Renewable Energy Certificates explained

Renewable Energy Certificates are often considered a rebate, since they provide a way for owners of small solar systems to receive a contribution to their investment. In fact, there is more to RECs than that.

Renewable Energy Certificates, or RECs, are simply a way of accounting for how much green energy is being produced under the Federal Government’s Renewable Energy Target legislation.

The legislation mandates that large electricity users and generators need to cause or create a certain amount of green generation to occur, in proportion to the volume of electricity they deal with. One REC is equivalent to 1MWh of renewable energy production, and the number of certificates required each year is set by the government through the Office of the Renewable Energy Regulator (ORER).

These large generators can evidence the amount of generation through presentation of Renewable Energy Certificates. They buy these RECs from small and large green generators on an open market.

Pricing
The value of these certificates is theoretically fixed, but in reality in fluctuates according to supply and demand factors, as a result of quotas. You can check the market price from a major broker at www.greenenergytrading.com.au.

Quantity of Credits available
The Renewable Energy Target legislation allows for the Minister to control the number of credits offered. As at July 1st, 2011, the Minister reduced the level of credits available for a complying 1.5 kilowatt (1.5kW) system to 93. Additional kilowatts of capacity earn 21 credits/kilowatt –  so a complying 2.5kW system is eligible for 114 credits.

More Information
More information on Renewable Energy Certificates, and the sub categories of Small scale Technology Certificates (STCs) and Large Scale Generator Certificates (LGCs) is available as a .pdf fileLRET-SRES-the basics.pdf, or you can visit the site of the regulator at www.orer.gov.au