An innovative finance model and partnership between government and the private sector is encouraging Melbourne property owners to upgrade older buildings and reduce their carbon footprint and building costs.
A 15-storey office block at 470 Collins Street is the latest building - the fourth in Melbourne - to take advantage of ”environmental upgrade agreement” finance to improve its NABERS energy-efficiency rating and cover the upfront costs of retrofitting a 1970s-era building.
Building owner Sam Suleman said the scheme, supported by Low Carbon Australia and the City of Melbourne, had allowed him to upgrade the building’s condensing systems, cooling towers, lighting and building management software earlier than originally planned.
The glass and concrete structure is a typical 42-year-old building with 14 floors of office space and a few ground floor retail tenants on 9763 square metres of floor space.
The $750,000 spent on improving the internal workings were expected to reduce energy costs by 30 per cent and give immediate annual savings of $55,000, Mr Suleman said.
Because the agreement required certification by the City of Melbourne, it also allowed him to pass on the benefits of the building’s greener credentials to the tenants, he said.
Other buildings to retrofit using the model, include 8 Dorcas Street, South Melbourne, 460 Collins Street and 123 Queen Street.
Environmental upgrade agreements are supported by the City of Melbourne as part of its $2 billion program to retrofit 1200 buildings, about 70 per cent, of buildings in the city. Other councils have since followed the model.
The finance is structured through a levy on the land similar to rates which the owner pays to the council, which then pays off the original loan.
Payments remain with the property if it changes hands and because the structure was so secure banks were willing to lend at reduced rates, Melbourne lord mayor Robert Doyle said.
”Everyone knows about sustainability. Everyone knows about the economic returns. The difficulty has been access to capital for building owners, and that’s the thing this solves,” he said.
Low Carbon Australia’s environmental upgrade fund, sourced through NAB, had loans totalling about $2 million, but aimed to fund about $60 million in environment upgrades in the next few years, chairman Mike Rann said.
”Many companies are now saying this makes sense because it’s cutting their energy costs in ways they previously hadn’t thought about.”
