The purpose of the Renewable Energy Target is to encourage new investment in renewable energy and reduce greenhouse gas emissions. It does this by creating a market for renewable energy certificates, which helps drive investment in the sector. On the supply side of the market, participants create certificates for each additional 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.
Accredited power stations that operated before 1997 must generate eligible electricity above a set baseline during a year before large-scale generation certificates can be created for that electricity.
The Renewable Energy Target comprises the:
Large-scale Renewable Energy Target, which aims to generate an additional 33,000 gigawatt hours of electricity from renewable sources in 2020, compared with 1997 levels. The 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 come from the
Renewable Energy (Electricity) Act 2000 (the Act).
Under the Act, sectors of the economy that are classed as emissions intensive and trade exposed are exempt from obligations on the electricity that they use in their production activities.
For more detail on how the Renewable Energy Target works, see
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.
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