EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 255
ISSUED BY AUTHORITY OF THE MINISTER FOR THE
ENVIRONMENT AND HERITAGE
Renewable Energy (Electricity) Act 2000
Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3)
The Renewable Energy (Electricity) Act 2000 (the Act) underpins the Mandatory Renewable Energy Target (MRET). MRET creates a guaranteed market for an additional 9,500 gigawatt hours per year of renewables-based electricity by 2010. The legislation places a legal liability on wholesale purchasers of electricity (retailers and large users) to contribute proportionately towards annual targets which ramp up to 9,500 gigawatt hours in 2010, and remain at that level until the measure expires in 2020. The measure provides that one Renewable Energy Certificate may be created for each megawatt hour of electricity generated by accredited power stations using eligible renewable energy sources.
Section 161 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Act.
Section 17 provides that the Regulations may prescribe matters necessary or convenient to give effect to what is an eligible renewable energy source. Section 23B provides that the number of renewable energy certificates for a particular installation of Small Generation Unit is to be determined by the Regulations.
The purpose of the Regulations is to amend the Renewable Energy (Electricity) Regulations 2001 to reflect the Government’s agreement to adopt a number of recommendations from the 2003 Review of MRET. These amendments will provide the bioenergy and solar technology sectors with opportunities to achieve a greater participation under the measure.
The changes:
- remove the primary purpose test from energy crops as an eligible renewable energy source, but clarifies that biomass from native forests is not an energy crop;
- increase the threshold generating capacity for photovoltaic (PV) Small Generation Units to 100kW and provide PV units with an option to create 15 years of Renewable Energy Certificates in a one-off up-front transaction; and;
- redefine Small Generation Units.
Details of the Regulations are set out in Attachment A.
Subsection 161(2) of the Act specifies that draft regulations must be available for public comment for a period of not less than 30 days before the regulations are made. This condition has been met.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003. The Regulations commenced on 14 November 2005.
Attachment A
Details of the Renewable Energy (Electricity) Amendment Regulations 2005 (No 3)
Part 1 - Preliminary
1 – Name of Regulations
This provides that the name of the regulations is the Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3).
2 - Commencement
This provides for the regulations to commence on 14 November 2005.
3 – Amendment of Renewable Energy (Electricity) Regulations 2001.
This provides that Schedule 1 amends the Renewable Energy (Electricity) Regulations 2001.
Schedule 1 - Amendments
Item [1] Subregulation 3(2)
This clarifies the definition of hydro and wind small generation units and amends the threshold generating capacity of photovoltaic small generation units from 10kW to 100kW.
Item [2] Regulation 9 – Energy Crops
This change removes the primary purpose test from energy crops, but specifies that biomass from a native forest should not be considered an energy crop.
Items [3] and [4] Paragraph 20(1)(a) and Paragraph 20(1)(b)
This removes references in Regulation 20 to the kilowatt rating of small generation units as the kilowatt rating is already specified in Subregulation 3(2). The schedules will now have a limit of 10kW installed or 25MWh of generation for hydro and wind small generation units, and a limit of 100kW installed or 250MWh of generation for photovoltaic small generation units.
Item [5] Subregulation 20(6)
Subregulation 6 specifies that parties wishing to claim certificates in respect of the installation of small generation units can create their certificates annually or upfront in bundles of 5 years. Where the creator of the certificates elects to create certificates each 5 years, subsequent allocation of certificates cannot be claimed until the Regulator has been provided with sufficient information to satisfy them that the system is still installed and is likely to remain operational for the next 5 year period.
This change provides parties wishing to claim certificates for a photovoltaic small generation unit installed after 31 July 2005 with a further option of creating 15 years of certificates in a one-off up-front transaction (referred to as the 15 year deeming option). Where the creator of the certificates elects to claim 15 years of certificates, no subsequent certificates may be created for the unit, including if the unit is reinstalled in the same or different location.
Where the creator of certificates elects to create certificates for a photovoltaic small generation unit either annually or upfront in bundles of 5 years, the creator cannot create certificates under the 15 year deeming option.
Overview
The Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3) were introduced to refine and enhance the framework established by the Renewable Energy (Electricity) Act 2000. This legislative instrument, enacted by the Australian Government, aims to adapt and improve the Mandatory Renewable Energy Target (MRET) scheme, which was designed to ensure a consistent and growing market for renewable energy in the electricity sector. The policy objective underpinning these amendments is to encourage greater participation and investment in renewable energy sources, particularly in the bioenergy and solar technology sectors, by removing certain regulatory barriers and offering new opportunities for certificate creation. These amendments were made to incorporate recommendations from the 2003 Review of MRET, thereby ensuring the scheme remains effective and responsive to technological and market developments.
The Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3) address specific issues within the existing regulatory framework, such as the definition and eligibility criteria for energy crops and small generation units, and the mechanisms for creating Renewable Energy Certificates. By clarifying the definition of hydro and wind small generation units, removing the primary purpose test for energy crops while explicitly excluding biomass from native forests, and increasing the threshold generating capacity for photovoltaic units, the amendments aim to foster broader participation in renewable energy generation. Additionally, the option to create 15 years of Renewable Energy Certificates in a single transaction for photovoltaic units installed post-31 July 2005 provides an attractive incentive for investment in solar technology. These changes collectively seek to bolster the viability and appeal of the MRET scheme, ensuring it continues to meet its objectives of promoting renewable energy and reducing greenhouse gas emissions.
Scope and Application
The Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3) apply to entities and individuals engaged in the generation and wholesale purchase of electricity, specifically targeting retailers and large users who are subject to the Mandatory Renewable Energy Target (MRET). The regulations amend the Renewable Energy (Electricity) Regulations 2001 to expand the opportunities for bioenergy and solar technology sectors to participate in the MRET scheme. The changes include removing the primary purpose test for energy crops, clarifying that biomass from native forests is not an energy crop, increasing the threshold generating capacity for photovoltaic small generation units to 100kW, and providing photovoltaic units with the option to create 15 years of Renewable Energy Certificates in a one-off upfront transaction. These regulations have a national jurisdictional reach, as they pertain to the Australian electricity market and are made under the authority of the Renewable Energy (Electricity) Act 2000. The regulations came into effect on 14 November 2005 and were subject to a 30-day public comment period as required by the Act. The amendments are intended to facilitate greater participation in the renewable energy market, thereby supporting the achievement of the national renewable energy targets set forth by the MRET.
Key Provisions
The Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3) introduce significant changes to the Renewable Energy (Electricity) Regulations 2001, primarily to enhance participation in the Mandatory Renewable Energy Target (MRET) for bioenergy and solar technology sectors. Under Section 17 of the Renewable Energy (Electricity) Act 2000, these Regulations amend the definition of eligible renewable energy sources and the generation capacities for small generation units. For instance, Section 23B of the Act now allows for photovoltaic (PV) Small Generation Units to have a threshold generating capacity increased to 100kW, as specified in the Regulations. This amendment opens up more opportunities for PV units by providing an option to create 15 years of Renewable Energy Certificates in a single upfront transaction. Moreover, the Regulations redefine Small Generation Units, removing the primary purpose test for energy crops while clarifying that biomass from native forests does not qualify as an energy crop.
These amendments impose specific obligations on parties and entities involved in the MRET scheme. Wholesale purchasers of electricity, including retailers and large users, are now legally required to contribute to the annual renewable energy targets set by the Act, which escalate to 9,500 gigawatt hours by 2010. The Regulations mandate that one Renewable Energy Certificate is created for each megawatt hour of electricity generated by accredited power stations using eligible renewable energy sources. This legal framework ensures that the renewable energy market remains robust and that targets are met through regulated contributions. Parties interested in claiming certificates for small generation units must adhere to the new rules regarding upfront transactions and generation limits, as outlined in the amended Regulations.
Failure to comply with the provisions of the Renewable Energy (Electricity) Act 2000 and the Renewable Energy (Electricity) Amendment Regulations 2005 (No. 3) can lead to various legal consequences. Under Section 161 of the Act, the Governor-General has the authority to enforce these regulations, and breaches may result in administrative, civil, or criminal penalties. While the explanatory statement does not explicitly detail maximum penalties, non-compliance with renewable energy targets and certificate creation processes could lead to enforcement actions, fines, or other corrective measures as prescribed by the Act. The legal obligations are clear: adherence to these regulations is mandatory for all entities participating in the MRET scheme.