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Ensuring the integrity of supply

Ensuring the integrity of the creation and surrender of renewable energy certificates is fundamental to the operation of the Renewable Energy Target. From eligible renewable energy generation to compliance by electricity retailers, the market relies on the integrity of supply and demand to operate effectively. We take market integrity and scheme compliance very seriously and have established various monitoring, compliance and enforcement systems.

Ensuring the integrity of supply

As discussed in Chapter 3. Australia's Renewable Energy Target, under the Renewable Energy Target, renewable energy must be generated by accredited large-scale renewable energy power stations or eligible small-scale systems.

Only validated renewable energy certificates can be traded in the market. We validate certificates to confirm they represent the correct amount of eligible renewable energy generation.

Creation of large-scale generation certificates

To ensure each large-scale generation certificate reflects one megawatt hour of renewable energy generation, we assess the accreditation of a power station, and creation of certificates. We reconcile this information annually with metered electricity generation data and crosscheck with a range of data sources. We also conduct compliance visits.

To participate in the Large-scale Renewable Energy Target and be eligible for large-scale generation certificates, a large-scale renewable energy power station must be accredited. To receive accreditation, a large-scale renewable energy power station will be assessed against the following requirements:

  • the operators meet the 'fit and proper person' criteria
  • electricity will be generated from at least one of the eligible renewable sources (such as wind or solar)
  • the system is designed to accurately measure the renewable energy generated, and deduct electricity generated using non-renewable sources or used for auxiliary generators
  • the generator is large (if so, a marginal loss factor must be defined by the Australian Energy Market Operator or the Independent Market Operator), and
  • all relevant Commonwealth, state and local approvals have been obtained.

Once accredited, the large-scale renewable energy power station can create large-scale generation certificates in proportion to the eligible renewable electricity it generates, in accordance with the methodology agreed with the power station.

We validate the certificates based on desktop audits including assessing the metered electricity generation data submitted by the power station.

Each year, the power station must submit an electricity generation return statement, covering the previous year. We assess the statement on:

  • the number of large-scale generation certificates created reflects the actual megawatt hours of eligible renewable energy generated
  • any non-renewable energy sources or marginal loss factor has been adequately included in calculations, and
  • if there has been any contraventions of Commonwealth, state, territory or local government law relating to the operation of the power station during the reporting year.

We are authorised to perform compliance visits41 to substantiate information provided during the accreditation, large-scale certificate creation or electricity generation return processes. We do this with the consent of the registered person or in accordance with a monitoring warrant issued under the Renewable Energy (Electricity) Act 2000.

We also crosscheck electricity generation data with information from the Australian Energy Market Operator and National Greenhouse and Energy Reporting Scheme.

Creation of small-scale technology certificates

Under the Small-scale Renewable Energy Scheme, eligible small-scale renewable energy systems may be entitled to small-scale technology certificates, which can be sold to recover a portion of the cost of purchasing and installing the system.

Small-scale technology certificates are created upfront for small-scale systems based on the deeming period.

Individuals and businesses can register to create and trade their own certificates. However, most assign their right to do so to registered agents in return for a discount on the system they are installing.

Several validation processes occur on certificate creations to ensure that certificates are only validated for eligible small-scale system installations. This includes taking a risk-based approach to auditing certificate creations, using a combination of system and manual checks prior to validating certificates.

In 2016 we introduced automated data exchange with partners including the Australian Energy Market Operator, to further enhance our capability to detect fraud.

The exchange of data with the Australian Energy Market Operator enables us to examine electricity production data to determine whether a small-scale renewable energy system is operating.

SPOTLIGHT...
Serial number validation pilot

The Solar Photovoltaic (Panel) Serial Number Validation Project intends to establish a mechanism that allows businesses in the supply chain to validate the authenticity of solar panels. This aims to protect the integrity of the Small-scale Renewable Energy Scheme and industry by addressing concerns relating to some unapproved panels entering the market.

In 2016, we sought Expressions of Interest for a pilot. Participants in the pilot are investing their own funds to build a new installer application and new validation database. We expect the pilot to begin in mid-2017.

The installer application, for use on mobile devices, will allow installers to collect details of a solar panel system installation while on site and registered agents will submit the details to us. The validation database service will provide confidence to installers that the panels they are using are genuine by verifying solar panel details and providing a digitally signed confirmation of the products. The installer or retailer can then provide proof to their customer.

The project is an excellent example of our agency partnering with industry and service providers to develop a solution to an issue that has the potential to impact consumers and the integrity of the industry.

If the pilot is successful it will provide installers and agents with confidence that they are meeting their obligations under the Small-scale Renewable Energy Scheme, and provide a level of assurance for consumers that they are getting the system they paid for.

Until the pilot is proven and fully implemented, we will increase manual audits of serial numbers with manufacturers.

Our partnership with industry to validate solar panel serial numbers will also further improve our ability to detect and prevent fraud. The validation of solar panel serial numbers by manufacturers provides confidence these solar panels meet scheme eligibility requirements for small-scale technology certificates, as well as providing additional assurances for industry, businesses and homeowners.

Small-scale system compliance

We provide a range of education and support activities to inform participants and broader industry of their obligations under the Small-scale Renewable Energy Scheme.

In 2017, we intend to apply a broader range of tools to monitor and respond to non-compliance. This will include:

  • increasing the use of our compliance monitoring powers
  • applying administrative sanctions to prevent further non-compliance, and
  • pursuing criminal prosecution and civil enforcement penalties for instances of serious non-compliance.

These capabilities will reduce the risk associated with scheme compliance and fraud, and streamline our validation processes.

Small-scale system fraud

We are serious about maintaining integrity in the Small-scale Renewable Energy Scheme. This includes detecting and preventing fraud by claiming certificates for a system that does not meet all eligibility criteria.

We actively investigate allegations of breaches of the Renewable Energy (Electricity) Act 2000 and collaborate as needed with our regulatory partners.

Most matters investigated related to the improper creation of small-scale technology certificates for solar panel system installations, including providing false details, forging signatures, using unapproved panels and not installing systems as claimed.

2016 FAST FACTS

Of the 3441 systems inspected, less than 2.5 per cent were found to be unsafe.

Two cases previously referred to the Commonwealth Director of Public Prosecutions remain open.

Small-scale system inspections

Each year contracted service providers42 inspect a sample of small-scale generation systems to check they meet the requirements under the scheme, including a focus on relevant standards for electrical safety. We provide inspection results to the relevant state and territory electrical safety regulators, who are responsible for electrical safety. The Clean Energy Council, which manages accreditation of solar panel system installers, can also access the inspection reports. All inspectors hold unrestricted electrical licences in the state or territory where they conduct inspections, as well as Clean Energy Council accreditation.

Most inspections are of solar panel systems on residential rooftops, with a small proportion of commercial sites and schools also inspected. The majority of small-scale systems are randomly selected from all installations within geographical regions. A small number of additional systems in 2016 were selected for inspection due to suspicion of fraud.

If an inspector finds an unsafe system, they are required to render it safe and then notify all interested parties of the extent and nature of the safety risk, including the home or business owner and relevant state and territory electrical safety regulator.

Table 10: Inspections of small generation systems in 2016
StateNumber
of systems
inspected
Systems safeSystems unsafeSystems
sub-standard
ACT242103
NSW78661628142
NT251915
QLD108177231278
SA309246261
TAS463727
VIC61448110123
WA55640112143
Total3441259386762

Note: See the glossary for unsafe and sub-standard definitions.

As shown in table 10, a total of 86 systems were found to be unsafe and 762 were found to be substandard in 2016. This represents a material improvement (2.5 per cent in 2016 compared with 6 per cent in 2015) in the safety of inspected systems and indicates that the requirement since 2015 to install a rooftop shroud to protect the DC isolator from water has been of benefit. More consistent inspections have resulted in a small increase in systems classed as sub-standard.

Most unsafe and sub-standard systems are due to water entering direct current isolator switch enclosures, and installers failing to ensure that all direct current wiring in the building is enclosed in heavy duty conduit. We continue to work to address these issues with the Clean Energy Council and state and territory electrical safety regulators who are responsible for installation safety and quality.

Footnotes

41 Part 11 of the Renewable Energy (Electricity) Act 2000.

42 Contracted service providers in 2016 were Global Sustainable Energy Solutions, Master Electricians Australia, the Australian Solar Council, IT Power, Techsafe and SpringCity.

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