From the 1st of January 2011 the Renewable Energy Target (RET) will be split into:
- Small-scale Renewable Energy Scheme (SRES)
The SRES encompasses eligible Solar Water Heaters & Heat Pumps, PV and other small-scale renewable energy projects. - Large-Scale Renewable Energy Target (LRET)
The LRET covers large-scale renewable energy projects such as Wind Farms
The transition of RECs to SRES and LRET are as follows:
A REC created from the installation of eligible solar water heaters and air sourced heat pumps up to and including the 31st of December 2010 will be reclassified as an LGC, Large-scale generation certificate.
Certificates created from the installation of eligible solar water heaters and air sourced heat pumps installed on or after the 1st of January 2011 will be known as Small-Scale Technology Certificates (STC).
A solar hot water system or air sourced heat pump that has been installed prior to or including the 31st of December 2010 will receive the value of RECs at the time of receipt by Rheem, the claim will be processed through the normal RECs channels and it will be classified within the LRET. Systems installed on or after the 1st of January 2011 will fall under the SRES classification.
Under the SRES, owners of an eligible solar water heater or air sourced heat pump installed on or after the 1st January 2011 will have the following options for claiming a financial benefit for their certificates;
- An up-front Point of Sale benefit at the time of purchase.
- Delayed benefit by assigning the certificates to Rheem or another registered agent.
- For a fee (currently $20), self registration with ORER and open-ended future sale of the certificates through the STC Clearing House. For further details see www.orer.gov.au/lret-sres-updates
Except for certificates sold through the STC Clearing House, the prices for LGC and STC are subject to change.
Note: The current requirement for all certificates to be registered within 12 months of installation date is unchanged. To ensure that a claim can be processed with this 12-month rule it is recommended that all claims be submitted within 11 months of the installation date. If an incomplete or inaccurate claim is submitted it is the responsibility of the person submitting the claim to provide the information in sufficient time for the claim to be processed and certificates registered with ORER
1st January 2011 RECs changes Frequently Asked Questions
What is changing within the existing RECs scheme?
The classification of Renewable Energy Certificates (RECs) will be divided into two categories:
LRET – applicable to installations completed prior to and including the 31st December 2010. Certificates for this scheme will be known as LGCs representing large-scale generation certificates. RECs generated prior to and including 31st December will fall under this category.
SRES – applicable to eligible solar water heater, heat pump water heater (and small scale solar PV, wind & hydro generation) installations completed from the 1st January 2011. Certificates will be known as Small-scale Technology Certificates (STCs).
Are RECs available under the new classification?
Certificates generated for installations prior to and including the 31st of December will be classified as RECs and fall into the LRET classification for trading purposes.
Certificates generated from 1st January 2011 will be classified as STCs. The term "RECs" with reference to solar water heaters and heat pump water heaters will be replaced with the term LGC or STC.
What does LRET mean?
Large-scale Renewable Energy Target
The LRET, covers large-scale renewable energy projects such as accredited renewable power stations.
What does SRES mean?
Small-scale Renewable Energy Scheme.
The SRES will enable the owners who install eligible solar water heaters and air source heat pumps to create STCs which can be traded for a financial benefit.
What is an STC?
Small-scale Technology Certificate.
Small-scale technology certificates (STCs) are created by eligible installations of solar water heaters and air source heat pump water heaters. An STC is generally equivalent to:
- 1 MWh of electricity deemed to be displaced by the installation of solar water heaters.
I installed my solar water heater before the 1st of January; can I still receive a financial benefit?
Yes, any solar hot water or air sourced heat pump system that has been installed prior to or including the 31st of December 2010 will receive the value of RECs at the time of receipt by Rheem, the claim will be processed through normal RECs channels and it will be classified within the LRET. Systems installed on or after the 1st of January 2011 will fall under the new SRES classification.
A system installed after the 1st of January 2011 will be eligible for STCs and will be processed under the SRES scheme.
What is the STC Clearing House?
The facility to sell STCs to buyers for a value set by the Minister. This value is subject to biennial review.
How do I gain financial benefit from my STC?
Owners of STCs can achieve a financial benefit in two ways:
- Agent assisted (ie. Rheem or other registered agents)
- Individual sale through the STC clearing house
If owners use an agent they are likely to receive their financial benefit more quickly than directly through the clearing house. They are unlikely to receive the full benefit set by the Minister due to processing and management costs associated with using the agent option.
Rheem will process STCs in the same way which RECs are currently processed, which benefits owners of new products not yet listed on the ORER register.
Refer to the ORER website for details: http://www.orer.gov.au/lret-sres-updates/
Should I hold onto my RECs to potentially gain an increased value after 1st January 2011?
Rheem is not in a position to provide financial advice regarding the changes to the scheme. It is important to understand that due to the transitional arrangements, a REC cannot be converted to, or be classified as an STC. They will be subject to the normal fluctuations of the current scheme beyond 1st January 2011 due to their being classified under the LRET scheme.
If I have RECs generated prior to 1st January 2011, can I trade it with Rheem?
Yes, Rheem will process RECs that are classified under the LRET after 1st January 2011.
Is Rheem a registered agent?
Yes, Rheem is a registered agent and can trade your STCs. Visit the Rheem SolarSavers website for information on how to trade your STCs. www.rheemsolarsavers.com.au.
Will the STC value change over time?
The STC will potentially be more stable than the past REC system but the pricing will depend on supply and demand for these certificates.
The Minister will be able to seek independent advice on matters relating to STCs under the SRES, including whether the published $40 (excl. GST) STC price remains appropriate over time. The Minister may reduce the $40 (excl. GST) price by legislative instrument should this be considered appropriate¹.
If the $40 (excl GST) value decreases registered agents will most likely reduce their buying price too.
¹ Information sourced from http://www.orer.gov.au/lret-sres-updates/
