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Treatment of electricity used to pump or raise water as an auxiliary loss in power stations using hydro

16 September 2019

When calculating large-scale generation certificate (LGC) entitlement, Regulation 3B(2) of the Renewable Energy (Electricity) Regulations 2001 (the Regulations) provides that the amount of electricity used by an accredited power station to pump or raise water before its release for hydro-electric generation is considered an auxiliary loss for the purpose of Regulation 14 (the general formula):

3B Definition of auxiliary loss

  1. For a power station, auxiliary loss means the amount of electricity used in generating electricity, and operating and maintaining the power station, but does not include any electricity used for network control ancillary services.
  2. For a hydro electric power station, auxiliary loss also includes the amount of electricity that is used to pump or to raise water before its release for hydro electric generation.

Electricity used to pump or raise water before its release for hydro-electric generation must be included as an auxiliary loss. However, where hydro-electric generation is incidental to the purpose of a facility, and the facility would continue to operate and release water regardless of any hydro generation, then the electricity used to pump or raise water does not need to be included as an auxiliary loss.

Applicants seeking to accredit power stations generating electricity from hydro—who consider that electricity used to pump or raise water does not meet the definition of an auxiliary loss under Regulation 3B(2)—must demonstrate that the pumping and releasing of water would occur regardless of hydro-electric generation.

Scenarios that may satisfy requirements include:

  • The power station is part of a facility or system that clearly serves a purpose other than hydro-electricity generation (e.g. sewerage treatment plant, drinking water supply).
  • The hydro electricity generating components are incidental to the purpose of the facility, and the facility would continue to operate and release water without these components.
  • The hydro-electricity producing components have been installed to recover energy that would otherwise be lost (because water must be released anyway).
  • The release of water had been occurring prior to the installation of hydro-electricity producing components, which have been subsequently installed (and with no resulting increase in water release volumes).

Where it is not satisfied that this guidance has been met, all electricity used in pumping or raising water is to be treated as an auxiliary loss.

Accredited power stations not reporting electricity used to pump or raise water prior to release as an auxiliary loss must be able to demonstrate that any water pumped or raised would occur regardless of hydro-electric generation. During the assessment of an LGC claim, the agency may request evidence of this from the nominated persons.

LGCs created from pumped water that does not serve the purpose of the facility or system, and not reported as an auxiliary loss, may be considered as an improper creation of LGCs under the Renewable Energy (Electricity) Act 2001 (the Act). Any alleged, apparent or potential offences under the Act are actioned in accordance with our Compliance Policy for Education, Monitoring and Enforcement Activities.

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