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:
- solar water heaters, including solar hot water systems and air source heat pumps (water heaters that draw heat from the air), which displace the use of electricity to heat water
- small generation units, including solar panels, small wind turbines, and hydro systems, which generate electricity.
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.
Table 2: Legislation underpinning the Renewable Energy Target schemes
| Legislation | Overview |
|---|
|
Renewable Energy (Electricity) Act 2000 | Sets out the aims of the schemes including the annual targets, creates liabilities, provides for registration of persons and accreditation of power stations, and establishes the market for renewable energy certificates. |
|
Renewable Energy (Electricity) (Large-scale Generation Shortfall Charge) Act 2000 | Provides the rate of charge for the applicable renewable energy shortfall charge for the Large-scale Renewable Energy Target. |
|
Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010 | Provides the rate of charge for the applicable renewable energy shortfall charge for the Small-scale Renewable Energy Scheme. |
| Renewable Energy (Electricity) Regulations 2001 | Provide details on a number of issues, including eligibility criteria for renewable energy sources and criteria for accreditation of power stations and small-scale systems. |