Support for small renewables in Australia

Avoiding a high administrative burden

The Australian government’s Department of Climate Change has created a new system of Renewable Energy Credits (REC) for systems up to 1.5 kW. Those small systems are mainly comprised of PV systems, along with small wind and hydroelectric installations. The problem with the former Renewable Energy Certificates system was that the resulting administrative burden for such small systems was too high and the resulting income too low to result in a successful incentive.

In the new RECs system, the energy production is not measured but estimated. The certificates are paid for in advance, at the time the system is purchased, for a lifetime of fifteen years. The production estimation is based on standard figures of mean solar irradiation in the local region. To provide an extra incentive for small systems, this figure is multiplied by 5 for systems installed between June 2009 and June 2012. This multiplier will decrease gradually after 2012 and be set at 1 from June 2015 onwards.

The RECs system significantly lowers the administrative burden related to small renewables compared to the old green certificate system. Moreover, it creates a genuine incentive. By providing the full lifetime benefit at the time and point of sale, the RECs moderate the upfront costs to be paid by the user for installing the system.

To avoid excessive use of this new incentives system, the prices are set in such a manner that the resulting electricity cost from small systems will still be slightly higher than the price of standard grid electricity.

The RECs system is part of the Australian Government’s Renewable Energy Target (RET) Scheme.