Renewable energy sources

The following energy sources are 'eligible renewable energy sources':

(d) bagasse cogeneration;

(e) black liquor;

(g) energy crops;

(i) food and agricultural wet waste; (j) landfill gas;

(k) municipal solid waste combustion;

79 Eligible renewable energy sources are defined in s 16 of the Renewable Energy (Electricity) Act 2000 (Cth).

80 Ibid, s 18. 81 Ibid, ss 18-30 for detailed provisions relating to RECs.

82 Ibid, Part 2. 83 Ibid, Part 2, Division 4. 84 Ibid, Part 2.

(o) photovoltaic and photovoltaic Renewable Stand Alone Power Supply systems;

(p) wind and wind hybrid Renewable Stand Alone Power Supply systems; (q) micro hydro Renewable Stand Alone Power Supply systems; (r) solar hot water; (s) co-firing; (t) wave; (u) ocean; (v) fuel cells; (w) hot dry rocks.

However, the following energy sources are not eligible renewable energy sources:

(a) fossil fuels;

(b) waste products derived from fossil fuels. 4.10.1.3 'Liable entities' under the Act

The legislation is directed primarily at 'liable entities';85 that is, entities which make a 'relevant acquisition' of electricity that is either a wholesale acquisition or a notional wholesale acquisition. A wholesale acquisition is essentially an acquisition from the National Electricity Market Management Commission (NEMMCO).86 A notional wholesale acquisition is where a person acquires electricity from a generator and that person is not registered under the National Electricity Code, or where there is less than 1 km between the point at which the electricity is generated and the point at which the electricity is used. The electricity must be transmitted and distributed on a line that is used solely for this specific purpose.87 These exceptions give effect to the government's agreement not to regulate self-generators under the scheme.

Liable entities are required to achieve individual renewable energy targets based on their projected market share of consumption, which can be projected 3 years in advance.88 A liable entity calculates its target with reference to the renewable power percentage (RPP) that must be achieved in any given year. The RPP should be set by Regulation before 31 March each year and must relate to the required gigawatt hours (GWh), or mandatory renewable energy target (MRET), as set out in the Act (see table 4.1).89

A liable entity must surrender RECs to the Renewable Energy Regulator in discharge of its renewable energy liabilities under the Act.90 So, if a liable entity makes a relevant acquisition of 100,000MWhof electricity in a givenyear, it would multiply that by the RPP to work out the number of RECs it has to surrender. For

88 Ibid, ss 36-43. Note that Green Power sales will not be able to be used by energy suppliers to meet their

MRET obligations.

Required GWh of renewable source electricity

Year

2001 2002

2003

2004

2005

2006

2007

2008

2009

2010 and later years

Required additional GWh

300 1100 1800 2600 3400 4500 5600 6800 8100 9500

Table 4.1 Renewable energy targets example, the RPP for the year 2001 was 0.24%. Consequently, an acquisition of 100,000MWh would require the entity to surrender 240 certificates to discharge its liability that year.

The Act envisages that a market in RECs might develop where one liability entity is in possession of excess RECs and another has too few RECs to meet its obligation under the Act. To this end a REC which is registered maybe transferred to any person.91 However, a liable entity will face a non tax-deductible penalty of $40/MWh if it has not acquired sufficient RECs.92 An entity can carry forward a 10% shortfall to the following year thus reducing its liability to pay the penalty.93 In the first year of the operation of the Act 659,000 RECs were surrendered to the Regulator, representing an oversupply of RECs for 2001 to a factor of2.2.94

Early assessment of the legislation, however, indicates that the Act will not deliver the 2% increase in renewable energy. This is because energy consumption in Australia is likely to double by 2010. The legislation as it currently stands will only deliver a 0.9% increase in renewable energy.95 This is hardly impressive given the renewable energy targets set in other countries, as discussed in Chapter 7.

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