Innovation required to ensure scheme integrity

With significant increases in installations of renewables across all types of technologies and sizes, our agency is stepping up to manage increasing volumes while maintaining service standards. To maintain integrity in our schemes we must innovate to respond to the pressures of additional volume and complexity.

We have invested in industry capability to improve compliance, including innovative new solutions to verify panel serial numbers and educate industry stakeholders. Further, to cope with higher volumes of transactions we have enhanced our REC Registry’s capability by streamlining power station accreditation applications and certificate creation for our Large-scale participants. This has created efficiencies for our clients and our agency.

In any industry where there is rapid growth, it is important to pay attention to the training and safety of workers, particularly in the case of electrical safety. We are working with industry bodies and state and territory governments that manage these safety risks to ensure they are aware of the rapid growth in renewables so they can respond appropriately.

Investing in industry capability and compliance

We recognise that the integrity of the Small-scale scheme can be lifted if industry is encouraged to adopt best practice in business operations.

Increasing agents’ capability and standards: SRES Smart

Individuals and businesses that install eligible Small-scale systems can create and trade Small-scale technology certificates. In most cases, they assign the right to create their certificates to registered agents in return for a discount on the installation of the system.

SRES Smart is an online initiative to increase new and existing registered agents’ competency and capability to better protect themselves and the scheme before certificates are created.

It includes a series of modules, knowledge checks and a self-assessment tool for applicants to demonstrate they understand the expected capability and standards of practice necessary to participate in the scheme.

SRES Smart expands on previously implemented Fit and Proper Person checks and requirements.³⁴ It provides our agency with evidence and assurance that registered agents understand their responsibilities.

Registered agents are an important control in the Small-scale Renewable Energy Scheme, and it is essential that they understand their role in the scheme and lower their risk of accidental non-compliance and fraud by third parties.

Installation quality

Inspections program

As required under the legislation, we inspect a statistically significant sample of solar panel systems that have received incentives under the Small-scale Renewable Energy Scheme. The inspections assess conformance with the relevant Australian standards, Clean Energy Council guidelines, state and territory electrical safety standards and scheme eligibility requirements.

Of the 3678 inspections conducted in 2018, 80 were found to be unsafe. This is an unsafe rate of 2.2 per cent, up slightly from 1.9 per cent in 2017. Common issues detected related to water ingress into electrical components and identification of products subject to recalls.

Our role is to ensure the integrity of the Small-scale Renewable Energy Scheme by providing the results of unsafe and substandard inspections to the relevant state and territory electrical safety regulators that are responsible for work health and safety for renewables. We also provide this information to the Clean Energy Council, which manages the accreditation of solar panel installers and approves the key components used.

While the inspections program delivers outcomes for the sample of solar panel systems we inspect, industry bodies and electrical safety regulators also leverage the program data to provide national outcomes such as improving Australian standards, installation guidelines and the education and training of installers.

For example, our inspection data has highlighted issues with some DC isolators. Initially this resulted in the strengthening of installation guidelines and training in September 2015. As some issues persisted, regulators and industry bodies continued to take action, recalling specific DC isolators every year from 2014 and introducing a range of more stringent requirements from July 2018. These actions should continue to improve the quality of installations.

Information sharing

Amendments were made to Clean Energy Regulator Regulations in 2018 that increase our ability to share data with Commonwealth, state and territory partners. The updated Regulations make it easier for our agency to disclose vital data, such as battery storage and solar PV system location information, to emergency services for the purpose of health and safety.

We have continued to work with emergency services and electrical safety regulators. During 2018 we established an information sharing agreement with seven emergency service organisations across the nation.

We have also worked with solar PV industry bodies including the Clean Energy Council, Smart Energy Council, Master Electricians Australia, and the National Electrical and Communications Association, to issue a coordinated message to their members regarding PV installation safety and to develop a battery installation checklist.

Improving the administration of the Renewable Energy Target

Australian National Audit Office findings

In 2018 the Australian National Audit Office conducted a performance audit into the Administration of the Renewable Energy Target. The audit aimed to provide assurance over the robustness of the Renewable Energy Target’s operation and achievement of its objectives. The audit concluded we effectively administer the Renewable Energy Target. The Australian National Audit Office made four recommendations for our agency to address:

1. assess the extent to which the Renewable Energy Target scheme data shows any residual systemic electrical safety risks for small generation units installed under the scheme and inform those stakeholders in the best position to effect further treatments
2. establish governance mechanisms to manage our investigations function that ensure mandated investigation requirements are contained in standard operating procedures, the procedures are consistently applied and that investigations are undertaken in a timely manner
3. develop an overarching map to document and link the various elements of the operation and governance of the Renewable Energy Target scheme
4. refine the design of our performance measurement and reporting framework to ensure it is addressing the requirements of the Commonwealth performance framework to demonstrate progress against our agency’s purpose using relevant, reliable and complete performance criteria.

We accepted all recommendations and have started work to implement them.

Enhancing our systems with REC Registry improvements

In response to the unprecedented growth in the Renewable Energy Target, we continue to refine and automate our agency’s controls to adapt and keep pace. In 2018 we released enhancements to the REC Registry to accommodate the increased levels of certificate activity as we track to 2020.

Our REC Registry is the secure online system for all scheme transactions and enables the market to operate. We streamlined the Large-scale generation certificate creation process to enable power stations to enter generation and supporting data directly to the REC Registry. Visibility of the assessment process is now also available, enabling nominated persons to track the status of their certificate creations.

The enhancements to the REC Registry reduce processing times and allow us to administer our schemes more efficiently.

Expanding data analysis capabilities

We have also enhanced the risk-based approach to the assessment of Large-scale generation certificate claims, informed by our agency’s operational experience in administering the scheme.

We have developed analytical tools to enhance assessments on claims representing higher risk or that are randomly sampled. These tools use data visualisation, statistical techniques and incorporate third party data to provide assurance over the veracity of power station generation data. These tools help to automate the evaluation of claims and place increased scrutiny over generation data. Anomalies identified during assessments result in re-evaluation of previous claims to address any under or over-creation of certificates. This may also result in an increased likelihood of further assessments for future claims.

These changes have seen a significant reduction in the average assessment time for Large-scale generation certificate claims, while also increasing the integrity of the certificates.

New method to calculate exemptions

In December 2017, the Renewable Energy (Electricity) Regulations 2001 were amended to introduce a new exemption certificate method: the electricity use method. This new method calculates exemption based on electricity consumed by emissions-intensive trade-exposed activities at the site during a calendar year, rather than the previous production calculation method, which was based on an industry average electricity intensity factor and an estimate of the year’s production. This allows exemption to be determined more accurately.

Most companies have until 2020 to start using the new electricity use method.

The value of exemption certificates under the Renewable Energy Target is approximately $500 million a year.³⁵ As such, it is important to be sure of the accuracy and veracity of the exemptions data we assess.

In conjunction with the new electricity use method, we released an online form and new assessment process to make it easier for companies that apply under the electricity use method.

The online application form is available using our Client Portal.³⁶ This is a fundamental shift in the way we receive and process exemption certificate applications, which has previously involved paper-based processing.