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Acquisitions and network exemption

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22 April 2015

Under the Renewable Energy Target, relevant acquisitions refer to the purchase of electricity made by a company. Companies who are liable under the Renewable Energy Target must report all relevant acquisitions they make on an annual basis—through the submission of an energy acquisition statement or renewable energy shortfall statement. In some instances, liable entities may be exempt from reporting relevant acquisitions. If certain conditions are met, this could mean that an entire electricity network (grid) could be exempt from reporting.

There are two types of relevant acquisitions: wholesale acquisitions or notional wholesale acquisitions.

Wholesale acquisitions

Under section 32 of the Renewable Energy (Electricity) Act 2000,  wholesale acquisitions include purchases of electricity:

  • from the Australian Energy Market Operator (AEMO)
  • from the Independent Market Operator (short term energy market)
  • from non-market registered generators (embedded generators, including domestic photovoltaic systems)
  • directly from generators (non-AEMO electricity networks), and
  • imported from registered market generators when the generator is not generating electricity.

Wholesale acquisitions do not apply as a relevant acquisition when the end user has acquired electricity directly from the person who generated it. In this case a notional wholesale acquisition would apply.

If a purchase of electricity has been identified as a wholesale acquisition, then no other types of acquisitions can apply.

Notional wholesale acquisitions

Under the Renewable Energy (Electricity) Act 2000 (the Act), notional wholesale acquisitions are purchases of electricity made by the same legal entity where they:

  • generate and use the electricity outside of the relevant acquisition exemption rules, or
  • on-sell the electricity directly to an end customer.

Section 33 of the Act prescribes two situations where a notional wholesale acquisition of electricity takes place:

  • The end user of the electricity acquires the electricity from the person who generated the electricity, and the end user is not registered under the National Electricity Rules.
  • The end user of the electricity generated the electricity and neither of the following conditions apply:
    • the electricity is generated less than one kilometre from the location the electricity is used, or
    • the electricity is transmitted or distributed between the point of generation and the point of use, and the transmission or distribution line is used solely for the purpose of transmitting or distributing electricity between those two points.

In both cases, the person who generated the electricity acts as both the notional generator and the notional wholesaler. This means that the notional wholesaler acquired the electricity from the notional generator at the time that the end user acquired the electricity.

Calculating acquisitions in MWh

Under the Renewable Energy (Electricity) Regulations 2001 (the Regulations), liable entities typically calculate the amount of acquired electricity for all relevant acquisitions at the:

  • AEMO or IMO settlement point (typically the transmission network identifier), or
  • customer or generator meter (typically the network meter identifier).

Under regulation 21 of the Regulations, the amount of acquired electricity is calculated in one of several ways, if the electricity is:

  1. acquired from AEMO or IMO, liable entities calculate the amount worked out on the basis of metering data used for AEMO or IMO settlement statements
  2. acquired directly from the person who generated the electricity at the interface between the transmission and distribution system, liable entities calculate the amount. This is worked out by a method of calculation to be chosen by the Clean Energy Regulator after consultation with the liable entity using:
    • AEMO or IMO equivalent settlement data
    • if the person who generated the electricity and the liable entity are not in the same distribution network the customer purchase data adjusted to the node, or node equivalent, by using the applicable distribution loss factor, or
    • generation data adjusted to the node, or node equivalent, by using the applicable marginal loss factor or equivalent.
  3. used outside the site of generation but in the same distribution network, liable entities calculate the amount. This is worked out by a method of calculation to be chosen by the Clean Energy Regulator after consultation with the liable entity using, depending on the applicable contractual arrangements:
    • the amount generated, as metered at the power station's grid connection point, or
    • the acquisition as metered at the customer's grid connection point, or
  4. acquired at the site of the generation, liable entities calculate the amount of metered electricity at the point on which the contractual arrangement is based.

If (a) to (d) above does not apply, liable entities are required to use a method of calculation to be chosen by the Clean Energy Regulator after consultation with the liable entity using the amount of metered or calculated electricity:

  • provided at the interface between the transmission and distribution system, or
  • at the point at which ownership of the electricity changes, in accordance with contractual arrangements.

Acquisition exemption rules

Liable entities may be exempt when they are both the liable entity and legal entity, and:

  • use and generate their own electricity within one kilometre
  • transmit electricity directly from the point of generation to the point of use
  • operate within a electricity network that has a generation installed capacity less than 100 MW.

Section 31(2) of the Renewable Energy (Electricity) Act 2000 prescribes that an acquisition is not a relevant acquisition if:

  • the electricity was delivered on a grid that has a capacity that is less than 100 MW and that is not, directly or indirectly, connected to a grid that has a capacity of 100 MW or more
  • the end user of the electricity generated the electricity and either of the following conditions are satisfied:
    • the point at which the electricity is generated is less than one kilometer from the point at which the electricity is used
    • the electricity is transmitted or distributed between the point of generation and the point of use and the line on which the electricity is transmitted or distributed is used solely for the transmission or distribution of electricity between those two points, or
  • the electricity is later acquired by AEMO or a person or body prescribed by the regulations.

Network (grid) exemption and reporting rules

For some networks (grids) relevant acquisitions do not apply. This includes if:

  • the electricity was delivered on a grid that has a capacity of less than 100 MW, and
  • the grid is not connected (either directly or indirectly) to a grid that has a capacity of 100 MW or more.

For more information refer section 31(2)(a) and section 31(3) Renewable Energy (Electricity) Act 2000 .

Under the Renewable Energy (Electricity) Regulations 2001 , regulation 22 defines the capacity of a grid as the sum of all installed electricity generation capacity, excluding:

  • standby plants, and
  • privately owned domestic generators.

A person who owns, operates or controls a grid must also provide the Clean Energy Regulator a statement within 28 days of the following changes:

  • the capacity of the grid increases from less than 100 MW to 100 MW or more, or
  • the grid becomes connected (either directly or indirectly) to a grid that has a capacity of 100 MW or more. 

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