June 23 (Reuters) - Australia’s Senate passed an amended set of laws on Wednesday for a scheme that aims boost green energy generation and to give investors in large renewable energy projects more certainty on investment returns.
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The renewable energy target (RET) scheme rewards investors with renewable energy certificates, or RECs, that can be sold to a ready market of buyers, such as coal-fired power generators, to offset the cost of the investment in wind farms, solar power, geothermal and other green energy.
Each certificate represents one megawatt-hour of electricity generated from renewable energy and the scheme sets a national target of 20 percent renewable energy generation by 2020.
But the scheme had run into trouble because of a flood of RECs, largely from small household solar installations, driving down the market price. This has deterred investment in large renewable energy projects.
To overcome this, the government announced changes to the RET scheme to give investors more certainty on future pricing of RECs. Industry and government say the amended laws could unlock about A$20 billion in new investments.
The government has set a target of renewable energy generation of 45,000 gigawatt-hours by 2020 for the RET scheme, which runs until 2030.
Previously, the flow of RECs was from household and large-scale renewable investments, a step that has driven down the price of the certificates.
From Jan 1, 2011, the RET programme will split into two: the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET).
Combined, these are expected to deliver more renewable energy than the existing 45,000 GW-hr target by 2020, the government says.
The bulk of this, 41,000 GW-hr, will come from large-scale projects. The government has set a series of annual targets of 10,400 GW-hr for 2011, 18,000 GW-hr by 2015 and 41,000 GW-hr by 2020. This target remains until the scheme ends in 2030.
The government says the degree to which the 20 percent target is exceeded will depend on the uptake of small-scale technologies by households, small business and community groups.
The LRET portion of the target will be increased to ensure the 20 percent by 2020 target is still met if the uptake of small-scale technologies is lower than anticipated.
The government and Greens amended the laws in the Senate. Under the Greens amendments, the government will review the scheme every two years to take account of new technology.
The government amended its laws to allow the renewable energy target to be temporarily raised in 2012 and 2013, if needed, to absorb a possible boom in RECs generated from household solar panels. That will help support the value of RECs for large power generators.
The small-scale scheme offers A$40 for each REC created by small-scale technologies such as solar panels and solar water heaters, effectively providing a floor price for RECs.
The number of systems receiving support under the SRES will be uncapped to ensure small-scale installers have certainty. The government plans to review the SRES as part of a mandated 2014 review of the renewable energy target to ensure the fixed price for RECs remains relevant. ($1=A$1.15) (Source: the Australian Department of Climate Change: here ble-target.aspx) (Editing by Clarence Fernandez)