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Chair’s review

Chairs review - photo of Clean Energy Regulator CEO, Chloe Munro. 

Chair’s review

New target

This past year included a significant turning point for the Renewable Energy Target. In June 2015, the Australian Parliament passed a bill to amend the 2020 target from 41 000 gigawatt hours (41 million megawatt hours) to 33 000 gigawatt hours (33 million megawatt hours). It also increased the partial exemption for emissions-intensive trade-exposed industries to full exemption. This ended 18 months of review and speculation about the Renewable Energy Target's future, and we are beginning to see confidence return to the market.

Efficient operation

While the target was under review, the Large-scale Renewable Energy Target and the Small-scale Renewable Energy Scheme continued to operate efficiently behind the scenes and drive both supply and demand in the renewable energy certificate market.

In 2015, the Renewable Energy Target once again achieved its objectives of:

  • Encouraging additional generation of renewable electricity—15.2 million megawatt hours of electricity was generated from large-scale renewable power stations and an estimated 8.9 million megawatt hours was generated or displaced from small-scale systems, mainly rooftop solar photovoltaics (solar panels).
  • Reducing greenhouse gas emissions—the Renewable Energy Target increases the amount of renewable electricity in Australia's electricity generation mix. This means less generation from coal and other fossil fuel based electricity generators, thereby contributing towards lowering overall emissions from Australia's electricity sector.
  • Ensuring ecologically sustainable renewable energy sources—all renewable energy linked to renewable energy certificates was generated from ecologically sustainable energy sources.

Trends

While we accredited another 41 renewable power stations under the Large-scale Renewable Energy Target in 2015, the cumulative capacity of all renewable power stations grew at a slower rate than the number of power stations (see the Renewable power stationspage). This reflects a trend towards investment in commercial and industrial solar systems, which are much smaller than utility scale power stations.

Solar farms made up the majority of new accredited renewable power stations for the second year in a row. In 2015, the total capacity of large-scale solar power stations was 172 megawatts, more than tripling in the cumulative capacity from 2014. The rate of uptake of solar panel installations on commercial and industrial sites also increased.

There has been a large surplus of certificates since the Renewable Energy Target was split into the large-scale and small-scale schemes in 2011. However, the surplus of 25.5 million large-scale generation certificates on 14 February 2015 was reduced to 18 million certificates after the 15 February 2016 surrender date. This marks a transition, with the surplus now expected to reduce more quickly to a lower level of liquidity. This is due to the time lag between the commitments to new projects and when these projects actually begin generating renewable energy.

The gradual downward trend in annual installations under the Small-scale Renewable Energy Scheme continued in 2015. Small-scale installations (mainly rooftop solar panel systems) peaked in 2011–12, primarily due to additional financial incentives from the former solar credits multiplier initiative and state-based feed-in tariffs.

Despite the overall decline in small-scale installations in 2015 compared with 2014, and the slight decline in total new installed capacity, the average capacity of solar panel systems installed increased. In 2015, the average small-scale solar panel system capacity increased to 4.9 kilowatts from 4.4 kilowatts in 2014, almost double the average system capacity in 2011 (see more information on the Small-scale system installations page).

Nevertheless, demand for household solar installations has remained solid and we will watch with interest the impact of new financing options and the anticipated uptake of household solar battery storage (see the feature on Battery storage).

Compliance

Our objective is to achieve a high rate of voluntary compliance. We engage with liable entities and broader stakeholder groups to explain legal obligations, facilitate market participation and ensure market integrity. Liable entity compliance with their obligation was once again very high in 2015. In aggregate, they surrendered 99.7 per cent of the required number of renewable energy certificates on time.

Our certificate validation activities are an important component of maintaining the integrity of the Renewable Energy Target certificate markets.

Each year we investigate alleged breaches of the Renewable Energy (Electricity) Act 2000. One of our investigations in 2015 prompted the replacement of non-genuine solar panels on around 180 rooftops across two states (see the feature on the Investigations page).

We also inspect a percentage of small-scale systems for compliance with required standards. Our inspection program has identified a recurring issue with direct current isolator switches. In response, we informed state and territory safety regulators, the Clean Energy Council and other relevant bodies. As a result, the matter has been referred to Standards Australia and industry guidelines are being updated.

In addition, all renewable power stations we inspected during the year were found to comply with the legislation.

Upturn

The year finished on a strong and positive note. The Australian community recognises renewables as a practical means to reduce greenhouse gas emissions. Costs are falling, particularly at the large-scale end, and innovations such as battery storage and smart control systems have captured the popular imagination. New approaches to finance look set to lift investment in renewable energy projects and widen participation in the small-scale scheme. We look forward to continued achievement of the objectives of the Renewable Energy Target in 2016.

Chloe Munro
Chair, Clean Energy Regulator

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