The Act places a legal liability on wholesale purchasers of electricity to proportionately contribute to the generation of additional renewable electricity. Those purchasers, defined as ‘liable entities’, are required to surrender a specified number of ‘renewable energy certificates’ to offset the energy they acquire each year.
The market for renewable energy certificates is facilitated by the Clean Energy Regulator through two schemes: the Large-scale Renewable Energy Target and the Small-scale Renewable Energy Scheme.
Under the Large-scale Renewable Energy Target, large-scale generation certificates are created by renewable energy power stations. One large-scale generation certificate is equivalent to one megawatt hour of eligible renewable electricity generated above the power station’s ‘baseline’. The baseline for each power station is determined by the Clean Energy Regulator under the Renewable Energy (Electricity) Regulations 2001. For example, the baseline for a power station that generated electricity before 1997 will be determined by the average amount of electricity generated by the power station in 1994, 1995 and 1996, while a power station that first generated electricity after 1997 will have a baseline of zero.
Under the Small-scale Renewable Energy Scheme, small-scale technology certificates are created for correctly installed small-scale systems. There are two categories of small-scale system:
Small-scale technology certificates can be created in advance for electricity generated by a small generation unit or the electricity displaced by a solar water heater. The number of small-scale technology certificates a small-scale system is eligible for is based on the operating life of the system, known as the ‘deeming period’.
Table 2 outlines the core legislation that underpins the schemes.
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.