An investigation into Victoria's energy-saving certificate programme has uncovered a pattern of fraudulent applications backed by computer-generated images, with a number of operators drawing on public funding in ways that breach the scheme's rules. Roughly 20 businesses enrolled in the scheme have had their registrations cancelled or withdrawn across the past two years, and a number of those operators subsequently went into liquidation — leaving affected customers without warranty protection on hot water units and air conditioning equipment, and still waiting on deposit refunds totalling millions of dollars.
A worker at a sustainability firm faces civil action from that company over allegations that carbon credits valued at $5.9 million were redirected into a separate business he controls.
Under the Victorian Energy Upgrades (VEU) scheme, households can access reduced prices on a range of goods — among them hot water systems, refrigerators, and televisions — through a framework that subsidises installers carrying out electrification work or boosting residential energy efficiency. Drawn from corporate records, regulatory enforcement notices, and direct accounts gathered from consumers and installers, the inquiry lays out a pattern of rule-breaking across the $572 million scheme.
Plans to fold all government-administered solar rebates into the VEU framework — a scheme that authorities report has extended its reach to 2.4 million households and 180,000 businesses — are set to take effect next year, with observers noting unresolved questions about the programme's day-to-day reliability.
Doctored images have become a persistent enforcement challenge for the Essential Services Commission — the agency overseeing the scheme — with AI generation tools now reducing the technical threshold for producing convincing fabricated visuals, a pattern that has taken hold over the past six months. Some operators have begun submitting AI-generated photographs as documentation that equipment such as air conditioners, lighting fixtures, heat pumps, or weatherproofing seals has been fitted at a property, then lodging those records as the basis for Victorian energy efficiency certificates, each worth $83.
A $230,000 forfeiture of carbon credits was directed at one business by the regulator that month, following allegations the company had lodged doctored photographs and inaccurate declarations to support its claims. A separate firm faced removal from the programme that same August, following a commission finding that it had submitted fabricated documentation — including manipulated photographs — and was required to hand back 1,228 certificates carrying a combined worth exceeding $100,000.
Findings released by the Essential Services Commission pointed to a firm that had sought carbon credits for weather seals and shower heads, with the regulator noting that the business had reportedly altered photographic records and pressed at least one customer into backing its unverified assertions.
Brody, who chairs the commission, told reporters that enforcement activity against non-compliant conduct had been stepped up over the preceding 18 months, a period during which the programme itself had grown and taken on more intricate energy upgrade work. Ten businesses were removed from the scheme over the course of the most recent financial year. Brody noted that activity patterns within the programme had shifted over time — early uptake centred on lighting upgrades and weather sealing, whereas more recent years have seen growth in energy-efficient air-conditioning units and hot water systems.
Thousands of post-installation compliance checks, including inspections and consumer phone audits, had been carried out, with data and technology deployed to identify non-compliance. Accreditation processes had been strengthened to address applicants using artificial intelligence tools to obscure gaps in their knowledge or capability, including through requirements for in-person interviews in some cases. Brody also pointed to the presence of participants attempting to exploit the scheme, and noted that the programme's own technology had been used to detect breaches.
A recurring issue for Victorians purchasing lower-cost air-conditioners and heat pumps has involved larger companies entering insolvency, leaving customers without the deposits or warranties they had paid for. Documents filed by the liquidator reveal that Cyanergy — which ceased operations in March — has left around $7 million in unpaid obligations to unsecured creditors, the bulk of them households that had already paid for energy-efficient goods.
Ahead of the firm's eventual closure, the regulator had placed it under suspension following reports that heat pump installations carried out on its behalf contained wiring faults that posed a potential hazard. A formal notice arrived for the firm that year, centred on allegations that invoices had been doctored to show installations that were never carried out.
According to the final report from liquidator Mackay Goodwin, the bulk of the $5.2 million owed to customers related to services that were never delivered, covering work such as installations and orders left unfinished. A further $1.9 million in outstanding liabilities was spread across the tax authority and a range of unsecured creditors.
With the firm now in liquidation, outstanding refund requests and unresolved workmanship complaints fall outside what it is able to handle. Documents from a committee of inspection — a body chaired by the liquidator — recorded a claim that Cyanergy's director had instructed staff to erase data from laptops retrieved from the company's chief financial officer and human resources personnel. Flagged within the committee's review were transfers exceeding $1 million directed toward a foreign entity, a finding that has since been referred for additional scrutiny.
Unpaid obligations to creditors — among them Judo Bank — leave Cyanergy carrying a further $9 million in outstanding debt. Insolvency proceedings for Smart Lifestyle Australia, a related entity, were initiated that same month. Solar panels, inverters, and batteries were among the products it supplied to Cyanergy in its role as a manufacturing partner. Total debts stand at $8.8 million, with $8 million of that amount tied to loans and guarantees held by Judo Bank.
Glower — a firm whose product range spanned batteries, solar panels, heating units, and water systems — collapsed into liquidation during February, leaving unsecured creditors facing an estimated shortfall of $4.28 million. Online complaint threads on the Facebook and other social media pages operated by Glower and Cyanergy contain a pattern of posts from clients seeking refunds on deposits or remediation of work they describe as faulty.
Carol Edwards, a buyer of a Glower hot water unit, told reporters that the appliance began leaking from the time of purchase. By the time she got in touch to arrange a repair, the company had shut down — leaving her, in her own words, with no avenue for redress.
Brody conveyed understanding toward Victorian consumers left with financial losses, particularly those who had paid for work that went unstarted or unfinished, while also noting the difficulty people encounter when attempting to have jobs completed or recoup money already spent. Customers were pointed toward Consumer Affairs Victoria as a potential avenue for assistance, according to Brody. Anyone who paid for services that were never fully delivered could raise the matter with their card provider to explore whether a chargeback would return the money spent. Warranty claims against product manufacturers — rather than installation contractors — were noted as a potential avenue open to at least some affected customers.
Eligible households stand to receive price reductions on replacement electric appliances — provided the units being swapped out run on gas or fall below current energy-efficiency standards. The funding behind those reductions flows from energy efficiency certificates that installers produce and then trade to energy retailers. Scores of refrigeration units turned up abandoned at business premises that year, left behind by contractors who had collected green-scheme certificates without swapping out the old equipment they were meant to replace.
David Davis, speaking in his capacity as the opposition's energy spokesman, told reporters that the programme had been dogged by wrongdoing over a number of years. Legal proceedings were brought against a staff member at electrical wholesaler Lawrence and Hanson after the company contended that certificates valued at $5.9 million had been redirected into a business he personally owned. An attempt to place his assets under a legal freeze accompanied the firm's pursuit of the credits' monetary worth. Via email, Lawrence and Hanson put forward the position that their organisation had been the target of deceptive conduct by outside parties.
