Table 6 summarises activities in relation to large-scale generation certificates and small-scale technology certificates during 2013.

Validation of certificates

Before a certificate is registered it must be checked and validated by the Clean Energy Regulator and the registered person must pay the applicable fee. Current fees are 8 cents per large-scale generation certificate for renewable energy power stations and 8 cents per small-scale technology certificate for solar water heaters. If the small-scale technology certificates for a small generation unit were created on or after 17 October 2011, the fee for each small-scale technology certificate is 47 cents.

As at 31 December 2013:

• 36,804,677 certificates had been created in the REC Registry in calendar year 2013. By comparison, 51,051,676 certificates were created in calendar year 2012.
• 34,810,407 certificates had been validated in the REC Registry in calendar year 2013. By comparison, 49,288,322 certificates were validated in calendar year 2012.

A number of factors contributed to the decrease in certificate creations and validations between 2012 and 2013. The phasing out of the solar credits multiplier had an effect on the number of small-scale system installations, as did changes to state and territory government solar feed-in tariff schemes. Other factors included foreign currency exchange rates and global production of solar photovoltaic systems.

As shown in graphs 8 and 9, a wide range of eligible renewable energy sources were used to create certificates in 2013. Not all accredited renewable energy power stations, agents or individuals created certificates in 2013.

Certificates created by power stations

Under section 19 of the Act, accredited renewable energy power stations were able to create large-scale generation certificates for eligible renewable electricity generated above the power station’s baseline for the 2012 generation year by the 31 December 2013 deadline. Renewable energy power stations that did not create certificates within the allowed timeframe are no longer eligible to create certificates for eligible renewable electricity generated in the 2012 generation year.

The Clean Energy Regulator’s large-scale generation certificate validation procedure was updated in 2013 to require power stations to submit a standing notice each time large-scale generation certificates are created in the REC Registry. This notice confirms ongoing compliance with all relevant Commonwealth, state, territory and local government planning and approval requirements, and is a prerequisite for large-scale generation certificate validation. The standing notice replaces the previous requirement to provide an annual statement of compliance and is submitted more frequently than the annual statement.

Between 1 June 2013, when the requirement was introduced, and 31 December 2013, the Clean Energy Regulator received 682 standing notices from accredited power stations.

In 2013, a total of 14,649,036 large-scale generation certificates were validly created. Graph 8 shows valid large-scale generation certificates by renewable energy source since the commencement of the scheme. The graph includes certificates created by small-scale systems before the splitting of the schemes provided for small-scale technology certificates.

Graph 8: Large-scale generation certificates validly created from the commencement of the scheme until 31 December 2013

Certificates created by Small-scale systems

Section 21 of the Act states that certificates for eligible solar water heaters must be created within 12 months of the installation date.

Regulation 19D of the Regulations (under section 23A of the Act) states that certificates for eligible small generation units installed on or after 6 October 2007 may be created:

• within 12 months of the installation date, for a one-year or five-year period
• at the end of the period in which the right was exercised to create certificates (for example, if a person created certificates for an installation for one year, at the end of that period the person may create certificates for another year, until the end of the scheme), or
• within 12 months of the installation date for a 15-year period (if this option is chosen no further certificates can be created for the installation).

Small generation units installed between 1 April 2001 and 5 October 2007 are eligible to create certificates at any time for a one-year or five-year period. At the end of each period owners or agents can create certificates for the next ‘deeming period’. The deeming period refers to the expected life of the system. Information about how deeming periods are determined is published on the Clean Energy Regulator website.¹⁵

If agents or individuals do not create certificates within the allowed timeframe they are no longer eligible to create certificates for their small-scale installation.

In 2013, a total of 20,457,324 small-scale technology certificates were validly created for 238,769 small-scale systems. Graph 9 shows valid small-scale technology certificates by renewable energy source since the commencement of the scheme.

Graph 9: Small-scale technology certificates validly created from the commencement of the scheme until 31 December 2013

Certificate transfer activity

From 2001 to 31 December 2013, 67,420 successful certificate transfers took place in the REC Registry, representing a total of 556,190,429 certificates transferred.

Of these, during 2013, there were:

• 16,292 accepted transfers, representing a volume of 153,107,687 certificates
• 562 transfers cancelled by sellers, representing a volume of 6,783,728 certificates
• 38 transfers rejected by buyers, representing a volume of 250,222 certificates.

Graph 10 shows monthly trends in transfers over the past three years.

Graph 10: Number of certificate transfers by month in 2011, 2012 and 2013

STC Clearing House

The STC Clearing House is a facility within the REC Registry that allows liable entities to purchase small-scale technology certificates at a fixed price of $40 (GST exclusive) when the supply from the open market does not meet their demand.

This facility provides certainty to these entities by guaranteeing a supply of certificates to meet their liability and setting a maximum price that they will be required to pay, allowing them to protect their risk and pass through costs efficiently. Sellers may also use the facility and receive the fixed price. Large-scale generation certificates are not included in the STC Clearing House.

The Act allows free trading of small-scale technology certificates and a liquid and efficient secondary market has developed outside of the STC Clearing House. Since early 2011, the small-scale technology certificate market has been in oversupply and, as a result, the secondary market price of small-scale technology certificates has been below the fixed price. The vast majority of trades have been made in the secondary market.

It was originally thought that a large number of trades would go through the STC Clearing House and that those trades would set the market price. However, of the approximately 109 million small-scale technology certificates created between 1 January 2011 and 1 January 2014, only 138,486 small-scale technology certificates were traded in the STC Clearing House.

In 2013, there were no significant purchases in the STC Clearing House as the market remained in oversupply. Small-scale technology certificates traded efficiently in the open market via both spot and forward contracts.

A clear trend throughout 2013 was the steep decline in the number of small-scale technology certificates awaiting sale in the STC Clearing House, as shown in Graph 11. The Clean Energy Regulator attributes this decline to the market price for small-scale certificates, which trended toward the fixed price of $40 (GST exclusive). As the price increased, holders of certificates withdrew their holdings from the STC Clearing House for sale in the secondary market.

Graph 11: Small-scale technology certificates awaiting sale in the
STC Clearing House

The price of small-scale technology certificates in the secondary market is shown in Graph 12. The Clean Energy Regulator sources wholesale market prices from
NextGen.Net and Thomson Reuters.

Voluntary surrender

Under section 28A of the Act, registered owners of certificates can choose to surrender certificates to the Clean Energy Regulator for any reason.

For example, individuals or companies may choose to surrender certificates to support additional generation of electricity from renewable energy sources and to meet their GreenPower obligations. If offers are made for this reason, or for similar reasons, they are considered to be ‘voluntary surrender’ offers.

Individuals or companies may also choose to make voluntary surrender certificate offers to offset the impacts of improper creation of certificates under the civil penalties and other remedies provisions of the legislation, or to meet enforceable undertaking obligations under section 154Q of the Act. If offers are made for these reasons they are considered to be ‘non-compliance surrender’ offers.

Any certificate accepted for voluntary surrender is permanently removed from the market and cannot be transferred to another party or used to acquit a mandatory surrender liability under the Act.

The Clean Energy Regulator will refuse a voluntary surrender where it is determined that the offer has been made in error. No offers were refused in 2013.

As at 31 December 2013, a total of 13,928,178 certificates, representing 931 offers, had been accepted for voluntary surrender in the REC Registry. Table 7 shows the number of certificates accepted for voluntary surrender.

Volume weighted average market price for a large-scale generation certificate

Under regulation 22ZH, the Clean Energy Regulator was required to estimate and publish the volume weighted average market price for a large-scale generation certificate for 2014 by 31 October 2013.

The Clean Energy Regulator estimated the volume weighted average market price for a large-scale generation certificate for 2014 at $35.24 and published this, along with the methodology used to estimate the price, on the Clean Energy Regulator website on 25 October 2013.

The volume weighted average market price for a large-scale generation certificate for 2014 is factored into the calculation of the partial exemption assistance rate for the year.