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About liability

18 September 2017

​The Renewable Energy Target creates demand for renewable energy by requiring certain entities to surrender an amount of certificates in proportion to the electricity they acquire in an assessment year. This is referred to as liability. A renewable energy certificate is equal to one megawatt hour (MWh) of renewable energy generated from a renewable energy source. If an entity does not surrender the right amount of certificates, it may be required to pay a shortfall charge. Emissions-intensive trade exposed entities are issued with exemption certificates which reduce the amount of certificates that a liable entity is required to surrender in an assessment year. There are some instances where acquisitions can be exempt from liability.

What is a liable entity?

Liable entities are classified as an individual or company who is the first person to acquire electricity on a grid which has an installed capacity of 100 megawatts or more. They are usually electricity retailers.

If an entity acquires electricity sporadically between assessment years they may be classified as an intermittent liable entity and will be required to report liability and surrender certificates for the years that they are liable.

What are they liable for?

Liable entities are liable for the electricity acquired each year. To acquit liability, entities must surrender an amount of large-scale generation certificates (LGCs) and small-scale technology certificates (STCs) equal to their liability.

Certificate liability is determined by applyin​g percentages (the renewable power percentage for LGCs and the small-scale technology percentage for STCs) to an entity's electricity acquisitions for that year. Entities acquit their liabilities by surrendering the required number of certificates to the Clean Energy Regulator for:

  • STCs – quarterly surrenders are required under the Small-scale Renewable Energy Scheme, and
  • LGCs ​– annual surrender is required under the Large-scale Renewable Energy Target.

The surrender of certificates is a legal requirement and works to increase the portion of renewable energy generated and supplied to the Australian electricity market.

Exemption from liability

Entities that carry out emissions-intensive trade-exposed (EIT​E) activities ​​may be eligible for exemption certificates.

EITE activities are specified in the Renewable Energy (Electricity) Regulations 20​01. They include but not limited to aluminium smelting, zinc smelting, petroleum refining and newsprint manufacturing.

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