The capacity of committed projects in 2016 is 1350 megawatts, estimated to generate a little over 3.9 million megawatt hours in a full year.
Table 4 also shows that at the end of 2016, an additional 719 megawatts was probable to be committed, estimated to generate a little over 1.8 million megawatt hours over a full year.
In the 2015 annual statement, we estimated 3000 megawatts of capacity was needed to be committed in 2016. While this was not achieved, there was 2069 megawatts of committed or probable projects. We assess this indicator as 'within reach' because of the following factors:
In the 2015 annual statement we estimated an additional 6000 megawatts of installed capacity was needed from 2016 through to 2020 to meet the total cumulative demand for large-scale generation certificates. Graphs 5 and 6 show the current required capacity and generation to reach the target.
A number of projects that were identified as probable in 2016 have been committed in the first few months of 2017, in addition to further significant public announcements about new projects in 2017.
The shift towards large-scale solar power stations continued in 2016, with an increase in solar projects among committed and probable projects.
As discussed, the cost of solar is falling and therefore building large-scale solar projects is becoming increasingly more commercially attractive.
While solar projects generally have a lower capacity compared with wind, large-scale solar power stations require a shorter build time. The shift to solar during 2016 was more rapid than assumed in the 2015 modelling that underpinned the 3000 megawatt requirement. If this trend continues, it may help partially offset the reduction in certificate liquidity owing to the slower than required commitments for new build in 2016.
Graph 7 shows the mix of technology types in the market. Around 35 per cent of new capacity financed during 2016 was solar.
'The rising costs of grid-supplied electricity, coupled with the falling costs of renewable energy production have resulted in a narrowing of the price difference between renewable and traditional energy sources. For large energy users contracting with a renewable energy generator and / or retailer to meet all or part of your energy supply needs is now a commercially viable proposition.'
Large-scale renewable energy power stations accredited40 in 2016 added 494 megawatts capacity and, as shown below in table 5, an estimated generation output of more than 1.5 million megawatt hours over a full year. This is above the 230 megawatts capacity that we expected to be accredited in 2016.
This is the main reason this indicator is assessed as 'on track'. Other factors that influenced our assessment include:
The large-scale generation certificate price trended upward during 2016.
The spot price is working as it should by sending a signal to the market that new build is required to come on quickly. As shown in table 6, the price was $86.75 at the end of 2016, which is below the post-tax equivalent of the shortfall charge of $93 per certificate. This is higher than the price at the end of 2015.
The spot price is higher than the cost price needed to finance new projects. It is well-above the prices being announced as part of power purchase agreements, which often include both the large-scale generation certificate price and wholesale electricity costs.
Once the market has formed a view that the necessary build to meet the target is likely to be committed, and that adequate supply will return, the spot price should start to moderate.
A total of 17 320 821 large-scale generation certificates were validated in 2016 compared with 16 463 436 in 2015.
After final surrender of certificates for 2016, a surplus of more than 13 million large-scale generation certificates remains. This is a reduction from the 18 million large-scale generation certificates that remained available after final surrender of certificates for 2015.
Nevertheless, it appears there will be sufficient surplus of certificates for the market to operate in the 2017 compliance year, and there will be enough certificates to meet demand for 2018.
There is time for sufficient build to come on for the operating surplus to return to adequate levels for the 2019 and 2020 compliance years.
Electricity retailers met 93.8 per cent of their certificate obligations under both the Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme through a combination of surrendering certificates and utilising carried-forward surplus created through over-surrender of certificates in previous years. Once again, the vast majority have complied with the objectives of the
Renewable Energy (Electricity) Act 2000.
A total of 19 676 342 large-scale generation certificates were surrendered. The certificates surrendered combined with certificate surplus from the previous year reflects a compliance rate of 89.3 per cent in the Large-scale Renewable Energy Target, as shown in table 7. A list of electricity retailers that did not meet their certificate surrender obligations is at
Appendix C and is published on our website.
The Renewable Energy Target allows some flexibility for electricity retailers to manage their obligations across years, and shortfalls within 10 per cent of their large-scale certificate liability for a year may be carried forward to the next year without incurring a shortfall charge. Of the 22 electricity retailers who reported a shortfall in 2016, a total of 15 had shortfall of greater than 10 per cent and were required to pay shortfall charges.
Sufficient large-scale generation certificates were available in the market for all electricity retailers to meet their surrender obligations. Our position remains that payment of the charge does not fulfil the purpose of the legislation.
The drop in the compliance rate is primarily attributable to just two retailers. The large majority of electricity retailers have met their obligations to surrender certificates.
Ensuring the integrity of demand for more information.
list of accredited large-scale renewable energy power stations is available on our website.
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