Renewable Energy Target review results: ‘Small-scale’ solar threshold stays at 100kW

The review of the federal government’s Renewable Energy Target (RET) has come to a close, and the results are mostly good news for Australia’s solar industry. Most importantly, the 100kW threshold dividing ‘small-scale’ renewable energy systems from ‘large-scale’ systems will not be reduced.

In its current form, the RET commits Australia to ensure that 20% of its energy come from renewable sources by the year 2020. It is divided into 2 schemes–the LRET for large-scale renewable energy systems (over 100kW), and the Small-scale Renewable Energy Scheme (SRES), for systems up to 100kW in capacity. Of the changes proposed under the most recent review of the RET, among the most concern concern to the solar photovoltaics (PV) industry would have been a reduction of the threshold for generators to be deemed ‘small-scale’ and therefore eligible for the creation of small-scale technology certificates (STCs), which provide in effect an up-front subsidy to the installation of solar PV and other renewable energy systems.

STCs are created on the basis of a ‘deeming period’ of up to 15 years, based on calculations that estimate the cumulative amount of renewable energy a generator will produce over this period. Demand for STCs is created by annual government targets under the RET–‘liable entities’ such as utilities and carbon pollution-intensive industries have are required to acquire and surrender a set number of STCs every year.

The scrapping of the threshold reduction proposal is unequivocally good news for Australia’s solar PV industry, whose small-scale solar customers benefit greatly from the benefits of certificate creation. A reduction of the threshold would have meant that commercial solar customers interested in smaller-scale systems would have had to bear a larger part of the initial investment in their solar system. Systems larger than 100kW are not eligible to create STCs; instead, they must become accredited to create large-scale generation certificates (LGCs). LGCs, unlike STCs, are created on an ongoing basis after the accredited generation unit in question has been commissioned. Although LGCs provide an ongoing revenue stream for the project’s owner/developer, they do not contribute to the cost of a installing a system.

The Clean Energy Council (CEC) has welcomed the results of the RET review, with Deputy Chief Executive Kane Thornton praising in a media release the ‘common sense’ decision to leave the scheme largely unchanged. “The Federal Government has acted to lock in current and future investments in Australian clean energy and Australian jobs, by leaving the nuts and bolts of the scheme in place,” Mr Thorton said. He also said that the RET is fulfilling its intended purpose of catalysing the growth of renewables in Australia’s energy sector.

Among other changes to be adopted include a plan to discontinue the SRES after 2030 (no legislative change required), and a switch to 4-yearly as opposed to yearly RET reviews (which would require legislative change).

© 2013 Solar Choice Pty Ltd

James Martin II