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Government changes facilitate opportunities for renewable energy

Opportunities for renewable energy companies and investors have been boosted significantly with the passing of legislation expanding the Mandatory Renewable Energy Target (MRET) scheme.

The Federal Government’s new national renewable energy target is designed to ensure that 20% of Australia’s electricity must come from renewable sources by 2020.  Eligible renewable sources include solar, wind, geothermal, hydro and biomass.

In conjunction with the proposed Carbon Pollution Reduction Scheme, the MRET scheme is intended to encourage the use of renewable energy sources, rather than rely on emissions intensive sources for electricity production.

The MRET scheme was originally introduced in 2001 and required electricity retailers and certain large electricity users to meet a share of the renewable energy target in proportion to their share of the national wholesale electricity market. 

The original target was set at 9,500 giga-watt hours of electricity from renewable sources by 2010, to be maintained until 2020.

The MRET scheme provides for the creation of Renewable Energy Certificates (RECs) by generators of renewable energy.  RECs are registered and can then be traded and sold to liable parties, where they are surrendered to the regulator to avoid paying a shortfall charge.

The new national renewable energy target will:

  • increase the existing mandatory renewable energy target by more than four times to 45,000 gigawatt-hours in 2020
  • expand the operation of the scheme until 2031
  • contribute to meeting Australia’s targets for the reduction of greenhouse gas emissions

The targets will increase over time, with a target of 12,500 giga-watt hours in 2010 escalating to a maximum of 45,580 giga-watt hours in 2020.  The target will remain at 45,000 giga-watt hours until the conclusion of the scheme in 2031.

The Government expects the national RET to provide an incentive to accelerate uptake of Australia’s renewable energy sources and drive significant investment in renewable energy technologies. 

In fact, economic modelling prepared for the Government estimates this will generate an additional $19 billion in investment in the renewable energy sector to 2020.

By international standards, investment and commercialisation of renewable energy projects in Australia to date has been relatively small and slow to implement.

The Government is also providing significant support for renewable energy through its $4.5 billion Clean Energy Initiative, which includes $2.1 billion to support research, development and deployment of renewable technologies. 

Please contact Lynne Grant or Geoff Green on 03 8319 1866 or at lynne.grant@bsglegal.com.au or geoff.green@bsglegal.com.au for further information.



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