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The Renewable Energy Target

The purpose of the Renewable Energy Target is to encourage investment in renewable energy and reduce greenhouse gas emissions. It does this by creating a market for renewable energy certificates, which help drive investment in the sector.

On the supply side of the market, participants create certificates for each megawatt hour of renewable energy generated or displaced (no longer required from the grid). On the demand side, liable entities (mainly electricity retailers) source certificates in proportion to the total electricity they acquire in an assessment year.

The Renewable Energy Target comprises the:

  • Large-scale Renewable Energy Target, which is to generate an additional 33,000 gigawatt hours of electricity from renewable sources in 2020, compared with 1997 levels. This scheme encourages companies to invest in new Large-scale renewable energy power stations, including solar and wind farms, and hydro and biomass power stations.
  • Small-scale Renewable Energy Scheme, which provides incentives for households and businesses to install Small-scale systems. This includes solar panels, solar water heaters, Small-scale wind or hydro systems and air source heat pumps.

The Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme are set out in the Renewable Energy (Electricity) Act 2000.

The Act provides for electricity used for emission-intensive trade-exposed activities to be exempt from Renewable Energy Target liability.

For more detail on how the Renewable Energy Target works, see www.cleanenergyregulator.gov.au.


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