Renewable Energy Certificate Market Overview
In 2011 the Renewable Energy Target (RET) was split into two parts: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). Both schemes are administered by the Clean Energy Regulator and create a financial incentive for systems owners to invest in renewable energy.
The REC Agents Association is predominantly concerned with the SRES.
The SRES supports renewable energy technologies such as: Small Generation Units (SGUs) including solar PV panel systems, small-scale wind systems and small-scale hydro systems; and solar water heaters (SHWs), including: solar thermal and air-sourced, heat pumps.
For legislative requirements of this scheme, visit the Clean Energy Regulator.
Under the SRES, Small-scale Technology Certificates (STCs) are created according to the amount of electricity the systems produce or displace.
Generally, one STC is equivalent to: I MWh of renewable electricity deemed to be created by a SGU (This equivalence differs if Solar Credits are applied to the calculation of STCs); or 1 MWh of electricity deemed to be displaced by solar thermal and air-sourced heat pump water heaters.
These certificates are traded in the open market, or through the Clearing House administered by the Clean Energy Regulator, to liable parties (such as electricity suppliers). Registered Agents facilitate this process for owners of small-scale systems (such as home owners). Refer to the diagram below for an example of how this process operates.
- A registered installer will install a small-scale system, according to regulations and legal requirements.
- The system owner, generally a homeowner, will assign the STCs created by the installed system to a third party, generally an Agent registered with the Clean Energy Regulator. System owners often do this to receive an “up-front” discount from the installer/supplier for the system, rather than waiting for the STCs to be sold in the market place.
- A registered Agent then completes and lodges all the paperwork with the Clean Energy Regulator to create the STCs.
- Once created, the Agent can then sell the STCs to liable parties (either through the Clearing House administered by the Clean Energy Regulator, or in the marketplace).
- The Agent pays the installer, based on the number of STCs, and the agreed value. Thus, the installer is paid for the discount they offered to the homeowner.