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Renewable energy charges explained

Jul 08, 2014

The Federal Government implemented legislation in 2001 that required retailers to progressively increase the proportion of renewable energy they purchase from generators. This legislation was expanded in 2009 to ensure that 20% of Australia’s electricity demand would be supplied by renewable energy by 2020.

In 2010, the Renewable Energy policy was split into two components, the Large Scale Renewable Energy Target (LRET) and a fixed price Small Scale Renewable Energy Scheme (SRES). The LRET requires retailers to purchase tradeable certificates created by renewable energy generators such as wind turbines, large scale solar farms and hydro-electric schemes.

The SRES in comparison requires retailers to buy certificates linked to small scale embedded generation such as residential solar panels, solar water heaters and air source heat pumps.

The purchase of LRET and SRES certificates by the retailers is designed to help reduce the operating costs associated with renewable generation to make them more competitive against the lower cost coal fired generators.

The current targets as set by the government are 9.87% for LRET and 10.48% for SRES. That is, retailers must purchase a minimum of LRET & SRES certificates as a proportion of their total electricity sales.

Additional to these two federal schemes, some states introduced state based renewable certificates to help further reduce greenhouse gases. NSW introduced the NSW Gas Abatement Certificates (NGACs) in 2003 but these closed in 2012. QLD had a similar scheme to that in NSW called GECs but this was closed on 31 December 2013. Victoria introduced the Victorian Energy Efficiency Target (VEET) in 2009 which was designed to run until 2030 however is now scheduled to cease after December 2015.

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