The enhanced Renewable Energy Target (eRET) legislation has been passed by the Australian Parliament. It is projected to unlock between $20-25 billion in investment and create thousands of jobs.
The target set by the previous Mandatory Renewable Energy Target (MRET) was 9,500 GWh by 2010, now with the eRET there is a new target of 45,000 GWh by 2020. This new target will stay constant from 2020 until 2030 during which a carbon trading scheme is estimated to commence. This means that there is a lot of room for investment in renewables still and this market will benefit early-movers most. A thing to note is that there will be banking of certificates which means that companies will be allowed to purchase more than they require upfront and therefore there might be some discrepancy in how much of the target is actually achieved by 2020.
There is a penalty for non-compliance which was $40/MWh (plus GST) but now it has been increased to $65/MWh. This increase in penalty may also mean an increase in the market value of the RECs.
The solar credit multiplier for PV will replace the SHCP (PV Rebate) this should act as a more transparent mechanism to incentivize the creations of RECs through PV installations. However, many of these are ˜phantom’ RECs, so there will be a difference in actual renewable energy being generated and certificates that are out there for the next five years (which is how long the scheme is intended to last).
SWH and heat pumps included as eligible generators. Which is not an incentive for investing in large scale wind power.
There will be exemptions for emissions intensive trade exposed industries which implies that others pay for renewable energy, not large users. This also means that there will be a discrepancy in how much energy is being generated by renewables and how much energy is being generated by non-renewables.
Newly proposed LRET (41,000 GWh by 2020) & SRES (no cap, expected uptake of 4000 GWh) portfolios for large & small scale technologies. Most of the target is reserved for large scale (wind, biomass) generation. This should in turn increase REC prices and create room for healthy growth in wind deployment.
So in short, there is a strong indication from the government that it wants to support investment in a firm and increasing manner towards until 2020. The government’s intentions seem to focus on larger scale investments however, the non-capped nature of the SRES and the $40 REC price there seems like there is quite a significant role for roof-top solar panels to play in the next 10 years.
Written by Prateek Chourdia
MEngSc – Photovoltaics and Solar Energy, UNSW
Solar Energy Analyst
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Clean Energy Council