An updated Renewable Energy Target (RET) scheme is expected to deliver more renewable energy than the original 20 per cent target and increase energy investment, according to the federal government and renewable energy industry.
Minister for Climate Change and Water, Senator the Hon. Penny Wong announced the RET will be split into the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET) from 1 January, 2011.
The LRET, covering large-scale renewable energy projects like wind farms, commercial solar and geothermal, will deliver the vast majority of the 2020 target.
“This will free projects from uncertainties that may have been caused by strong demand for small-scale renewable technologies,” Senator Wong said in a joint press release with the Hon. Greg Combet.
The SRES will cover small-scale technologies such as solar panels and solar hot water systems and deliver the remainder of the target. It will provide a fixed price of $40 per megawatt hour of electricity produced.Under this fixed price, a Sydney household that installs a 1.5 kilowatt solar panel system in 2011 will benefit from an upfront subsidy of $6200. If the same household decides to install a typical solar water heater, they will receive $1200 in support under the SRES.
The Government expects the revamped RET will support new jobs and investment in both large and small-scale renewable energy projects.
“While these changes address some uncertainty in the current market, uncertainty around the Carbon Pollution Reduction Scheme is also harming market sentiment. This illustrates why it’s critical to have a market-based, long-term response to reducing emissions to drive investment in the renewable industry,” Senator Wong said.
The clean energy industry believes the renewable energy target will deliver stalled multi-million dollar commercial projects as well as supporting household scale technologies such as solar panels and solar hot water systems.
“The Rudd Government has got it right with this announcement,” Clean Energy Council chief executive, Matthew Warren said.
“The clean energy industry has been discussing structural design issues with the current Renewable Energy Target since late last year. The Rudd Government has listened carefully to industry advice and today has acted decisively and effectively.
“Our main concern was to improve the design of the RET to ensure that it delivered both industrial scale generation projects as well as the continued development and deployment of household technologies like solar panels and hot water. Today’s announcement addresses this problem.
“We will continue to work with the government to ensure the final legislation is effective and efficient.
“These changes clear the path for the clean energy industry to play its crucial role in driving down the cost of clean energy whilst cutting Australia’s greenhouse emissions.
“This is good news for jobs and investment in the renewable energy industry,” Mr Warren said.
Hydro Tasmania welcomed the announcement, as “the generous incentive for small-scale technology over the past year had resulted in the REC price falling to a level which could not support large-scale renewable energy projects”.
While awaiting further detail about how the enhanced scheme will operate, Hydro Tasmania senior advisor, renewable energy policy, Kane Thornton said preliminary analysis suggested the Government’s approach should ensure a strong incentive for all renewable energy projects.
The announcement should restore the integrity of the RET and ensure renewable energy projects are now more commercially viable, Mr Thornton said.
Legislation for the enhanced RET, which can provide long-term investor certainty and deliver a higher Renewable Energy Certificate (REC) price, is critical, according to Hydro Tasmania.