New RET legislation coming soon

07 May 2010

Earlier this week some of the Green Energy Trading team attended the Clean Energy Council conference in Adelaide. We heard from Government officials that work is progressing on the new legislation which will effectively split the Renewable Energy Target into two components - small scale and large scale. The legislation is likely to be available soon and may be tabled as early as next week. 

A consistent theme of the conference was the renewable industry’s need for certainty and it was critical that the new RET legislation be passed as soon as possible. The Shadow Minister for Energy and Resources Ian MacFarlane, who also gave a presentation to the conference, confirmed the Opposition’s support for splitting the RET and was keen to see the final details and modelling before making a firm commitment.

We also got some insights into the Governments’ thinking on how they will implement the small scale scheme.  The government indicated that there was strong support for trading outside of the clearing house and that the $40 per SREC available through the clearing house would effectively become the default price.

It appears that the government is leaning towards a quarterly settlement even though electricity retailers were strongly in favour of the current annual arrangements. The government also indicated that they were considering mechanisms that enabled electricity retailers to know in advance what their obligation was going to be so that they could pass the cost on to their customers.  This would then involve adjustment in subsequent periods.

Andrew Livingston, from the Office of the Renewable Energy Regulator, outlined likely changes to the regulations and compliance in the lead up to the implementation of the small scale scheme next year. There will be a greater emphasis on compliance and we can expect more audits, more site visits, and more REC applications rejected. He also highlighted that they are clamping down on PV systems claiming RECs before they were installed. The requirement is that the system needs to be capable of producing power, even though it may not have been connected by the power company.  There have been examples of systems claiming RECs before the inverter has been installed – this is not permitted and would be in breach of the Act.