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How the scheme works

29 March 2017
RET

​The Clean Energy Regulator administers the Renewable Energy Target's two schemes:

The Large-scale Renewable Energy Target is designed to deliver the majority of the 2020 target, while the Small-scale Renewable Energy Scheme supports the installation of small-scale renewables, such as household solar rooftop panels and solar hot water systems.

Image of the RET Market mechanism as described on this page.  

The Renewable Energy Target operates through the creation of tradable certificates which create an incentive for additional generation of electricity from renewable sources. Certificates are created and issued through the REC Registry —an online trading platform managed by the Clean Energy Regulator.

Through the scheme, large renewable power stations and the owners of small-scale systems are eligible to create certificates for every megawatt hour of power they generate—creating the 'supply' side of the certificate market. Wholesale purchasers ​​​of electricity, mainly electricity retailers, buy these certificates to meet their renewable energy obligations—forming the 'demand' side of the certificate market. Wholesale purchasers of electricity then surrender these certificates to the Clean Energy Regulator in percentages set by regulation each year.

The number of certificates issued to an individual or business is determined by the am​ount of electricity generated or displaced by an eligible system. Eligible systems may include renewable energy power stations, small-scale solar panels, wind and hydro systems, or solar water heaters and heat pumps.

There is also a secondary market for certificates that does not involve the Clean Energy Regulator, and includes financial institutions, traders, agents and installers.​

Figure illustrates the main elements of the operation of the market for large-scale generation certificates and small-scale technology certificates. As described above. 

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