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The Renewable Energy Target was introduced in 2001, through the Renewable Energy (Electricity) Act 2000(the Act), to encourage additional generation of electricity from sustainable and renewable resources and reduce greenhouse gas emissions in the electricity sector (section 3 of the Act). The Act does this by creating a market for renewable energy certificates, to drive investment in renewable energy. On the supply side of the market, participants in the Renewable Energy Target scheme (the scheme) create certificates for each megawatt hour of renewable energy generated or displaced (no longer required from the electricity grid). On the demand side, electricity retailers source these certificates to meet their share of renewable energy in proportion to the total electricity sold to their customers.

In January 2011, the Renewable Energy Target was split into the Large–Scale Renewable Energy Target (LRET) — the establishment or expansion of renewable power stations — and the Small–scale Renewable Energy Scheme (SRES) — the installation of small generation units (primarily solar photovoltaic systems) and solar water heaters/air source heat pumps. In January 2018, the Minister for Energy announced that the legislated LRET target of 33,000 gigawatt hours of additional electricity from renewable energy sources by 2020 would be achieved.

In administering the scheme, the Clean Energy Regulator (the regulator) validates scheme participants’ creation, and monitors electricity retailers’ surrendering, of renewable energy certificates. The Clean Energy Council has a co-regulatory role under the scheme to maintain a list of approved components for solar photovoltaic systems and to accredit designers and installers of solar photovoltaic systems. The regulator engages with other state and territory regulatory agencies and industry peak bodies (including the Smart Energy Council and Master Electricians Australia).

The Renewable Energy Target scheme is one of the Government’s key measures to encourage investment in renewable energy sources and reduce Australia’s greenhouse gas emissions. The scheme underpins a market for renewable energy certificates worth in excess of $1.5 billion annually rising, involving a broad spectrum of participants from large energy retailers through to large and small businesses and householders. The audit aimed to provide assurance over the robustness of the scheme’s operation and the achievement of its objectives.

The objective of the audit is to assess the effectiveness of the Clean Energy Regulator’s administration of the Renewable Energy Target scheme. To form a conclusion against the audit objective, the ANAO applied the following high level audit criteria:

  • Has the regulator established appropriate arrangements to register renewable energy systems and validate renewable energy certificates?
  • Is the regulator effectively monitoring the surrender of renewable energy certificates by liable entities?
  • Is the regulator effectively monitoring scheme compliance and responding to non-compliance?
  • Has the regulator established appropriate governance arrangements to manage the risks, operation and performance of the Renewable Energy Target scheme?
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Auditor-General Report No. 18 2018–19