​Liable entities (usually electricity retailers who first acquire electricity in a grid of 100 megawatts or more) have an obligation to purchase and surrender large-scale generation certificates and small-scale technology certificates based on the volume of electricity they purchase each year.

For each assessment year, liable entities are required to report 'reduced acquisitions'¹⁸ in megawatt hours, and acquit their liabilities under the Renewable Energy Target by:

• lodging an energy acquisition statement, large-scale generation shortfall statement and small-scale technology shortfall statement on or before 14 February (for the previous calendar year), and
• surrendering sufficient certificates to acquit their reduced acquisitions or paying a shortfall charge of $65 per certificate not surrendered.

Determination of power percentages

The amount of certificates that liable entities are required to purchase is determined by the:

• renewable power percentage, and
• the small-scale technology percentage.

Renewable power percentage

The number of large-scale generation certificates that liable entities must purchase is calculated by the renewable power percentage set annually in the Regulations. The renewable power percentage changes each year in proportion to the legislated annual targets as they increase to reach 41 000 gigawatt hours by 2020.¹⁹

The renewable power percentage takes into account factors including:

• the legislated annual target and any certificates surrendered that were under or over the previous year's target
• estimated amount of electricity that will be acquired by liable entities for the year, and
• any partial exemption estimated to be issued for emissions-intensive trade-exposed activities.

The renewable power percentage for 2014 was 9.87 per cent, equivalent to 16.95 million large-scale generation certificates.

Small-scale technology percentage

Liable entities are also required to purchase small-scale technology certificates. The number of small-scale technology certificates that liable entities must purchase is based on the expected supply of small-scale technology certificates, rather than specified annual targets.

The small-scale technology percentage is calculated based on the estimated:

• value (in megawatt hours) of small-scale technology certificates that will be created for the year
• certificates surrendered that were under or over the previous year target
• accumulated excess or shortfall from previous years
• estimated amount of electricity that will be acquired by liable entities for the year, and
• any partial exemption estimated to be issued for emissions-intensive trade-exposed activities.

The small-scale technology percentage for 2014 was 10.48 per cent, equivalent to 18.65 million small-scale technology certificates.

Reporting of 2014 energy acquisitions

On 14 February 2015, the Clean Energy Regulator received energy acquisition statements and shortfall statements submitted by liable entities for the 2014 assessment year. A total of 114 liable entities were required to report for the 2014 assessment year by the due date, 17 more than in 2013.

Liability is determined by deducting partial exemptions from the overall amount of relevant acquisitions of electricity (the liable entity's reduced acquisitions). Liable entities initially²⁰ reported 181.852 million megawatt hours of reduced acquisitions for 2014, which is 207.541 million megawatt hours of relevant acquisitions of electricity less 25.689 million megawatt hours of partial exemptions.

Reduced acquisitions for the Large-scale Renewable Energy Target

Reduced acquisitions for the Large-scale Renewable Energy Target in 2014 resulted in an initial liability of 19 367 246 large-scale generation certificates. Liable entities initially had a 99.97 per cent compliance rate for surrendering these certificates. Based on initial assessments, there were 42 liable entities with an accumulated carried-forward surplus of 84 314 large-scale generation certificates (which can be used to acquit future large-scale generation certificate liabilities).

Three liable entities were initially found to have a total shortfall of 6 569 large-scale generation certificates. All three liable entities had shortfalls within 10 per cent of their total large-scale generation certificate liability. This will be carried forward and added to the entities' 2015 large-scale generation certificate liability.

Graph 18 shows the number of large-scale generation certificates that were accepted or are available to acquit liabilities under the Act.

Reduced acquisitions for the Small-scale renewable energy scheme

Reduced acquisitions for the Small-scale Renewable Energy Scheme in 2014 resulted in an initial liability of 19 058 098 small-scale technology certificates. Liable entities initially had a 99.88 per cent compliance surrender rate for surrendering certificates overall. Based on initial assessments, there were 75 liable entities with an accumulated carried-forward surplus of 438 832 small-scale technology certificates (which can be used to acquit future quarterly small-scale technology certificate liabilities).

Three liable entities were found to have a total shortfall of 22 056 small-scale technology certificates. Those entities were required to pay the shortfall charge, because there is no buffer for entities with small-scale technology certificate shortfalls. The shortfalls for each quarter were:

• quarter 1–two liable entities had a total shortfall of 3 119 small-scale technology certificates
• quarter 2–three liable entities had a total shortfall of 7 834 small-scale technology certificates
• quarter 3–two liable entity had a total shortfall of 11 103 small-scale technology certificates, and
• quarter 4–zero liable entities had a shortfall.

As at 16 February 2015²¹, all but one liable entity with shortfalls had paid for their 2014 shortfall charges.

Graph 19: Small-scale technology certificates accepted or are available to acquit a mandatory liability for the assessment years from 2011–2014

Graph 19 shows the number of small-scale technology certificates that were accepted or are available to acquit liabilities under the Act.

Methods for determining the amount of small-scale technology certificates to be surrendered for quarters 1 to 3

The Act allows for four methods to estimate, determine or refuse required surrender amounts for small-scale technology certificates for quarters 1 to 3 of an assessment year:

• Liable entities that lodge an Energy Acquisition Statement are allowed to amend the amount of small-scale technology certificates they are required to surrender from 15 February to 1 October, the due date (section 38AF of the Act). The Clean Energy Regulator may approve, determine another amount or refuse these applications. Assuming the application is approved, and the liable entity applied for an inappropriate amount, the Clean Energy Regulator determines another amount (section 38AF(7) of the Act).
• Liable entities that did not lodge an Energy Acquisition Statement by the due date are allowed to apply for an amount of small-scale technology certificates to surrender from 1 January to 31 December, the due date (section 38AG of the Act). The Clean Energy Regulator may approve, determine another amount or refuse these applications.
• The Clean Energy Regulator determines an amount (section 38AH of the Act). This applies when liable entities failed to lodge for the assessment year or as required by the Act.
• The Clean Energy Regulator estimates an amount by 15 April or assesses an amount by 1 April (section 40C of the Act). This is the first step to receiving an amount.

Table 7 represents the number of liable entities and the methods used to determine quarter 1 to 3 STC required surrender amounts since 2011. Figures will change annually due to assessment process time frames and when new liabilities are found.