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Calculating certificate liability

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28 September 2016
RET

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To meet their compliance obligations under the Renewable Energy Target, liable entities must surrender the required amount of certificates as determined by the renewable power percentage and small-scale technology percentage. Failure to surrender the right amount of certificates may result in renewable energy shortfall charges, including interest and penalty charges.

The Clean Energy Regulator recommends that liable entities purchase certificates at least two weeks prior to a surrender deadline to allow for processing time, especially if the liable entity wishes to purchase small-scale technology certificates (STCs) from the STC clearing house.

Calculating large-scale generation certificate liability

Liable entities must surrender large-scale generation certificates (LGCs) annually. They do this at the same time that they lodge their energy acquisition statement and large-scale generation shortfall statement. This must be done by 14 February each year via their REC Registry account.

To calculate large-scale generation certificate liability, entities must:

  1. Take their reduced acquisition amount and multiply it by the renewable power percentage.
  2. Minus any carried forward surplus.
  3. Add any carried forward shortfall.​
Calculating large-scale generation certificate liability

Liable entities may generate a surplus if they surrender LGCs above the calculated annual LGC liability. As shown below, liable entities have the option to carry forward any generated surplus to meet future large-scale generation certificate liability, or maintain and carry forward surplus for a future year. Surpluses cannot be sold of transferred to another liable entity, so it is important to ensure liable entities do not create too much carried forward surplus which can't be used.

Carried forward shortfalls occur where a liable entity does not fully meet their LGC liability but surrenders more than 90 per cent of the calculated LGC liability (refer to section 36 of the Re​newable Energy (Electricity) Act 2000).

Calculating small-scale technology certificate liability

Under the Small-scale Renewable Energy Scheme, a liable entity must surrender a set percentage of small-scale technology certificates (STCs) each quarter. As the actual electricity acquisitions for the assessment year are not known in the first three quarters, an estimate is used to determine how many STCs must be surrendered. This amount is based off the previous year's reduced acquisitions lodged in the energy acquisition statement.

The final required amount for STC surrender is finalised in the fourth quarter when actual liable electricity acquisitions are reported.

Calculating STC liability (required surrender amount) for qua​rters one to three

Step 1: Determine the estimated or actual electricity acquisitions through using one of the following methods.

  • Previous year's reduced acquisitions—the amount lodged in the energy acquisition statement for the previous assessment year.
    • This method applies to the majority of liable entities. The Clean Energy Regulator sends a notification of the required surrender amounts for quarters one to three via a liable entity's REC Registry account on April 1 under section 40C.
  • An a​mount proposed by an existin​g liable entity under section 38AF.
  • An amount proposed by a new liable entity under section 38AG.
  • Assessment year's reduced acquisitions:
    • Default assessment for a new liable entity under section 38AH.
    • Where an existing liable entity proposes an amount under section 38AF, but exceeds that amount by more than 10 per cent.

Step 2: Use the estimated or actual electricity acquisitions determined in Step 1 to calculate the quarterly required surrender amount.

Liable entities calculate their STC liabilities for quarters one to three of the assessment year by:

  • STC required surrender amount for quarter one of an assessment year = estimated or actual electricity acquisitions x 35 per cent x small-scale technology percentage for the assessment year – carried forward surplus from quarter four
  • STC required surrender amount for quarter two of an assessment year = estimated or actual electricity acquisitions amount x 25 per cent x small-scale technology percentage for the assessment year – carried forward surplus from quarter one
  • STC required surrender amount for quarter three of an assessment year = estimated or actual electricity acquisitions x 25 per cent x small-scale technology percentage for the assessment year – carried forward surplus from quarter two
STC required surrender amount for quarter three of an assessment yearSurpluses may be carried forward when a liable entity surre​nders STCs above the required surrender amount for the assessment quarter. As shown above, you have the option to use the surplus to acquit liability in the current quarter or create a surplus to acquit a future STC required surrender amount. You cannot sell or transfer surplus STCs to another entity.​

Liable entities cannot carry forward a STC shortfall. If a STC shortfall occurs, liable entities will be required to pay the small-scale technology shortfall charge, which is set at $65.00 per STC not surrendered.

Sections 38AA and 38AE of the Ren​​ewable Energy (Electricity) A​ct 2000 set out how to calculate your STC liabilities for each quarter.

Calculating STC liability (required surrender amount) for quarter four

Liable entities surrender STCs for quarter four with the energy acquisition statement and small-scale technology shortfall statement through their REC Registry account.

Liable entities calculate their annual STC liability for quarter four for the assessment year based on their reduced acquisitions:

  • STC required surrender amount for quarter four of an assessment year = reduced acquisitions for the assessment year x small-scale technology percentage) – (required surrender amounts for quarter one to three) - (carried forward surplus from quarter three)
STC required surrender amount for quarter four of an assessment year

Surpluses may be carried forward when a liable entity surrenders STCs above the required surrender amount for the assessment quarter. As shown above, you have the option to use the surplus to acquit the quarter or create a surplus for a future quarter. You cannot sell surplus STCs to another entity.

You cannot carry forward a STC shortfall, if a STC shortfall occurs you will be required to pay the small-scale technology shortfall charge set at $65.00 per STC not surrendered.

Calculating acquisitions​

Liable entities can calculate the amount of electricity acquired for all relevant acquisitions at the:

  • Australian Energy Market Operator (AEMO) or AEMO WA settlement point (typically the transmission network identifier or Muja reference node), or
  • customer or generator meter (typically the network meter identifier).

In most cases, liable entities calculate the amount worked out on the basis of metering data used for AEMO or AEMO WA settlement statements, where the electricity is acquired from AEMO or AEMO WA.

In other circumstances, the amount of acquired electricity is worked out by a method of calculation chosen by the Clean Energy Regulator after consultation with the liable entity, such as:

  • If the electricity is acquired directly from the person who generated the electricity at the interface between the transmission and distribution system, liable entities calculate the amount using:
    • AEMO or AEMO WA 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.
  • If the electricity is used outside the site of generation but in the same distribution network, liable entities calculate the amount. 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.
  • If the electricity is 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.
  • In other circumstances, by 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.

Exemptions

Acquisition of electricity may be exempt from liability purposes (that is, it is not a 'relevant acquisition') if:

  • Electricity was delivered on a grid of less than 100 MW installed capacity, or
  • The end user of the electricity is the entity who also generated the electricity, and either:
    • the distance between electricity generation and use is less than 1 km, or
    • the electricity transmission line is used solely for the transmission of electricity between the point of generation and point of use.

Under the Renewable Energy Target, companies that conduct emissions-intensive trade-exposed activities may be eligible to apply for exemption. Activities eligible for exemption include but are not limited to production of glass containers and bulk flat glass, integrated production of lead and zinc, manufacture of newsprint and carton board and petroleum refining.​

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