Clarification on installations capable of creating STCs

The Renewable Energy (Electricity) Act 2000 establishes the Renewable Energy Target (RET) which creates a market that aims to deliver 23.5% of electricity from renewable sources by 2020. There are two schemes within the RET and these are:

  • the large-scale renewable energy target (LRET) with a legislated target of 33,000 gigawatt hours of additional renewable electricity generation by 2020; and
  • the small-scale renewable energy scheme (SRES) which incentivises the installation of small-scale renewable energy systems such as household solar panels and solar hot water systems.

The RET scheme allows accredited renewable energy power stations and owners of eligible small-scale renewable energy systems to create certificates for each megawatt-hour of electricity that they produce or displace. Liable entities, typically electricity retailers, are then required to acquire the certificates and surrender them annually in proportion to the quantity of electricity purchased by the liable entity. Certificates are surrendered to the Clean Energy Regulator (CER). Where a liable entity fails to surrender the correct number of certificates, it must pay a shortfall charge.

STC Eligibility Clarification

The eligibility requirements for small-scale solar PV generation units were clarified in the Renewable Energy Electricity Amendment (Small-Scale Solar Eligibility and Other Measures) Regulations 2019 made under the Renewable Energy (Electricity) Act 2000 (Regulations). The Regulations commenced on 26 February 2019 and clarify how the boundary of a solar PV device should be determined when the device is made up of multiple solar PV systems.

Only those eligible solar photovoltaic small generation units with a capacity of no more than 100 kW and capable of generating no more than 250 MWh of electricity each year are eligible to create small-scale renewable energy certificates (STCs). An issue that arose in the creation of certificates under SRES was the ‘gaming’ of the scheme by the classification of larger installations as smaller systems in aggregate. By virtue of the financial advantages in STCs over LGCs in certain circumstances, there was an incentive for installations to be carried out in a way that a larger system was split, in terms of metering or geography, so that STCs could be claimed.  The Regulations seek to put a stop to this practice on the basis that it is said to be inconsistent with the purposes of the Act.

Scenarios

A number of scenarios explaining the operation of the Regulations are provided in the explanatory statement and examples of these have been replicated below.

Scenario: five stores in a retail complex, each with a 50 kW system, have commercial sub-meters and all are connected to the grid via one NMI. These systems will be considered to be separate devices and eligible to create STCs.

Scenario: five stores in a retail complex, each with 60 kW systems, and commercial sub-meters. All are connected to the grid via one NMI. Two of the stores are electrically connected behind the commercial sub-meters. The two stores that are electrically connected by a behind the commercial sub-meters will be considered to be one system and STCs will not be able to be created.

Scenario: A university is connected to grid via a single NMI with individual non-commercial sub-meters on individual buildings (the sub-meters are used to maintain building management systems).  The university precinct includes a main building with a 100kW system and two sets of housing each with a 5 kW system. Paragraph 3(2A)(a) applies as the sub-meters do not meet the definition of a commercial meter. All systems are considered to be one device >100kw so are not eligible to create STCs. The NMI defines the device boundary.

Scenario: a solar farm developer has installed 10 ground-mounted hundred kilowatts systems on 10 adjoining sites with separate NMIs that are connected to the grid via one substation installed as part of the development. STCs cannot be claimed.

If you have any questions on the above please get in touch.

Connor James

Connor James

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