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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.