Skip Ribbon Commands
Skip to main content

Skip Navigation LinksCalculating-certificate-liability

CER branding swish

Calculating certificate liability

Suggested Reading Suggested Reading

06 May 2022
RET

Contents

Under the Renewable Energy Target (RET), liable entities are required to surrender certificates.

The liable entities’ reduced acquisitions are used to calculate the required surrender amount of large-scale generation certificates (LGCs) and small-scale technology certificates (STCs).

If a liable entity does not surrender the required number of certificates it may incur shortfall charges.

The Clean Energy Regulator (the agency) recommends that liable entities plan ahead to calculate their certificate liability and obtain certificates at least 2 weeks prior to a surrender deadline.

Calculating large-scale generation certificate liability

Under the Large-scale Renewable Energy Target, liable entities must surrender LGCs annually through the REC Registry. This is completed at the same time they lodge their energy acquisition statement.

LGC liability is automatically calculated in the energy acquisition statement on the REC Registry. A liable entity can manually calculate their LGC liability by multiplying their reduced acquisitions by the renewable power percentage, then including any carried forward surplus or carried forward shortfall from the previous year.

LGC required surrender amount per year

Reduced acquisitions reported in the EAS × Renewable power percentage - Surplus carried forward from the previous year + Shortfall carried forward from the previous year = LGC liability

Example:

10,000 MWh × 19.31 % - 150 + 0 = 1,781 LGCs
  • a liable entity acquired 10,000 MWh of electricity in 2020,
  • the 2020 RPP was 19.31%, and
  • the entity has a carried forward surplus from the previous year of 150 and carried forward a shortfall of zero.
  • This means the LCG liability (required to surrender amount) for the 2020 assessment year was 1,781 LGCs. A LGC carried forward surplus can be created when a liable entity surrenders more LGCs than the calculated LGC liability for the year. The surplus will then carry forward into the following year and acquit a portion of the LGC liability.

Download a hi-res JPG version of the above LGC required surrender amount per year formula and example

Liable entities cannot sell or transfer surplus certificates to another liable entity.

A LGC shortfall is created when a liable entity does not surrender enough LGCs to acquit its total LGC liability. If the shortfall is less than 10% of the LGC liability, the shortfall is carried forward to the following assessment year.

See section 36 of the Renewable Energy (Electricity) Act 2000 for further information regarding large-scale certificate liability.

Calculating small-scale technology certificate liability

Under the Small-scale Renewable Energy Scheme, liable entities must surrender an amount of STCs each quarter.

An estimate is used to calculate the required surrender amount for the first 3 quarters of the assessment year. In most cases, the estimate is based on the previous year’s reduced acquisitions lodged in the energy acquisition statement.

In the fourth quarter, the reduced acquisitions for the current assessment year are used to finalise STC liability for the year.

A STC carried forward surplus can be created when a liable entity surrenders more STCs than the calculated STC liability for a quarter. The carried forward surplus will then acquit a portion of the STC liability in the following quarter.

Entities cannot sell or transfer surplus STCs to another entity.

Liable entities cannot carry forward a STC shortfall. If a STC shortfall occurs, the liable entity will be required to pay the non-refundable small-scale technology shortfall charge.

Calculating STC liability for quarters one to 3

Liable entities calculate their STC liability for quarters one to 3 of the assessment year based on their estimated or actual reduced acquisitions, determined through one of the following methods:

  • Previous year’s reduced acquisitions – the amount lodged or assessed in the energy acquisition statement for the previous assessment year. This is the method used in most cases.
  • documentasset:Variation amount – existing liable entities that vary the required surrender amount.
  • documentasset:Proposed amount – new liable entities or liable entities that did not lodge an energy acquisition statement the previous year.
  • Current assessment year’s reduced acquisitions:
    • Default assessment - Under section 38AH of the Act, this occurs when a new liable entity did not lodge an energy acquisition statement for the previous year or propose a new amount under section 38AG.
    • Under section 38AF(7) of the Act – this occurs when a variation amount under section 38AF has been accepted, but the amount reported in the energy acquisition statement exceeds the variation amount by more than 10%.

Once the estimated or actual reduced acquisitions are determined, liable entities can then calculate their STC liability for quarters one to three by using the calculations outlined below.

Liable entities can view their required surrender amounts and surrender STCs via their REC Registry account.

STC required surrender amount for quarter 1

Estimated or actual reduced acquisitions ×Small-scale technology percentage×35 %=STC liability quarter 1

Example

10,000 MWh×24.40 %×35 %=854 STCs
  • a liable entity lodged an EAS for 2019 reporting 10,000 MWh of electricity,
  • therefore, the ‘previous years’ reduced acquisitions’ of 10,000 MWh are used as the estimated reduced acquisitions which calculate the required surrender amount for quarters 1-3 for the 2020 assessment year,
  • the 2020 STP was 24.40%.
  • This means the required surrender amount for quarter one 2020 is 854 STCs.

Download a hi-res JPG version of the above STC required surrender amount for quarter 1 graphic

STC required surrender amounts for each of quarters 2 and 3

Estimated or actual reduced acquisitions × Small-scale technology percentage × 25 % = STC liability quarters 2 and 3

Download a hi-res JPG version of the above STC required surrender amounts for each of quarters 2 and 3 formula

Calculating STC liability for quarter 4

STC liability for quarter 4 is calculated using a different method to the first 3 quarters of the assessment year. Liable entities surrender STCs for quarter 4 with the lodgement of their annual energy acquisition statement on the REC Registry.

Liable entities calculate the liability based on their current assessment year’s reduced acquisitions, multiplied by the STP, then subtract any STCs surrendered in the first 3 quarters.

STC required surrender amount for quarter 4

Reduced acquisitions reported in the EAS × Small-scale technology percentage - Total required surrender amounts for quarters 1–3 = STC liability quarter 4

Example:

4,000 MWh × 24.40 % - 750 STCs = 226 STCs
  • a liable entity acquired 4,000 MWh of electricity in 2020,
  • the 2020 STP was 24.40%,
  • the liable entity’s total required surrender amounts for quarter one – 3 was 750 STCs.
  • This means the required surrender amount for quarter 4 for the 2020 year is 226 STCs.

Download a hi-res JPG version of the above STC required surrender amount for quarter 4 formula and example

See sections 38AA and 38AE of the Renewable Energy (Electricity) Act 2000 for further information regarding small-scale technology certificate liability.

Renewable power percentage

The number of LGCs a liable entity is required to surrender each year is calculated by multiplying the number of reduced acquisitions by the renewable power percentage (RPP) set for that assessment year. The RPP is published on the agency website each year by the 31 March.

The Minister for Energy and Emissions Reduction (the Minister) determines the RPP for each assessment year. The agency recommends a percentage to the Minister, considering the following matters:

  • renewable electricity required for the year (the annual target)
  • estimated relevant acquisitions of electricity for the year
  • the cumulative adjustment (the difference between previous annual targets and liabilities), and
  • estimated exemption from emissions-intensive trade-exposed activities.

The Minister may also consider other matters in determining the RPP. If the RPP is not set by 31 March of the assessment year, a default percentage is applied.

Small-scale technology percentage

The number of STCs a liable entity is required to surrender each quarter is partly calculated using the small-scale technology percentage (STP). The STP is published on the agency’s website each year by the 31 March.

The Minister determines the STP for each assessment year. The agency recommends a percentage to the Minister, considering the following matters:

  • estimated STC creations for the year
  • estimated relevant acquisitions of electricity for the year
  • the cumulative adjustment (the difference between previous STC creations and surrenders), and
  • estimated exemption from EITE activities.

The Minister may also consider other matters in determining the STP. The STP must be set by 31 March of the assessment year, otherwise a default percentage is applied.



​​​​​​​


Documents on this page Documents on this page

Was this page useful?

LEAVE FEEDBACK
 
 
preload-image-only preload-image-only preload-image-only preload-image-only preload-image-only preload-image-only preload-image-only preload-image-only preload-image-only