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Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008

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2008

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

SENATE

 

 

 

 

Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by authority of Senator Milne)

 

 

 

 



Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008

- Explanatory Memorandum

 

Background

The purpose of the Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008 is to amend the Renewable Energy (Electricity) Act 2000 to establish a national feed-in tariff (FiT) scheme. The objective of the FiT scheme is to provide reliable, long-term financial support for the commercialisation of a range of both large and small scale renewable energy technologies, particularly those that are generally unsupported by the existing mandatory renewable energy target scheme or short term ad-hoc rebate policies such as the Solar Homes and Communities Program.

 

This Bill incorporates a number of changes to the previous, similar Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008. These changes are based on information received in submissions and hearings during the Senate Environment, Communications and the Arts Committee inquiry into the earlier bill. The main changes include:

  1. Requiring that, in the case of small to medium sized renewable energy generators (i.e. those with an installed capacity of less than 1 MW), the process of reading electricity meters and the rebate of the FiT rates will be the responsibility of the electricity retailers.
  2. Allowing owners of existing renewable energy generators (i.e. those installed before Royal Assent) to be eligible to receive FiT rate rebates and payments. 
  3. Requiring the FiT rate payments to be paid at least quarterly instead of annually and the FiT rate rebates to be rebated at the same time as an electricity bill is rendered to the owner.
  4. Allowing the Minister to reduce to the FiT rate applied to any particular technology without waiting five years, but at a maximum rate of reduction of 5% per year.
  5. Clarifying that extensions to existing registered renewable energy systems will not be treated as new systems for the purpose of eligibility for rebates and payments.
  6. Removing ‘wood waste’ as a renewable energy source due to the uncertainty about whether, in many instances, this source is genuinely renewable.

 

In summary the scheme is intended to operate as follows:

 

Feed-in-Tariff Rates

   i.         It is the responsibility of the Minister for Climate Change to set a FiT rate for any of renewable energy technology listed in section 17 of the Act, except ‘wood waste’, each year.

 

  ii.         In setting the FiT rates it is the objective of the Minister to support the economic viability of electricity generation from a range of prospective renewable energy technologies. To achieve this, the Minister may vary FiT rates according to the type and location of qualifying generators. 

 

 

iii.         The owner of a qualifying generator will receive a constant FiT for 20 years, set at the time that they register with the scheme, on all of the electricity that they produce (not just the highly variable component which is exported to the grid). Only generators which forgo participation in the mandatory renewable energy target scheme can be a 'qualifying generator'.

 

iv.         The Minister must review the FiT rate applying to each renewable energy generator type each year - with the adjusted rates applying only to new installations. In order to provide a degree of certainty to manufacturers and suppliers of renewable energy products, the Minister may increase FiT rates at the beginning of any financial year, but can only decrease rates at a maximum of 5% per year. 

 

Feed-In-Tariff Levy

  v.         The Minister must set a FiT levy rate per MWh of electricity acquired from the electricity grid, to fund the Regulator’s FiT payments to qualifying generators with an installed capacity equal to or greater than 1 MW. The FiT levy is to be imposed by a proposed Renewable Energy (Electricity) Feed-in-Tariff Levy Act 2008 .  The FiT levy rate must be sufficient to cover the estimated cost of payments made by the Regulator.

 

vi.         The FiT levy is payable by all electricity retailers and direct customers of electric energy from the grid, calculated by reference to their annual energy acquisition statements lodged under section 44. (Note that the annual energy acquisition statement is used to calculate the renewable energy shortfall charge of an electricity retailer or a direct customer).

 

Feed-In-Tariff Payments

vii.         In the case of renewable energy generators with an installed capacity of less than 1 MW, it is the responsibility of the electricity retailers to manage the process of reading electricity meters and the payment of the FiT rates. Payments from electricity retailers to qualifying generators will be in the form of a rebate on an electricity bill and must be rebated at the same time as an electricity bill is rendered to the owner. If the whole of an amount to be credited to the owner of a qualifying generator under in a particular billing period has not been set-off against the charges payable by the owner for the supply of electricity by the expiration of 12 months after the end of that billing period, the owner is entitled to the payment of the outstanding balance.

 

viii.         In the case of renewable energy generators with an installed capacity equal to or greater than 1 MW, a quarterly return by the owner of a qualifying generator must be lodged with the Regulator within 15 days of the end of the quarter. The Regulator must pay the FiT rate to the owner of a qualifying generator within 30 days of receiving from the owner a quarterly return in the prescribed form indicating the metered energy produced by the qualifying generator.

 

 

Feeding-in of electricity to grid

ix.         Subject to compliance by the owner of a qualifying generator with any relevant technical, safety or other requirements, electricity distributors must connect the qualifying generator to the grid and permit the owner to feed electricity into the grid.

 

Feed-In-Tariff Register

  x.         The Regulator must establish a Register which records:

a.     details of all qualifying generators, including the name and address of the owner of the generator, the date of registration of the generator and the type of generator (that is, the eligible renewable energy source used by the generator);

b.     In the case of renewable energy generators with an installed capacity equal to or greater than 1 MW, the total amount of electricity produced by each qualifying generator each quarter;

c.     the FiT rate to be paid to the owner of a registered qualifying generator and the period for which the FiT rate will be paid; and,

d.     if there is any change to the installed capacity of a qualifying generator, the new installed capacity of the qualifying generator.

 

Reporting

xi.         The Minister must ensure that an independent report on the operation of the FiT scheme is prepared and tabled each year. The report must include details of total renewable energy produced and total payments made under the FiT scheme, and the total receipts from the FiT levy.

 

xii.         The Minister must provide statements explaining how the FiT rates and FiT levy rates are calculated and must table those statements in both Houses of Parliament each year.