EXPLANATORY STATEMENT

Select Legislative Instrument 2010 No. 321

Issued by authority of the Minister for Climate Change and Energy Efficiency

Renewable Energy (Electricity) Act 2000

Renewable Energy (Electricity) Amendment Regulations 2010 (No. 9)

Section 161 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.

The Act, as established, provides the framework for the implementation of the Government’s Mandatory Renewable Energy Target (MRET) announced in 1997.  The MRET created an additional 9,500 Giga Watt hours (GWh) of additional renewable electricity per year by 2010 by establishing a supply and demand for Renewable Energy Certificates (RECs) and a REC market.  The objective of the Act is to encourage the additional generation of electricity from renewable sources.

On 9 September 2009, the Act was amended and MRET became known as the Renewable Energy Target (RET) with an expanded target.  On 29 June 2010, the Act was amended further by the Renewable Energy (Electricity) Amendment Act 2010 (the Amendment Act), which from 1 January 2011, will split the RET into the large-scale renewable energy target (LRET) and small-scale renewable energy scheme (SRES) and strengthens the Government’s commitment of 20 percent of Australia’s electricity will come from renewable sources by 2020.

Under the Act, wholesale purchasers of electricity (the ‘liable entities’) are required to meet a share of LRET in proportion to their share of the national wholesale electricity market and meet a share of SRES in proportion to their support of the small-scale technology industry.  The Act provides for the creation of large-scale generation certificates (LGCs) from accredited renewable energy power stations and the creation of small-scale technology certificates (STCs) from eligible solar water heaters and small generation unit installations. 

The purpose of the Regulations is to amend the Principal Regulations to specify the LRET RPP for 2011 effective from 1 January 2011 as this is when LRET commences under the Act and specify the first SRES STP for 2011 effective from 1 January 2011 as this is when SRES commences under the Act.

The Regulations specify the RPP for 2011, which, when used in a set formula calculates the number of LGCs that liable entities have to surrender to the Renewable Energy Regulator to avoid a penalty.  The RPP for 2011 is 5.62 percent, decreasing from 5.98 percent in 2010 but increasing from 3.64 percent in 2009. 

Subsection 39(1) of the Act provides that the RPP for a given year must be specified in the regulations on or before 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 that will be acquired for the year;

•                 the amount by which the required GWh 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; and

•                 the estimated amount of all partial exemptions expected to be claimed for the year.

The Regulations also specify the STP for 2011, which, when used in a set formula calculates the number of STCs that liable entities have to surrender quarterly to the Renewable Energy Regulator to avoid a penalty.  The STP for 2011, which relates to the first SRES reporting and STC surrendering year, is 14.80 percent. 

Subsection 40A (1) of the Act provides that the STP for a given year must be specified in the regulations on or before 31 March in that year.  However, subsection 40A(3) provides that, before the Governor-General makes a regulation under subsection 40A(1), the Minister must take into consideration:

•                 the estimated value, in megawatt hours, of small-scale technology certificates that will be created for the year;

•                 the estimated amount of electricity that will be acquired for the year; and

•                 the estimated amount of all partial exemptions expected to be claimed for the year.

The Regulations allows the:

•                 2011 RPP of 5.62 percent to be set under Regulation 23.  Regulation 23 to the Principal Regulations is amended every twelve months and the amendments are machinery in nature and do not substantially alter the existing operation of the Principal Regulations; and

•                 2011 STP of 14.80 percent to be set under Regulation 23A.  Regulation 23A to the Principal Regulations is amended as required under the Act and the amendments are machinery in nature and do not substantially alter the existing operation of the Principal Regulations. 

Consequently a public consultation period was not conducted for the Amendment Regulations.

The Regulations will be a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations will commence on the commencement of Part 1 of Schedule 1 to the Amendment Act, which will be on 1 January 2011.