Australia: Renewable energy - why all the hype?

Last Updated: 5 November 2018
Article by Lilian Hui, Kylie Wilson and Carl Hinze

Most Read Contributor in Australia, October 2018

The renewable energy sector is one of the fastest growing industries in Australia and there has been a major boost in interest from investors looking to get involved in related projects.

But it is a complex, heavily-regulated area.

In the first of a three-part series, we take a look at the legislative background concerning renewable energy, particularly for solar, looking at what is happening internationally – and how Australia compares.

What is renewable energy?

Renewable energy is energy that is collected from renewable resources such as sunlight, wind, rain, tides, waves, and geothermal heat. Rapid deployment of renewable energy and energy efficiency is resulting in significant benefits globally relating to energy security, climate change mitigation, and economic development.

International perspective

Worldwide investments in renewable technologies amounted to more than US$286 billion in 2015. After hydro and wind power, solar photovoltaics (another name for solar power) is the third most utilised renewable energy source globally. At the end of 2016, worldwide installed solar photovoltaics capacity increased to more than 300 gigawatts (GW), covering approximately two per cent of global electricity demand. China, followed by Japan and the United States, is the fastest growing market, while Germany remains the world's largest producer, with solar photovoltaics providing seven per cent of annual domestic electricity consumption.

Globally, there are an estimated 7.7 million jobs associated with renewable energy industries, with solar power being the largest renewable employer.

As of 2015, worldwide, more than half of all new electricity capacity installed was renewable. At least 30 nations around the world already have renewable energy contributing more than 20 per cent of energy supply.

International renewable energy markets are projected to continue to grow strongly in the coming decade and beyond. At least two countries, Iceland and Norway generate all their electricity using renewable energy already, and many other countries have set a goal to reach 100 per cent renewable energy in the future. For example, in Denmark the government aims to switch the total energy supply (electricity, mobility and heating/cooling) to 100 per cent renewable energy by 2050.

Australian perspective

In Australia, the Federal Government has designed a policy called the Renewable Energy Target Scheme (RET) which has been operational since 2011. The policy is divided into the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES).

Large-scale Renewable Energy Target

The LRET effectively created a financial incentive for the establishment or expansion of renewable energy power stations such as wind and solar farms or hydro-electric power stations.

Large-scale generation certificates (LGCs) are issued in return. One LGC is issued for each megawatt-hour of eligible renewable electricity produced by an accredited renewable power station.

LGCs can be sold to entities (mainly electricity retailers) who surrender them annually to an industry Energy Regulator to demonstrate their compliance with RET's scheme's annual targets.

The revenue earned by the power station for the sale of LGCs is additional to that received for the sale of the electricity generated.

The LRET includes legislated annual targets which will require significant investment in new renewable energy generation capacity in coming years.

The legislative targets aim to ensure that at least 33,000 GW of Australia's electricity comes from renewable sources by 2020.

Small-scale Renewable Energy Scheme

The SRES creates a financial incentive for domestic households, small businesses and community groups by encouraging the installation of small-scale renewable energy systems such as solar water heaters, heat pumps, solar power panel systems, small-scale wind systems or small scale hydro systems.

It does this by legislating demand for SRES Certificates (STCs). Like LGCs, the STCs are created for these systems at the time of installation according to the amount of electricity they are expected to produce or displace in the future. For example, the SRES allows eligible solar power systems to create, at the time of installation, STCs equivalent to the expected system output between the time of installation and the end of the RET Scheme in 2030.

While it is possible for owners of renewable energy systems to create and sell the STCs themselves, in practice, installers of these systems usually offer a discount on the price of an installation or a cash payment in return for the right to create STCs.

Regulation

In addition, Australia has implemented legislation as a result of the Renewable Energy Target Scheme. The following Acts, in particular, are administered by the Australian Government's clean energy regulator (as per the Clean Energy Regulator Act 2011), which is a body responsible for administering legislation that will reduce carbon emissions and increase the use of clean energy within Australia.

See the Acts here:

Renewable Energy (Electricity) Act 2000?
Renewable Energy (Electricity) Amendment Act 2015?
Renewable Energy (Electricity) (Large-scale Generation Shortfall Charge) Act 2000
Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010
Renewable Energy (Electricity) Regulations 2001
Renewable Energy (Method for Solar Water Heaters) Determination 2016
Renewable Energy (Electricity) Amendment (Transitional Provision) Regulations 2010
Renewable Energy (Electricity) Amendment (Transitional Provisions) Regulations 2009
Renewable Energy (Electricity) Amendment (Solar Zones and Other Measures) Regulations 2014

What does this mean for investors?

Renewable energy projects often appeal to entities that see potential in entering into the renewable energy market within Australia, whether they are:

  • entities established in other countries or within Australia, or
  • entities currently within the research and development phase with existing or new concepts in the renewable energy space.

It is important to understand the crucial framework of both large and small scale renewable energy projects. In our experience, we have found there to be particular issues when assisting clients in this space.

Key issues:

Initial phase prior to any investment

  • funding and financial mechanism and framework required to assist in large or small scale projects (e.g. construction and testing phase loans)
  • corporate structuring and asset protection mechanisms
  • Australian Tax and duty obligations
  • foreign element issues (FIRB Approval).

Starting phase

  • testing phase – trial and error, data and reporting
  • legal and financial due diligence in any LRET or SRES scale renewable energy project
  • competition and consumer protection requirements
  • green power schemes
  • government grants
  • feed in tariffs
  • impact of Legal regimes for off-shore renewable energy
  • impact of Legal issues concerning bio-fuels
  • planning approval, council requirements and environmental impact assessments
  • property law issues (e.g. regulating rights to solar access, exclusivity and completing land interests)
  • confidentiality
  • marketing.

Implementation or execution phase

  • marketing
  • exclusivity
  • construction and development framework/deployment
  • access
  • timing
  • accessibility
  • employment
  • third party arrangements.

Risk management phase

  • ongoing and implementation of risk management systems
  • exit and expanding strategies
  • implementation of extra key players
  • growth and expansion
  • re-assessments.

We assist clients in understanding how these key issues will impact their successful involvement in renewable energy projects in Australia.

Stay tuned for our next two pieces in this series where we will focus on the farm side of negotiating with energy companies, predominantly solar and wind farm, and also look at inbound investment issues for energy companies.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Carl Hinze
Similar Articles
Relevancy Powered by MondaqAI
McCullough Robertson
Norton Rose Fulbright Australia
Corrs Chambers Westgarth
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McCullough Robertson
Norton Rose Fulbright Australia
Corrs Chambers Westgarth
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions