The Renewable Energy Target (RET) scheme

Review of the Renewable Energy Target

The Renewable Energy Target (RET) scheme is designed to ensure that 20 per cent of Australia’s electricity comes from renewable sources by 2020. The RET scheme is helping to transform our electricity generation mix to cleaner and more diverse sources and supporting growth and employment in the renewable energy sector.

Since January 2011 the RET scheme has operated in two parts—the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET).

Large-scale Renewable Energy Target

Wind power

The LRET creates a financial incentive for the establishment or expansion of renewable energy power stations, such as wind and solar farms or hydro-electric power stations. It does this by legislating demand for Large-scale Generation Certificates (LGCs). One LGC can be created for each megawatt-hour of eligible renewable electricity produced by an accredited renewable power station. LGCs can be sold to entities (mainly electricity retailers) who surrender them annually to the Clean Energy Regulator to demonstrate their compliance with the RET scheme’s annual targets. The revenue earned by the power station for the sale of LGCs is additional to that received for the sale of the electricity generated.

The LRET includes legislated annual targets which will require significant investment in new renewable energy generation capacity in coming years. The large-scale targets ramp up until 2020 when the target will be 41,000 gigawatt-hours of renewable electricity generation.

Small-scale Renewable Energy Scheme

The SRES creates a financial incentive for households, small businesses and community groups to install eligible small-scale renewable energy systems such as solar water heaters, heat pumps, solar photovoltaic (PV) systems, small-scale wind systems, or small-scale hydro systems. It does this by legislating demand for Small-scale Technology Certificates (STCs). STCs are created for these systems at the time of installation, according to the amount of electricity they are expected to produce or displace in the future. For example, the SRES allows eligible solar PV systems to create, at the time of installation, STCs equivalent to 15 years of expected system output.

RET-liable entities with an obligation under the LRET also have a legal requirement under the SRES to buy STCs and surrender them to the Clean Energy Regulator on a quarterly basis.

While it is possible for owners of renewable energy systems to create and sell the STCs themselves, in practice, installers of these systems usually offer a discount on the price of an installation, or a cash payment, in return for the right to create the STCs.

RET scheme legislation

The legislation and regulations under which the RET scheme is administered are available via the following links:

Legislative amendments to implement the expanded national RET scheme were passed by the Commonwealth Parliament on 20 August 2009. Higher annual targets commenced on 1 January 2010.

Further amendments, made in 2010 to separate the scheme into large-scale and small-scale components, came into operation on 1 January 2011.

The Clean Energy Regulator

The Clean Energy Regulator oversees the operation of the RET scheme in accordance with the RET legislation. The Department of the Environment provides policy advice and implementation support for the scheme.

Further information about the RET, including fact sheets, registration and accreditation forms can be found on the Clean Energy Regulator’s website

Reviews of the RET scheme

The RET scheme legislation prescribes regular reviews of the scheme’s operation to ensure it is operating efficiently and effectively. Arrangements for the 2014 statutory review of the RET will be announced shortly. On 17 February 2014, the Minister for the Environment and Minister for Industry announced arrangements for the review.

Further information about the review, including the Terms of Reference, can be found on the Department of the Prime Minister and Cabinet website: www.RETReview.dpmc.gov.au

Other support for renewables

Australian Renewable Energy Agency

The independent Australian Renewable Energy Agency (ARENA) complements the RET scheme. ARENA streamlines and coordinates the administration of support for research and development, demonstration and commercialisation of renewable energy technologies. Australian Renewable Energy Agency web site.

Solar Towns

Renewable energy has an important role to play in reducing Australia’s greenhouse gas emissions. The Solar Towns programme, a pilot measure, will allocate $300,000 each to seven regions to support the uptake of solar technologies.  Details will be available on this website prior to the start of the programme.