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Executive summary

Renewable Energy Target at a glance

Objectives

The Renewable Energy Target encourages investment in renewable energy systems. The objectives are to:

  • encourage the additional generation of electricity from renewable sources
  • reduce emissions of greenhouse gases in the electricity sector, and
  • ensure that renewable energy sources are ecologically sustainable.

How it works

The Renewable Energy Target creates an incentive for additional generation of electricity from renewable sources. Participants create renewable energy certificates for every megawatt hour of electricity they generate (the 'supply' side). Wholesale purchasers of electricity, mainly electricity retailers, buy these certificates to meet their renewable energy obligations (the 'demand' side). They then surrender these certificates to the Clean Energy Regulator in percentages set by regulation each year.

The Clean Energy Regulator administers the Renewable Energy Target's two schemes:

  • the Large-scale Renewable Energy Target, which encourages investment in renewable power stations to achieve 41 000 gigawatt hours of additional renewable electricity generation by 20201, and
  • the Small-scale Renewable Energy Scheme, which supports small-scale installations like household solar panels and solar hot water systems.

The Clean Energy Regulator regulates both the 'supply' and 'demand' to ensure scheme integrity, and provides an online registry to enable the market to operate.

Outcome

By creating a market-based financial incentive to generate more electricity from renewable sources, the Renewable Energy Target increases renewable energy and, in turn, helps accelerate carbon abatement for Australia.

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