Energy Audits in Asset Due Diligence. What Buyers Often Miss

When you acquire a commercial or industrial asset in Australia, energy risk rarely sits at the top of the checklist.

Leases. Structural condition. Compliance. Revenue. Energy is often treated as a line item in operating expenses.

That is a mistake.

Across manufacturing sites, large commercial buildings, logistics facilities and healthcare assets, energy performance directly affects:

• Net operating income

• Capex exposure

• Compliance risk

• Decarbonisation obligations

• Future tenant competitiveness

An energy audit conducted during asset due diligence can change how you view the asset before you commit capital.

Where energy risk hides during acquisition

In most transactions, buyers review 12 months of utility bills, basic NABERS ratings if available, equipment age schedules, and maintenance reports.

What this rarely shows:

• True after-hours base load

• Control failures in HVAC and BMS

• Inefficient process loads

• Demand charge exposure

• Electrification constraints

• Embedded gas dependency

• Deferred plant upgrades are masked as operational

A structured commercial and industrial energy audit in Australia provides the technical layer behind the financials. 

Energy cost is not the only issue

Asset buyers often focus on current annual energy spend. The more important questions are:

• Is this cost artificially low due to an underperforming plant that will soon fail?

• Is a major HVAC replacement imminent?

• Is the electrical infrastructure sufficient for electrification?

• Will future carbon reporting expose liabilities?

• Are there easy efficiency gains that justify a purchase price adjustment?

Energy audits in due diligence answer these questions with evidence, not assumptions.

Indicative example. Industrial acquisition

In a recent indicative example of a mid-sized food manufacturing site:

• Annual electricity and gas cost. Approximately $1.2 million

• Ageing ammonia refrigeration plant

• Significant after-hours base load from compressed air and cold storage

• No recent controls optimisation

Surface-level review suggested stable costs. A targeted energy audit during due diligence identified:

• Imminent compressor replacement risk

• Oversized motors operating at low load

• Demand charge exposure from poor staging

• Heat recovery opportunity, reducing gas use

The audit modelled staged upgrades over five years. Outcome for the buyer:

• Revised capex forecast

• Negotiated price adjustment reflecting plant risk

• Immediate operational improvements post-settlement

• Clear decarbonisation pathway

Without the audit, the risk of plant condition would have appeared as a surprise within 24 months.

Indicative example. Commercial office building

In a large occupied commercial building with a 3.5 Star NABERS rating, stable tenants, and rising electricity costs, standard due diligence focused on tenancy and leases. Energy audit findings included:

• Poor after-hours controls

• Simultaneous heating and cooling

• Oversized base building plant

• Tenant lighting inefficiencies

The audit outlined low-disruption control changes, targeted capital upgrades, and an expected uplift in NABERS rating. This matters for asset value. Energy performance affects tenant attraction, compliance and long-term operating costs.

Energy audits support NABERS improvement plans. They do not replace formal ratings, but they inform how improvements are staged. 

Portfolio acquisitions. Why consistency matters

For private equity and infrastructure funds acquiring multiple assets, inconsistency is the real risk. Different sites, different data quality, different metering, different maintenance histories.

Energy audits during due diligence allow you to:

• Apply a consistent assessment framework

• Standardise plant condition reporting

• Compare like-for-like energy intensity

• Model portfolio-wide capex exposure

• Prioritise upgrades across assets

This is particularly important when assets sit in different states with different tariffs and grid constraints.

Operational realities that matter

In theory, energy upgrades look straightforward. In practice, sites face budget pressure, ageing equipment, shutdown constraints, tenant disruption risk, and contractor access limitations.

A due diligence audit that ignores these constraints is not useful. A properly scoped audit identifies:

• What can be done immediately with minimal disruption

• What requires a shutdown windows

• What should align with future plant replacement

• Where electrification depends on switchboard capacity

Understanding what you receive from a commercial energy audit helps clarify how this information is structured.

Risk mitigation. Valuation protection. Negotiation leverage

Energy audits during acquisition deliver value in three ways.

Risk mitigation: Identifies hidden risks in plant condition, quantifies deferred maintenance exposure, and highlights compliance gaps.

Valuation protection: Improves forecasting accuracy, clarifies realistic operating costs, and avoids unexpected capex shocks.

Negotiation leverage: Supports price adjustments, informs vendor discussions, and strengthens internal investment committee approvals.

Energy due diligence does not replace technical building inspections. It complements them with a systems and performance lens.

AS/NZS 3598 audit levels can be adapted depending on transaction scale and risk appetite. 

When to commission an energy audit in a transaction

Energy audits are most effective when commissioned:

• During early due diligence, before final valuation

• For assets with high energy intensity

• When electrification or decarbonisation is likely within five years

• Where NABERS or ESG performance affects tenant demand

• In portfolio acquisitions requiring capital planning clarity

For low-energy intensity sites, a lighter review may be sufficient. For industrial assets with significant process loads, deeper analysis is often justified.

Energy performance is an asset characteristic

Energy is not just an operating expense. It reflects plant condition, controls sophistication, infrastructure readiness, carbon exposure, and upgrade pathway.

In acquisitions, you price risk. Energy audits give you evidence to price it properly.

Next step

If you are considering an acquisition, portfolio expansion, or asset repositioning, speak with us about whether an energy audit should be part of your due diligence. Request an energy audit or contact us for an initial discussion about your site and constraints.

Find out about available energy reduction grants and subsidies for your organisation on our Grants page.