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The renewable power percentage

10 March 2020
RET
The 2020 renewable power percentage (RPP) is 19.31%.

This means liable entities (generally electricity retailers) are required to surrender approximately 33.7 million large-scale generation certificates (LGCs) to meet their Large-scale Renewable Energy Target (LRET) obligations for 2020. See Setting the Renewable power percentage and Calculating the retailer power percentage sections below for more information.

Liable entities that do not surrender sufficient LGCs to meet their obligations are required to pay a non-tax deductible shortfall charge, with a refund available in certain circumstances.

Contents

About the renewable power percentage

The LRET aims to meet the annual target for renewable electricity set out in the Renewable Energy (Electricity) Act 2000 (the Act). The annual target increases each year until 2020 and is then constant at 33,000,000 megawatt hours (MWh) from 2021 to 2030.

The number of LGCs each liable entity is required to surrender each year is calculated by multiplying the amount of wholesale electricity (relevant acquisitions) they acquire (minus exemptions) by the RPP for that compliance year. Liable entities surrender LGCs annually to the agency to meet their Renewable Energy Target obligations.

The Quarterly Carbon Market Report provides regular information on the markets the agency administers, including LGC creation trends.

Setting the renewable power percentage

To set the RPP each year, the agency recommends a percentage to the Minister for Energy and Emissions Reduction (the Minister) using actual data or estimates for the matters the Minister must consider, as set out in the Act. These matters are:

The Minister may also take into account other matters in determining the RPP.

The RPP must be set by regulation by 31 March of the setting year, otherwise a default percentage is applied.

Renewable electricity required for the year

The Act sets out the amount of renewable electricity required for each year. The 2020 target is 33,850,000 MWh.

Estimated relevant acquisitions of electricity for the year

Relevant acquisitions of electricity are wholesale electricity purchases by a liable entity, as defined in the Act. Relevant acquisitions of electricity are estimated based on acquisitions reported by liable entities in the REC Registry two years prior to the setting year, rounded to the nearest 100,000 MWh.

Data two years prior is used because compliance and assessment activities for that year have been completed and the number is unlikely to change. This process assumes electricity demand remains relatively stable, in line with the Australian Energy Market Operator’s predictions.

The estimated relevant acquisitions of electricity for 2020 is 213,000,000 MWh.

Cumulative adjustment

The cumulative adjustment equals the sum of all annual targets from 2001 to 2019 minus the sum of all liable entity liabilities (in MWh) for the same period. It ensures liable entities are required to surrender only the number of LGCs needed to meet the legislated renewable energy targets.

Using liability and not the number of surrendered LGCs ensures; a liable entity’s obligation isn’t affected by another entity not meeting its obligation; and voluntarily surrendered LGCs don’t affect liable entities’ obligations.

For the 2020 RPP the cumulative adjustment was -112,591 MWh. This is a negative number, which means liable entity obligations are below annual targets by this amount.

Estimated exemptions

Businesses receive exemption certificates (in MWh) for electricity used in emissions-intensive trade-exposed (EITE) activities. Businesses exchange these certificates with their electricity retailer to reduce electricity costs. The electricity retailer surrenders exemption certificates to the agency to reduce their RET liability.

In 2020 the estimated exemption is 38,300,000 MWh.

Calculating the renewable power percentage

The matters the Minister must consider when setting the RPP are be expressed by the formula:

formula setting out matters the Minister must consider when setting the RPP

In 2020 RPP calculation is:

2020 Renewable Power Percentage calculation

The default renewable power percentage

If the RPP is not set by 31 March in the setting year, a default value automatically comes into force. To date the default RPP has not been applied.

Annual targets and renewable power percentages

The following link is for a data set that includes RPPs and changes to LRET targets.

documentAsset:LRET 2001-2030 Annual targets and renewable power percentages

  
  
  
2021-2030
N/A
33,000,000
2020
19.31
33,850,000
2019
18.60
31,244,000
2018
16.06
28,637,000
2017
14.22
26,031,000
2016
12.75
21,431,000
2015
11.11
18,850,000
2014
9.87
16,950,000
2013
10.65
19,088,000
2012
9.15
16,763,000
2011
5.62
10,400,000
2010
5.98
12,500,000
2009
3.64
8,100,000
2008
3.14
6,800,000
2007
2.70
5,600,000
2006
2.17
4,500,000
2005
1.64
3,400,000
2004
1.25
2,600,000
2003
0.88
1,800,000
2002
0.62
1,100,000
2001
0.24
300,000

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