EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 310
Issued by authority of the Minister for the Environment and Heritage
Renewable Energy (Electricity) Act 2000
Renewable Energy (Electricity) Amendment Regulations 2005 (No. 5)
Subsection 161(1) of the Renewable Energy (Electricity) Act 2000 (the Act) provides that the Governor-General may make regulations prescribing all 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. Subsection 161(2) provides that the draft regulations must be available for public comment for a period not less than 30 days before the regulations are made.(1)
The Act provides the legislative framework for the implementation of the Government’s mandatory renewable energy target, announced by the Prime Minister on 20 November 1997. The mandatory renewable energy target is designed to increase the amount of electricity in Australia that has been generated from renewable energy sources. By 2010, an additional 9,500 Giga Watt hours (GWh) of electricity will be required to be supplied from renewable energy sources, raising the contribution that renewable energy sources make to Australia’s electricity supply to around 12 percent.
Under the Act, wholesale purchasers of electricity (the ‘liable parties’) are required to meet a share of the target in proportion to their share of the national wholesale electricity market. The Act provides for the creation of renewable energy certificates by generators of renewable energy. One Mega Watt hour of electricity generated from renewable energy sources equals one renewable energy certificate. The renewable energy certificates, once registered, are traded and sold to the liable parties who, in turn, must surrender the renewable energy certificates to the Renewable Energy Regulator, or pay a penalty. The number of renewable energy certificates to be surrendered by a liable party is determined by multiplying the amount of electricity purchased by the liable party by the Renewable Power Percentage (RPP), as prescribed in the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) for the year to which it applies.
The purpose of the Regulations is to amend the Principal Regulations to specify:
- the RPP for 2006, which is used in a formula to calculate the number of renewable energy certificates that liable parties have to surrender to the Renewable Energy Regulator to avoid a penalty. The RPP for 2006 will be 2.17 percent; and
- new postcodes zones under Part 1 of Schedule 7 for the administration of solar water heaters.
Subsection 39(1) of the Act provides that the RPP for a given year must be specified in the regulations on or prior to 31 March in that year. However, subsection 39 (3) provides that, before the Governor-General makes a regulation under subsection 39 (1), the Minister must take into consideration the required amount of renewable electricity for the year, the estimated amount of electricity to be acquired for the year, and the amount by which the required GWhs of renewable source electricity for previous years has exceeded, or has been exceeded by, the amount of renewable electricity required under the scheme in those years.(2)
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced on the day after they are registered on the Federal Register of Legislative Instruments.
Overview
The Renewable Energy (Electricity) Amendment Regulations 2005 (No. 5) were enacted to address the need for updating the Renewable Energy (Electricity) Regulations 2001 in line with the Renewable Energy (Electricity) Act 2000. This legislation was introduced by the Australian Government to implement the mandatory renewable energy target, aiming to increase the contribution of renewable energy sources to the national electricity supply. The Act mandates that wholesale purchasers of electricity, known as liable parties, must meet a share of the renewable energy target proportional to their market share. To facilitate this, the Act allows for the creation of renewable energy certificates by generators of renewable energy, which are then traded and surrendered by liable parties to the Renewable Energy Regulator. The explanatory statement outlines that the primary objective of the Regulations is to specify the Renewable Power Percentage for 2006 and to introduce new postcode zones for the administration of solar water heaters, ensuring compliance with the Act's requirements and promoting the growth of renewable energy in Australia.
Scope and Application
The Renewable Energy (Electricity) Act 2000 sets out the legislative framework for the implementation of Australia's mandatory renewable energy target, which was designed to increase the contribution of renewable energy sources to the nation's electricity supply. The Act applies to wholesale purchasers of electricity, referred to as liable parties, who are required to meet a share of the target in proportion to their share of the national wholesale electricity market. The Act facilitates the generation of renewable energy certificates by renewable energy generators, with each Mega Watt hour of electricity generated from renewable sources equating to one certificate. Liable parties must then trade for, and surrender these certificates to the Renewable Energy Regulator, or face penalties. The Renewable Energy (Electricity) Amendment Regulations 2005 further detail the specific Renewable Power Percentage for 2006, which is integral in calculating the number of certificates liable parties must surrender. Additionally, these regulations update the postcode zones for the administration of solar water heaters. The Regulations are made under the authority of the Minister for the Environment and Heritage, following a public consultation period, and are subject to the Legislative Instruments Act 2003.
Key Provisions
The Renewable Energy (Electricity) Amendment Regulations 2005 (No. 5) make specific provisions to support the Renewable Energy (Electricity) Act 2000. These regulations prescribe the Renewable Power Percentage (RPP) for the year 2006, which is 2.17 percent (Reg 3). This percentage is crucial in determining the number of renewable energy certificates (RECs) that wholesale purchasers, referred to as liable parties, need to surrender to the Renewable Energy Regulator to avoid penalties. The regulations also introduce new postcode zones under Part 1 of Schedule 7 for the administration of solar water heaters (Reg 4). These zones help streamline the administration and ensure compliance with the renewable energy targets.
Liable parties under the Act are required to meet a share of the renewable energy target in proportion to their share of the national wholesale electricity market. This obligation is central to the Act’s aim of increasing the amount of electricity generated from renewable sources. The liable parties must acquire and surrender the requisite number of RECs, which are generated by renewable energy producers. Each megawatt hour of electricity generated from renewable sources equates to one REC. Failure to surrender the correct number of RECs results in either the payment of a penalty or the surrender of RECs to the Regulator. The RPP is a key factor in calculating the number of RECs liable parties need to surrender, based on the amount of electricity they purchase.
Under the Renewable Energy (Electricity) Act 2000, breaches of the regulations can lead to both civil and criminal consequences. Liable parties who fail to surrender the correct number of RECs can be subject to financial penalties (s 38). The Act also provides for the possibility of criminal charges against individuals or entities who deliberately or negligently fail to comply with the Act’s requirements. Such offences can result in substantial fines, with the maximum penalties varying based on the severity and frequency of the breach. The Act mandates that the Minister for the Environment and Heritage consider specific factors, including the required amount of renewable electricity and past performance, before prescribing the RPP in the regulations (s 39). These provisions ensure that the Act’s objectives are met and that there is a robust framework for accountability and enforcement.