The Renewable Energy Target (RET) is designed to deliver a 23.5% share for renewables in Australia’s electricity mix by 2020.
The RET legislation includes a legislated annual Large-Scale Renewable Generation Targets (LRET), rising to 33,000 gigawatt-hours of renwable energy by 2020, while the Small-Scale Renewable Energy Scheme (SRES) is uncapped.
- Large-Scale Renewable Energy Target (LRET): The LRET creates a financial incentive for the establishment and growth of renewable energy power stations, such as wind and solar farms, or hydro-electric power stations. It does this by legislating demand for Large-scale Generation Certificates (LGCs). Each LGC is equivalent to one megawatt hour of eligible renewable electricity generation. LGCs can be sold or traded to liable entities to create a revenue source for renewable energy power stations in addition to the sale of electricity. Liable entities (wholesale electricity retailers) have a legal obligation to buy LGCs and surrender them to the Clean Energy Regulator on an annual basis.
- Small-Scale Renewable Energy Scheme (SRES):The SRES creates financial incentives for home owners to install eligible small-scale renewable systems such as solar water heaters and heat pumps. It does this by legislating demand for Small-scale Technology Certificates (STCs). STCs are created for these installations according to the amount of electricity they produce or displace over the deemed life of the system. Liable entities have a legal obligation to buy STCs and surrender them on a quarterly basis. The STCs created can be sold or traded to receive an upfront cash support or a discount on the system purchased, which assists in reducing the capital cost of the system for the home owner.