Australia: Expanded Renewable Energy Target: Legislation Commences

Last Updated: 13 July 2010
Article by Jennifer Mee, Paul Sistrom and Nicola Sutherland

The Renewable Energy (Electricity) Amendment Act 2010, which was introduced into the Commonwealth Parliament in mid May, received Royal assent on 28 June 2010. Also receiving Royal assent on the same day were the Renewable Energy (Electricity) (Charge) Amendment Act 2010 and the Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010.

The Acts separate the Renewable Energy Target scheme into two parts: the Large-scale Renewable Energy Target and the Small-scale Renewable Energy Scheme. The changes aim to accelerate investment in large scale renewable energy projects, which had stalled under the previous scheme.

Most of the substantive provisions will take effect on 1 January 2011. However, the regulation making powers, some transitional provisions and the provisions creating civil penalties have already commenced.

The Acts will have the following implications.

  • Separate large and small obligations: the Acts create separate obligations for liable entities in respect of "large-scale generation" and "small-scale technology". Both attract potential shortfall charges and civil penalties.
  • Separate large and small certificates: the Acts create "large-scale generation certificates" and "small-scale technology certificates".
  • Retain renewable energy target for large-scale generation: the Acts retain the Renewable Energy Target (RET) concept, but only for large-scale generation.
  • Require liable entities to surrender all small-scale certificates: the Acts require liable entities (together) to surrender all small-scale technology certificates created in a year (ie without limit).
  • Fixed price for small-scale certificates: the Acts set a fixed price for small-scale technology certificates at A$40, plus GST (where applicable).
  • Optional clearing house: the Acts facilitate the creation of an optional "clearing house" for small-scale technology certificates.
  • Possible review of price for small-scale certificates: the Acts contain a mechanism by which the Minister may review, and if necessary reduce, the price of small-scale technology certificates to ensure that the price remains relevant over time. The Minister must take independent advice as part of this process.
  • Possible adjustment of large-scale annual targets: the Acts include, for the Large-scale Renewable Energy Target, a contingency arrangement under which annual targets may be adjusted if the banked stock of renewable energy certificates (RECs) exceeds a certain benchmark as at December 2010.
  • Possible reduction of Solar Credits multiplier: the Acts allow the Solar Credits multiplier for small generation units to be reduced in certain circumstances (eg if the Renewable Energy Regulator determines that there is systemic evidence that solar PV panels are being offered for sale at a level where there is a relatively small or no out-of-pocket expense).
  • Surrender of certificates: the Acts require small-scale technology certificates to be surrendered quarterly (as compared to annually for large-scale generation).
  • Renewable Power Percentage: the Acts separate the "Small-scale Technology Percentage" from the Renewable Power Percentage, which will only apply to large-scale generation.
  • Emerging technologies: the Acts allow the Minister to determine that an emerging renewable energy technology be included as a renewable energy technology under the Acts.
  • Waste coal mine gas: the Acts significantly affect the treatment of waste coal mine gas (WCMG) projects, by repealing 1 July 2011 as the date from which existing WCMG power stations (once accredited) may commence creating renewable energy certificates, and making this a matter for future regulations.
  • Standards for small generation units: the Acts require the Regulations to establish a scheme for inspection and reporting on small generation units to ensure conformity with relevant standards.
  • EITEs: the Acts preserve the rate of assistance for emissions intensive trade exposed entities (EITEs) under the present RET.
  • Civil penalties: the Acts introduce new civil penalty provisions (including civil penalties for executive officers).
  • Transitional provisions: the Acts contain transitional provisions whereby all RECs created before 1 January 2011 will be treated as large-scale generation certificates. In general, for contracts entered into before the Act commences, references to "renewable energy certificates" or "certificates" will be taken to mean large-scale generation certificates (subject to the contract expressing the contrary).
  • Review of scheme: the Acts require the Government to commission an independent review of the scheme as soon as practicable after 30 June 2010 and every two years thereafter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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