Large-Scale Generation Certificates
Large-Scale Generation Certificates (LGCs) were formerly known as RECs. The RECs (Renewable Energy Certificate) Scheme was introduced to financially assist large scale renewable energy generators following the Kyoto Protocol in 1997. This came as a result of the Australian Government signing on to various international treaties to increase the use of renewable energy worldwide. In Australia, a target of 20% renewable by 2020 has been set.
In the past consumers have paid for RECs as a percentage of their consumption – between 2% and 5%. This revenue was passed on to large scale renewable generators. Certificates are traded like shares allowing customers on contracts to negotiate the cost of these certificates in the same way they negotiate contract energy prices.
Small-Scale Generation Certificates
On 1 January 2011 the Australian Government introduced a small RECs scheme that trades in Small-Scale Generation Certificates (SGCs) for household or small business renewable energy systems (e.g. roof-top solar panels). SGCs are priced at a guaranteed $40 each (plus GST). Currently owners are paid 5 times the certificate value to help cover the capital cost of installing these systems. This allowance is worth several thousand dollars (starting at around $5000) and replaces the previous allowance of up to $8000 that was discontinued in June 2009. To pay for the SGCs, energy consumers will pay an extra $40 (plus GST) per megawatt hour (MWh) for 14.8% of their consumption during 2011. This is the equivalent of paying $6.51 per MWh or 0.06512 cents per kWh on the total consumption shown on their bill.
Both SGCs and LGCs are shown as separate items on the bills for customers with energy contracts. For non-contract customers they are included in the rates and not shown separately on the bill.