On 20 August 2009 the Federal Parliament passed the Renewable Energy (Electricity) Amendment Act 2009.
The Renewable Energy (Electricity) Amendment Act 2009 amends the Renewable Energy (Electricity) Act 2000 (Act). The objectives of the Act are to encourage additional renewable energy generation, reduce emissions of greenhouse gases in the electricity sector and to ensure that renewable energy sources are ecologically sustainable. The Act obliges large wholesale purchasers of electricity to source increasing amounts of electricity generated from approved renewable energy sources. This obligation is implemented through the obligation to surrender renewable energy certificates (RECs) which can be created and traded by eligible participants on an internet based registry system.
The key amendments to the Act are the:
- Transition of State and Territory schemes into a national scheme;
- Increase and extension of the Renewable Energy Targets (RET);
- Introduction of a multiplier for certificates for small generation units;
- Provision for partial exemptions for electricity-intensive, trade exposed entities; and
- Increase of the shortfall charge from $40 per MWh to $65 per MWh from 1 January 2010.
The amendments introduce a national scheme by exempting constitutional corporations from complying with any corresponding State or Territory law. The amendments will subsume the Victorian Renewable Energy Act 2006, currently the only comparable State-based scheme. Power stations accredited under State law will be deemed accredited under the Act and State certificates can be converted under the Commonwealth legislation by 2 November 2010.
The Renewable Energy Target (RET)
The amendments will introduce a gradual increase of the annual renewal energy target from 9,500 GWh to 45,000 GWh by 2020. The RET will remain at 45,000 until 2030. The RET's are expected to ensure that an equivalent of at least 20% of Australia’s electricity supply is generated from renewable sources by 2020. It is anticipated that by the end of 2030 the Carbon Pollution Reduction Scheme (CPRS) will drive renewable energy projects through carbon prices.
Multiplier of certificates for small generation units
RECs created by households and businesses installing small renewable energy generation units will be calculated by a multiplier that will decrease gradually over time from 5 to 1 by 1 July 2015. For example, units installed between 9 June 2009 and 30 June 2010 will create five RECs per MWh generated and units installed from 1 July 2015 will create 1 REC per MWh generated. The multiplier only applies to the first 1.5 kWs off capacity of the unit installed. Any electricity generated from capacity above 1.5kWs will only be counted on a multiplyer of one.
To maintain international competitiveness, partial exemptions will apply to entities with emissions-intensive, trade exposed (EITE) activities. Exemptions are likely to apply to 90% and 60% of the entity’s liability. Even though the direct linkage with the CPRS scheme has been removed following pressure from the Opposition, it is intended that the eligible entities will be the same as under the CPRS scheme. Transitional regulation will be made to provide details of the interim assistance for EITE activities until the CPRS legislation is passed.
Increase of shortfall charge
Liable entities that do not meet their obligations under the Act to surrender RECs are charged with a shortfall charge. To ensure that it is not more cost effective for liable entities to pay the shortfall charge than to purchase RECs, the shortfall charge will increase from $40 per MWh to $65 per MWh from 1 January 2010.
An independent review of the Mandatory Renewable Energy Target Scheme is scheduled for 2014 and such review may result in the further amendment of the targets currently set.
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