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To power our homes and businesses, Australia generates electricity from coal and gas fired power stations, as well as a range of renewable energy sources including large-scale hydropower facilities and wind farms, and small-scale solar hot water and solar rooftop panels.
The Renewable Energy Target is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.
The Renewable Energy Target works by allowing both large-scale power stations and the owners of small-scale systems to create large-scale generation certificates and small-scale technology certificates for every megawatt hour of power they generate. Certificates are then purchased by electricity retailers (who supply electricity to householders and businesses) and submitted to the Clean Energy Regulator to meet the retailers' legal obligations under the Renewable Energy Target. This creates a market which provides financial incentives to both large-scale renewable energy power stations and the owners of small-scale renewable energy systems.
Small-scale technology certificates can be created following the installation of an eligible system, and are calculated based on the amount of electricity a system produces or replaces (that is, electricity from non-renewable sources).
Generally, householders who purchase these systems
assign the right to create their certificates to an agent in return for a lower purchase price. The level of this benefit differs across the country depending on the level of solar energy.
In June 2015, the Australian Parliament passed the
Renewable Energy (Electricity) Amendment Bill 2015. As part of the amendment bill, the
Large-scale Renewable Energy Target was reduced from 41 000 GWh to 33 000 GWh in 2020 with interim and post-2020 targets adjusted accordingly.
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.