renewable Energy Scheme (SRES) 

SRES supports small systems like rooftop solar panels, solar hot water units, and heat pumps installed at homes and small businesses. 
These installations create certificates that must be purchased by energy retailers, which again contribute to part of your bill. 

In simple terms: 
SRES helps Australians put solar on their roofs. The scheme is funded through electricity prices, which is why it appears in your bill. 

State and Territory Energy Efficiency Schemes 

These schemes only apply within their respective state or territory and aim to reduce energy use by making homes and businesses more efficient. 

NSW Energy Savings Scheme (ESS) 

The NSW ESS encourages households and businesses to reduce electricity consumption by upgrading to more efficient equipment—things like LED lighting, efficient appliances, and better heating or cooling systems. 
These upgrades generate “energy savings certificates” that retailers are required to buy. 

In simple terms: 
ESS rewards energy-saving upgrades in NSW. Retailers recover the cost through energy rates. 

Victorian Energy Upgrades Program (VEU, formerly VEET) 

In Victoria, the VEU program works similarly. It supports upgrades that lower energy use—such as efficient lighting, heating, cooling, hot water, and industrial process improvements. 
Approved upgrade providers create certificates for the energy saved, and energy retailers must purchase enough of these to meet annual targets. 

In simple terms: 
VEU lowers Victoria’s energy use by helping households and businesses upgrade to more efficient products. Retailers factor this cost into Victorian electricity tariffs. 

SA Retailer Energy Efficiency Scheme (REES) 

South Australia’s REES program focuses mainly on helping households, including low-income homes, reduce their energy consumption. 
Retailers are required to deliver or fund energy-saving activities such as lighting upgrades, energy audits, or appliance replacements. 

In simple terms: 
REES supports South Australian homes—especially vulnerable households—to reduce energy use. Retailer obligations influence the cost of electricity in SA. 

ACT Energy Efficiency Improvement Scheme (EEIS) 

The ACT’s EEIS applies to both homes and businesses. It encourages upgrades that reduce electricity use, such as higher-efficiency appliances, better insulation, or professional energy-saving services. 
Like other schemes, certificates are created for activities and retailers must meet annual targets. 

In simple terms: 
EEIS helps ACT households and businesses cut energy use through subsidised upgrades. Electricity retailers pass through the cost of meeting their targets. 

Why These Schemes Matter 

Although environmental charges add a cost to electricity bills, they also: 

• Support Australia’s shift to cleaner and renewable energy 
• Reduce long-term electricity demand 
• Improve efficiency and lower power consumption 
• Help homes and businesses save money through subsidised upgrades 
• Reduce greenhouse emissions nationwide 

In the long run, these programs are designed to make energy cleaner, more reliable, and more cost-effective.

Comparison: Environmental Charges & Energy Schemes in Australia

Scheme	Jurisdiction	Primary Purpose	What It Incentivises	Type of Certificates	Who Creates Certificates	Who Bears Liability / Must Surrender	Typical Impact on Energy Bills	Key Differentiators
LRET – Large-scale Renewable Energy Target	Australia-wide (Federal)	Increase large-scale renewable electricity generation	Construction and operation of renewable power stations (wind, solar farms, hydro, biomass)	LGCs – Large-scale Generation Certificates	Accredited large power stations (per MWh generated)	Liable entities (electricity retailers and large electricity buyers)	Cost passed through via LGC component	Focuses on supply-side decarbonisation and utility-scale projects
SRES – Small-scale Renewable Energy Scheme	Australia-wide (Federal)	Support small-scale renewable installations	Rooftop solar PV, small wind, hydro, solar water heaters, heat pumps	STCs – Small-scale Technology Certificates	Households & small businesses installing eligible systems	Electricity retailers (who purchase/surrender STCs)	STC price influences upfront system rebates	Designed for households/SMEs, no annual cap on certificates, boosts small-scale generation
NSW – ESS (Energy Savings Scheme)	New South Wales	Reduce electricity consumption	Energy-efficient upgrades (lighting, appliances, HVAC, industrial, commercial activities)	ESCs – Energy Savings Certificates	Accredited Certificate Providers implementing eligible upgrades	Electricity retailers must meet energy savings targets	Scheme cost included within NSW electricity prices	Pure efficiency scheme; focuses on demand reduction not generation
VIC – VEU (formerly VEET) Victorian Energy Upgrades	Victoria	Reduce energy consumption & emissions	Appliance upgrades, lighting, insulation, industrial process improvements	VEECs – Victorian Energy Efficiency Certificates	Accredited Providers performing eligible upgrades	Energy retailers with Victorian customers	VEEC cost reflected in Victorian electricity bills	One of Australia’s largest efficiency programs with broad upgrade categories
SA – REES (Retailer Energy Efficiency Scheme)	South Australia	Improve residential energy efficiency	Home energy efficiency activities, low-income household support	REES Energy Efficiency Activities (no market-based certificate like VEEC/ESC)	Retailers or contractors performing upgrades	Energy retailers (state-obligation)	Retailer compliance costs reflected in SA bills	Strong focus on household support & low-income assistance
ACT – EEIS (Energy Efficiency Improvement Scheme)	Australian Capital Territory	Reduce energy use and emissions	Home and business energy-saving upgrades	EECs – Energy Efficiency Certificates (ACT-based)	Accredited Service Providers	Electricity retailers in ACT	EEIS cost embedded in ACT bill components	Progressive scheme with strong residential participation and business upgrade incentives

Cheat Sheet: Key Differences at a Glance 

Differentiator	RET (LRET + SRES)	ESS (NSW)	VEU (VIC)	REES (SA)	EEIS (ACT)
Type	Renewable energy generation	Energy efficiency	Energy efficiency	Energy efficiency	Energy efficiency
Mechanism	Certificate market (LGC/STC)	ESC market	VEEC market	Retailer-delivered activities	Certificate market (ACT)
Focus	Supply-side renewables	Demand-side efficiency	Demand-side efficiency	Household-focused efficiency	Efficiency for households & businesses
Who Benefits Directly	Large generators (LRET), small system owners (SRES)	Households & businesses upgrading	VIC households & businesses	SA households (strong low-income focus)	ACT households & businesses
Cost Recovery	Retailers pass through cost federally	Embedded in state tariffs	Embedded in state tariffs	Embedded in SA tariffs	Embedded in ACT tariffs

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