Wind farms continue to be the largest beneficiaries under the Renewable Energy Target.
Wind farms continue to be the largest beneficiaries under the Renewable Energy Target. Image Credit: Statkraft

RenewReporter has completed an extensive analysis of data from the Clean Energy Regulator’s REC Registry, providing a detailed breakdown of how electricity retailers have meet their obligations under the Renewable Energy Target for the 2016 compliance year.

Each year, electricity retailers are required to surrender Large-scale Generation Certificates (LGCs) to the Clean Energy Regulator to demonstrate their compliance with the renewable energy target.

Each certificate represents 1 Megawatt-hour of electricity generated from a renewable source of electricity. Ensuring that the number of certificates surrendered matches the annual renewables target ensures that the sector is on its way to meeting the 20 per cent target by 2020.

You can check out RenewReporter’s explainer of the RET scheme, and retailer strategies from earlier.

This analysis as looked at data relating to the Large-scale Renewable Energy Target, and breaks down were electricity retailers sourced their certificates for the 2016 compliance year.

Retailers maintain high compliance rate (mostly)

Leading up to the end of the compliance window for the LRET, the Clean Energy Regulator had been significantly more vocal about the importance of compliance than previous years, calling on retailers to act in the ‘spirit of the scheme’. The Clean Energy Regulator was concerned that retailers would opt to pay penalty charges, rather than purchase renewable energy certificates.

It appears that all but one retailer complied with the Clean Energy Regulator’s wishes, with ERM Power being the only retailer choosing to pay the penalty charges. ERM Power had informed shareholders that it would not surrender 1.9 million certificates and instead would pay $123 million in penalties.

The large-scale target had been set at 21.43 million Megawatt-hours. At the closure of the compliance window, 19.57 million certificates had been offered for surrender. The difference being almost precisely the amount ERM Power decided not to offer.

The compliance rate for the 2016 year therefore stands at just over 91 per cent.

Wind dominates supply of certificates

There are a range of fuel sources that have been defined as being renewable for the purpose of the RET scheme. These include the commonly understood sources of wind, solar and hydro, but extends to biomass and waste, as well as the inclusion of waste-coal mine gas, a hangover from compensation arrangements made when the ill-fated Carbon Price Mechanism was introduced.

Wind power was by far the largest source of certificates offered for surrender in the 2016 year, providing over 70 per cent of all certificates surrendered.

Hydro (13.7%) and Landfill gas (4.1%) were the next largest contributors, with the remainder provided through a mix of sugar cane trash (bagasse), solar and other sources of bioenergy.

While large-scale solar has experienced a relative boom of late, with numerous projects under construction or recently reaching financial close, it has been slow in capturing a large share of the annual surrender. With just under 230,000 certificates surrendered, large-scale solar represented just 1.2 per cent of the 2016 market.

Almost these large-scale solar certificates were sourced from the Nyngan and Moree Solar projects.

South Australia punches above its weight

Certificates were created for renewable generation in all states and territories across the Australia.

Victoria was the largest contributor of certificates, with generators in the state providing 27 per cent of the 2016 surrender.

South Australia followed a close second, providing 23.6% of certificates, with almost the entirety of certificates coming from wind generation. New South Wales (20.4%) and Tasmania (10.3%) followed.

Big 3 Retailers continue to dominate

Origin Energy, AGL and EnergyAustralia, known colloquially as the “Big 3”, were by far the three largest purchasers of renewable energy certificates, reflecting their positions as the three largest electricity retailers in the country.

In 2016, the Big 3 represented 55 per cent of the market for certificates, with Origin the largest purchaser (24.2%) followed by AGL (17.2%) and Energy Australia (13.6%).

Reflecting the supply of certificates, the Big 3 sourced their certificates from a range of fuel sources, mostly from wind and hydro, but also including contributions from large and small scale solar and landfill gas.



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