FACTBOX-Australia's revised renewable energy target scheme

Fri Feb 26, 2010 3:59am GMT

Feb 26 (Reuters) - Australia has a set a target of 20 percent renewable energy generation by 2020 to help curb the growth in planet-warming carbon dioxide emissions and trim the nation's reliance on coal and gas for power generation.

The renewable energy target (RET) scheme rewards investors with renewable energy certificates, or RECs, that can be sold to a ready market of buyers to offset the cost of the investment.

Each certificate represents one megawatt-hour of electricity generated from renewable energy.

But the scheme has run into trouble because of a flood of RECs, largely from small household solar installations, driving down the market price. This has deterred major investments in wind farms, solar and other large renewable energy projects.

To overcome this, the government announced changes to the RET scheme on Friday to boost big clean-energy investments. (For related story, click on [ID:nSGE61P01N])

TARGET

The government has set a target of renewable energy generation of 45,000 gigawatt-hours by 2020 for the RET scheme, which runs until 2030.

Previously, the flow of RECs was from household and large-scale renewable investments, a step that has driven down the price of the certificates.

REVISED SCHEME

From Jan 1, 2011, the RET programme will split into two: the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET).

Combined, these are expected to deliver more renewable energy than the existing 45,000 GW/h target by 2020, the government says.

The bulk of this, 41,000 GW/h, will come from large-scale projects. The government has set a series of annual targets of 10,400 GW/h for 2011, 18,000 GW/hr by 2015 and 41,000 GW/h by 2020. This target remains until the scheme ends in 2030.

The government says the degree to which the 20 percent target is exceeded will depend on the uptake of small-scale technologies by households, small business and community groups.

The LRET portion of the target will be increased to ensure the 20 percent by 2020 target is still met if the uptake of small-scale technologies is lower than anticipated.

FIXED PRICE FOR HOUSEHOLDS

The small-scale scheme offers A$40 for each REC created by small-scale technologies like solar panels and solar water heaters, effectively providing a floor price for RECs.

The number of systems receiving support under the SRES will be uncapped to ensure small-scale installers have certainty.

The government plans to review the SRES as part of a mandated 2014 review of the renewable energy target to ensure the fixed price for RECs remains relevant. ($1 = A$1.12) (Source: the Australian Department of Climate Change: here ble-target.aspx) (Editing by Sugita Katyal)