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List of Recommendations

Recommendation Detail
1 The Renewable Energy Target (RET) should be amended in light of the changing circumstances in Australia’s main electricity markets and the availability of lower cost emission abatement alternatives.
2

The Large-scale Renewable Energy Target (LRET) should be amended in one of the following two ways:

Option 1 – Closed to new entrants (‘grandfathering’)
In order to reduce the cost of the LRET and its impact on electricity markets, the Panel recommends that the LRET should be closed to new entrants.

  1. The LRET is closed to new renewable energy power stations (subject to limited exceptions described below). The Clean Energy Regulator (CER) should set targets annually based on estimated output from accredited power stations.
  2. In addition to those renewable energy power stations already accredited under the scheme, eligibility would be extended to:
    1. Renewable energy power stations already under construction.
    2. Renewable energy power stations to be constructed where project proponents can demonstrate that there is full financial and contractual commitment to the project (e.g., final investment decision, engineering and procurement contract) within one month of the announcement of this approach.
  3. The last year of the operation of the LRET is 2030.

or

Option 2 – Share of growth in electricity demand
In order to provide support for new renewable power stations, and contribute to Australia’s emissions reduction target while achieving less reduction than Option 1 in the cost of the LRET, the Panel recommends that the target be set to allocate a share of growth in electricity demand to renewables in the following manner:

  1. The target is set annually by the CER, increasing each year to 2020 by an amount equivalent to 50 per cent of projected growth in national electricity demand, ensuring that new renewable energy power stations are only supported under the RET where electricity demand is increasing.
  2. Where national electricity demand is projected to remain flat or fall, the target is held at the previous year’s level.
  3. From 2021 onwards, the target is fixed at the 2020 level until 2030, the last year of the operation of the LRET.

Based on current electricity demand forecasts, this approach would achieve a 20 per cent share of renewables in the electricity generation mix by 2020.

3

The Small-scale Renewable Energy Scheme (SRES) should be amended in one of the following two ways:

Option 1 – Abolition
In order to address the cost of the SRES (and its effect on electricity markets), the Panel recommends that it be closed immediately in the following manner:

  1. The SRES should terminate upon announcement.
  2. Those who contracted before the announcement for the installation of a small-scale system should receive the certificates they would have done.

or

Option 2 – Bring forward the phase-out of the SRES
In order to reduce the cost of the SRES while providing some support for new small-scale renewable energy systems, the Panel recommends that the phase-out of the SRES be brought forward in the following manner, to take effect immediately:

  1. Bring forward the last year of operation of the SRES from 2030 to 2020.
  2. Reduce the period for which certificates may be created for rooftop solar PV systems from 15 years to 10 years, and in each year from 2016 onwards further reduce the period for which certificates may be created, as set out below:

Rooftop solar PV: period certificates may be created

Year installed Period
Prior to announcement 15 years
From announcement 10 years
2016 9 years
2017 8 years
2018 7 years
2019 6 years
2020 5 years
2021 onwards Scheme closed
  1. Reduce system size eligibility threshold for rooftop solar PV systems from no more than 100 kilowatts to no more than 10 kilowatts.
  2. Reduce the period for which certificates may be created for solar and heat pump water heaters by one year each year, commencing in 2016, as set out below:

Solar and heat pump water heaters: period certificates may be created

Year installed Period
Prior to 2016 10 years
2016 9 years
2017 8 years
2018 7 years
2019 6 years
2020 5 years
2021 onwards Scheme closed
4 The current partial exemption arrangements for emissions-intensive trade‑exposed businesses should be maintained.
5 The self-generation exemption should be amended to extend the one kilometre radius restriction and to permit self-generators to supply incidental amounts of electricity (below a set threshold) to third parties without attracting a RET liability. The Government should consult with affected parties to determine an appropriate distance limit and threshold for incidental off-takes.
6 The Government’s commitment to the reinstatement of native forest wood waste as a renewable energy source under the LRET should be implemented through the reintroduction of the relevant regulations in force prior to 2011.
7 The requirement for statutory reviews of the scheme should be removed from the Renewable Energy (Electricity) Act 2000.
8 Projects, or components of projects, receiving support under the RET should be excluded from participating in Emissions Reduction Fund auction processes.
9 Projects that receive support under the RET should not be eligible to receive further assistance from the Clean Energy Finance Corporation or the Australian Renewable Energy Agency.
10 To further reduce the costs of the RET the Government should consider the following proposals to improve the operation of the scheme:
  1. Bring forward the dates for setting the Small-scale Technology Percentage and the Renewable Power Percentage from 31 March in the compliance year to a date prior to the commencement of the compliance year (e.g., 1 December).
  2. Align the acquittal of LRET and SRES obligations so that both are acquitted six monthly and allow liable entities to carryover a shortfall of small-scale technology certificates (as is currently the case for large-scale generation certificates).
  3. Publish the RET liable entity with whom an EITE business will negotiate the provision of the Partial Exemption Certificate.
  4. Update guidelines for determining the renewable components in waste for electricity generation.
11 The Government should consult with affected parties on implementation of the Panel’s recommendations for the RET including:
  1. Measures for ensuring that large-scale generation certificates trade in a suitable price range that provides an appropriate level of support for accredited power stations.
  2. Methods for setting targets.
  3. Setting the distance limit and threshold for third party off-takes for the self-generation exemption.
12 The Panel’s recommendations for progressively reducing the deeming rate for solar PV installations and reducing the size eligibility threshold from 100 kilowatts to 10 kilowatts should take effect from the date of announcement. Transitional arrangements should be provided for parties that have entered into contracts on the basis of the current policy at the date of announcement.