On 28 August 2014, the Expert Panel chaired by Dick Warburton (“Panel”) released its report on the Renewable Energy Target (“RET”) Review,  (“report”). The Panel concluded in its report that the RET should not continue in its current form because the costs outweigh the benefits of emissions reduction.

The Panel made separate recommendations for the Large-scale RET (“LRET”) and the Small-scale Renewable Energy Scheme (“SRES”) in its report.

On 22 October 2014, Federal Industry Minister Ian Macfarlane outlined the government's position on the Renewable Energy Target in response to the Panel’s report and ahead of negotiations with the Labor Party.

Large-scale Renewable Energy Target

The Panel recommended two alternative options to the Government for the LRET:  

Option 1: closing the LRET to new entrants, while continuing to operate the LRET until 2030 for existing and committed renewable generators (i.e. renewable power stations under construction or not yet constructed but with full financial and contractual commitment to the project within one month of the announcement of this approach).

Option 2: replacing a fixed target of 41,000GWh in 2020 with a ‘floating’ annual target, where the target would be updated one year in advance by an amount equivalent to 50% of projected growth in national electricity demand to ensure the scheme delivers a real 20% share of renewable generation in 2020. Where the national electricity demand is projected to remain flat or to fall, the target would stay the same as the previous year. The target would then be fixed from 2021 onwards at the 2020 level until the final year of the RET (2030).

The Government has stated that the LRET should represent “a real 20 per cent”.  The Government has not released any further information on how this will be achieved, but we may find it is in line with Option 2 of the report.

Small-scale Renewable Energy Scheme

The report also recommended two options to the Government for the SRES:

Option 1: closing the scheme immediately upon announcement and those who contracted before the announcement for the installation of a small-scale system receive the certificates they would have received.

Option 2: accelerating the phase out of the SRES by:

  • bringing forward the last year of operation of the SRES from 2030 to 2020;
  • reducing the period for which certificates may be created for rooftop solar PV systems from 15 years to 10 years, and in each year from 2016 onwards, further reducing the period for which certificates may be created;
  • reducing system size eligibility threshold for rooftop solar PV systems from no more than 100 kilowatts to no more than 10 kilowatts; and
  • reducing the period for which certificates may be created for solar and heat pump water heaters by one year each year, commencing in 2016.

The Government has indicated that it will depart from the Panel’s recommendations by not changing “support for household solar systems”.