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The Renewable Energy Target For Australia - What is it?

Australia has invested in various power sources. For instance, the country produces electricity from gas and coal-powered stations. Moreover, numerous…

10/07/2020 9:50 AM

Australia has invested in various power sources. For instance, the country produces electricity from gas and coal-powered stations. Moreover, numerous renewable energy sources, including wind farms, large scale, and small scale solar hot water and rooftop panels, also exist. In its quest to reduce the emission of greenhouse gases, the Australian government established a scheme dubbed The Renewable Energy Target. This scheme also sought to boost the generation of power from the already existing sustainable and renewable sources.

About the Renewable Energy Target of Australia

The fundamental working mechanism of this scheme is to enable both the owners of small-scale systems and large-scale power frameworks to establish large-scale generation certificates as well as small-scale technology certificates for each megawatt-hour of power generated. These certificates are sold to electricity retailers and also submitted to the Clean Energy Regulator. That ensures that as the retailers supply power to businesses and households, they adequately meet the retailers' legal obligations stipulated in the Renewable Energy Target. It facilitates a scenario whereby incentives are accorded to the large scale renewable energy power stations as well as the owners of the small scale systems.

How the Renewable Energy Target Works

The target is administered by the Clean Energy Regulator in two schemes which include:

  • The Large-Scale Renewable Energy Target (LRET)-This scheme obliges high energy users to derive a fixed proportion of their power from renewable energy sources. It is therefore offered in terms of the large-scale generation certificates (LGCs) that are created by the sizeable renewable power stations like wind farms and solar farms. They are sold to the high-energy users who are required to surrender them to meet the LRET stipulations. As at the end of 2020, this scheme is expected to reach a milestone of 33000-gigawatt hours of additional renewable energy.
  • Small-Scale Renewable Energy Scheme(SRES)-On the other hand, this scheme gives incentives to businesses or individuals that chose to install the small-scale renewable energy systems through projects like heat pumps, rooftop solar and solar water heaters. As such, small-scale technology certificates (STCs) are availed upfront for a specific system stipulating the expected renewable power generation. That is subject primarily to the geographical locations as well as the installation dates of the small-scale frameworks. SRES is bound to expire in 2030. Just like in LRET, the giant energy users are obliged to buy a fixed level of STCs and then surrender them towards the inclination of the RET regulations.

Worth note is the fact that the LRET and SRES certificates are formed and issued through an online trading portal known as the REC registry. This portal is actively maintained and managed by the Clean Energy Regulator. Large and small systems create certificates concerning each megawatt-hour of power produced. The result is the establishment of the supply side of the certificate market.

Consequently, the wholesale purchasers of power buy the certificates to meet the renewable energy obligations hence creating the demand side of the certificates market. A secondary market for the documents exists too. However, it consists of traders, installers, and financial institutions. Therefore, the Clean Energy Regulator is not involved in the secondary market.

A Brief History of the Renewable Energy Target Project

In the effort to reduce greenhouse gas emissions, Australia came up intending to achieve approximately 20% of renewable energy by 2020. The Mandatory Renewable Energy Target was therefore founded in 2001. The initial goal of this project was to derive around 2% of the country's total energy output from renewable sources. However, this was revised in 2009 to facilitate reaching the 20% mark of renewable energy by 2020. With the name being altered to the Renewable Energy Target, two sections were established. These include the discussed large-scale renewable energy target and the small-scale renewable energy target. Later on, 2015 saw the Australian Parliament pass the Renewable Energy Amendment Bill of 2015. In this, the large-scale renewable energy target got reduced from the prior 41000 GWh to 33000 GWh by 2020. Post-2020 targets were also revised accordingly. Since its inception in 2001, RET has been able to actively improve the installation numbers, particularly of the small-scale renewable energy frameworks. Moreover, it has been successful in stimulating rampant investment in the renewable energy power industry.

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Reporting Fraud

In many countries, government-regulated projects typically face lots of challenges, such as resistance from varying stakeholders or even fraudulent acts being rampant. Fraud-related activities end up reducing the effectiveness of beneficial programs or policies. Since the Clean Energy Regulator administers the Renewable Energy Target, it is also mandated with the role of preventing the misuse of its privileges. Therefore, all stakeholders in this sector are urged to always report suspected fraud cases by calling or even writing to this regulatory body.

Notable Progress and the Future of RET

Clean Energy Regulator was quick to report in 2019 that as of September, the LRET goals of 2020 (33000 GWh) had been accomplished. That was quite remarkable, especially when you take into account that in 2017 only over half of the 2020 goals had been achieved. However, this scheme will still expect high-energy users of power to meet the stated requirements of the regulator's policy until 2030. It translates to more renewable energy being produced past the 33000 GWh mark. The implication in the market is that since LGCs will continue to increase, there will be an oversupply in this field hence reducing the value. The prices are bound to keep falling sharply such that experts in this sector are projecting that the value will be almost zero by 2030.

For SRES, its schedule runs till 2030. In this, the level of incentives keeps falling annually. The unique thing is that unlike LRET, a limit on the amount of renewable energy that can be produced by the scheme does not exist. A recommendation in July 2018 through a report by the Australian Competition and Consumer Commission was to abolish SRES in 2021 in the quest to reduce the costs of electricity whereby the Clean Energy Council opposed the move. The reasoning behind the Energy Council was that SRES had been pivotal in sustaining high safety and quality standards throughout the last decade, characterized by the enormous growth of the sector.


From the above, it is clear that the Renewable Energy Target is an ideal program that has seen Australia meet its renewable energy goals. Various stakeholders such as power stations, manufacturers, agents, installers, liable entities, individuals, and small businesses that are yet to participate are urged to get into the wagon as the Clean Energy Regulator has diverse resources to cater for all. It is undoubtedly a program that other nations should seek to emulate to reduce greenhouse emissions.

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Steve Tarcos

I`m Steve, an Engineer who is highly involved and interested in the world of renewable energy. In my spare time, I play with my kids and watch documentaries.