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About the Renewable Energy Target

22 July 2016
RET

To power our homes and businesses, Australia generates electricity from coal and gas fired power stations, as well as a range of renewable energy sources including large-scale hydropower facilities and wind farms, and small-scale solar hot water and solar rooftop panels.

The Renewable Energy Target is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.

The Renewable Energy Target works by allowing both large-scale power stations and the owners of small-scale systems to create certificates for every megawatt hour of power they generate. Certificates are then purchased by electricity retailers who sell the electricity to householders and businesses. These electricity retailers also have legal obligations under the Renewable Energy Target to surrender certificates to the Clean Energy Regulator, in percentages set by regulation each year. This creates a market which provides financial incentives to both large-scale renewable energy power stations and the owners of small-scale renewable energy systems.

In the case of small-scale systems, all certificates are provided 'up front' for the systems' expected power generation or displacement over a 15 year period. Generally, householders who purchase these systems assign the right to create their certificates to an agent in return for a lower purchase price. The level of this benefit differs across the country depending on the level of solar radiation.

In June 2015, the Australian Parliament passed the Renewable Energy (Electricity) Amendment Bill 2015. As part of the amendment bill, the Large-scale Renewable Energy Target was reduced from 41 000 GWh to 33 000 GWh in 2020 with interim and post-2020 targets adjusted accordingly.

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