Allens

Energy

Client Update: Changes to Renewable Energy Target scheme announced

2 March 2010

In brief: Changes to the Renewable Energy Target scheme announced by the Federal Government will help progress projects to develop wind, solar and geothermal energy that have been on hold. Partner Grant Anderson (view CV) and Lawyer Nick Buttner report.

In our Focus: Expanded renewable energy target scheme legislation passed – August 2009, we looked at the expanded Renewable Energy Target (RET) scheme legislation that was passed by the Senate. Last Friday, the Federal Government announced that, from 1 January 2011, the RET scheme will have two parts – the Small-scale RET scheme and the Large-scale RET scheme.

The Large-scale RET scheme will cover large-scale renewable energy projects involving wind farms, commercial solar and geothermal, while the Small-scale RET scheme will cover technologies (mainly used in a domestic/small business setting) such as solar panels and solar hot water systems.

The separation of the schemes will reduce uncertainties surrounding large-scale renewable energy projects that have been created as a result of high demand for small-scale renewable technologies. The high demand for such technologies has caused the market to be flooded with Renewable Energy Certificates (RECs) which depressed the REC price, and had a deterrent effect on those pursuing or considering large-scale renewable energy projects.

According to a fact sheet released by the Department of Climate Change:

  • electricity retailers and other entities currently liable under the RET will be required to purchase RECs from both schemes;
  • the Large-scale RET scheme's 2020 target of 41,000 GWh has been set to achieve a level of large-scale renewable electricity generation above what was expected under the existing RET;
  • the mechanism by which liable entities will be required to purchase RECs created by the Small-scale RET scheme will be finalised during an industry consultation process; and
  • liable entities will be able to use existing banked RECs to meet obligations under the Large-scale RET scheme.

In effect, the announced changes set a target to achieve a projected 18 per cent share of large-scale renewable energy in Australia's electricity mix by 2020.

The Government will shortly release an industry consultation paper and intends to introduce enabling legislation during the winter sittings of Parliament.

For further information, please contact:

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