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RENEWABLE ENERGY (ELECTRICITY) AMENDMENT REGULATION 2012 (NO. 3) (SLI NO 15 OF 2012)
Select Legislative Instrument 2012 No. 15
Issued by the Authority of the Minister for Climate Change and Energy Efficiency
Renewable Energy (Electricity) Act 2000
Renewable Energy (Electricity) Amendment Regulation 2012 (No. 3)
Section 161 of the Renewable Energy (Electricity) Act 2000 (the Act) provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act establishes the Renewable Energy Target (RET) scheme to encourage electricity generation from eligible energy sources. The RET is designed to ensure that the equivalent of 20 per cent of Australia's electricity supply is generated from renewable sources by 2020. From 1 January 2011, the RET has operated as two parts -- the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES).
Under the Act, wholesale electricity purchasers ('liable entities') are required to contribute to the RET in proportion to their share of the national wholesale electricity market. The Act provides for the creation of renewable energy certificates by renewable energy sources, such as from wind, solar, hydro, various forms of biomass and geothermal energy.
The Act also provides for waste coal mine gas (WCMG) (a by-product of underground coal mining operations) to be eligible under the LRET in prescribed circumstances that include a limited eligibility period commencing on a prescribed date (1 July 2012) and ending on 31 December 2020. This reflects the Government's policy to provide transitional assistance for existing waste coal mine gas fuelled power stations that would be affected by the cessation of the NSW Greenhouse Gas Reduction Scheme on commencement of a carbon price. One certificate generally represents one megawatt-hour (MWh) of electricity from eligible energy sources.
The Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) provide an administrative framework to implement the Act in relation to power station accreditation, eligibility requirements for renewable energy sources, eligibility requirements for small-scale renewable energy systems, and calculation methods for determining the number of certificates.
The Regulation amends the Principal Regulations to support the provisions of the Act that deal with the circumstances under which electricity generation by existing power stations using WCMG are eligible for Large-scale Generation Certificates (LGCs) under the RET scheme.
The Act provides that the Act and Principal Regulations are to be reviewed by the Climate Change Authority in 2012.
Details of the Regulation are included in Attachment 1.
The Act specifies no conditions that need to be satisfied before the power to make the Regulation may be exercised.
The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulation commences on the day after it is registered.
In developing these Regulations, the Department of Climate Change and Energy Efficiency conducted targeted consultation around draft regulations with relevant waste coal mine gas power station owners/operators and relevant state and territory governments during the period November 2011 to January 2012. Submissions were received in writing and discussions undertaken to clarify the issues raised. The consultation draft regulation was revised as appropriate to finalise the regulation.
Statement of Compatibility with Human Rights
A statement of compatibility with human rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out in Attachment 2.
Authority: Section 161 of the Renewable Energy (Electricity) Act 2000
Details of the Renewable Energy (Electricity) Amendment Regulation 2012 (No. 3)
Regulation 1 - Name of Regulation
This regulation provides that the title of the Regulation is the Renewable Energy (Electricity) Amendment Regulation 2012 (No. 3) (the Regulation).
Regulation 2 - Commencement
This regulation provides for the Regulation to commence the day after it is registered.
Regulation 3 - Amendment of Renewable Energy (Electricity) Regulations 2001
The effect of this regulation is that the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) are amended by Schedule 1 to the Regulation.
Schedule 1 - Amendments
Item 1 - before regulation 4
Subsection 13 (1) of the Act enables a registered person to apply to the Regulator for accreditation, as an accredited power station, of the components of an electricity generation system in specified circumstances. Subsection 13 (2A) of the Act provides that an application that lists eligible WCMG as an eligible source from which power is intended to be generated cannot be made after the day prescribed by regulations for the purposes of that subsection.
New regulation 3S prescribes 1 April 2012 as the day after which an application that lists WCMG as an eligible energy source cannot be made. The purpose of prescribing this date is to enable the Renewable Energy Regulator (the Regulator) to complete the accreditation process and determine the 2008 WCMG limits prior to 1 July 2012.
Item 2 - after regulation 5
Subsection 14 (1) of the Act requires the Regulator to determine whether a power station that is the subject of an application made under section 13 of the Act is eligible for accreditation. If the Regulator determines that a power station is eligible for accreditation, the Regulator must also determine the 2008 WCMG limit for the power station if some or all of the power generated by the power station is generated from eligible WCMG. Subsection 14 (4) of the Act provides that the Regulator must determine the 2008 WCMG limit for the power station in accordance with guidelines prescribed in the regulations.
New regulation 5A provides that for the purposes of subsection 14 (4) of the Act the guidelines for determining the 2008 WCMG limit for eligible power stations are set out in Schedule 3A to the Principal Regulations.
Item 3 - after division 2.6
This item inserts new Division 2.7 in the Principal Regulations. The division provides for varying the 2008 WCMG limit for an accredited power station.
The new division includes new regulations 20FA, 20FB, 20FC and 20FD.
New Regulation 20FA - Guidelines for varying 2008 WCMG limit
Subsection 30G (1) of the Act enables the Regulator, by written determination, to vary the 2008 WCMG limit (the annual cap on eligible generation using WCMG) for an accredited power station. Subsection 30G (2) provides that the Regulator must make such a determination in accordance with guidelines prescribed in the regulations.
New regulation 20FA specifies that new Division 2.7 prescribes guidelines for the purposes of subsection 30G (2) of the Act for varying the 2008 WCMG limit (the annual cap on eligible generation using WCMG) for an accredited power station.
New Regulation 20FB - Circumstances for varying 2008 WCMG limit for an accredited power station
New regulation 20FB sets out the circumstances for varying the 2008 WCMG limit for an accredited power station. These circumstances reflect the Government's policy intent that the Regulator would not be compelled to reopen matters that were previously considered by the Regulator when the original determination was made.
Subregulation 20FB (1) provides that a nominated person for a power station may apply to the Regulator, in the manner set out in subregulation 20FB (3), to:
Paragraph 20FB (1) (c) enables the Regulator to vary the 2008 WCMG limit after considering the application.
Subregulation 20FB (2) provides that the Regulator may vary the 2008 WCMG limit for a power station on his or her own initiative if he or she becomes aware that the information used to determine the limit was inaccurate, misleading or incomplete, or becomes aware of an error (for example a miscalculation) in determining the limit. Prior to making such a determination, the Regulator would be required to provide written notice to the nominated person for the power station in question, stating that he or she is considering a variation to the 2008 WCMG limit, setting out the reasons for the potential variation and inviting the nominated person to provide any information that may assist the Regulator in his or her consideration. The written notice would have to specify a date by which the information is to be provided, and could also specify the form in which this information is to be presented.
Subregulation 20FB (3) stipulates that applications to vary the 2008 WCMG limit must be in writing, in a form approved by the Regulator, state the basis and rationale for the request, and meet all requirements set out in the form approved by the Regulator.
New Regulation 20FC - redistribution of 2008 WCMG limits between accredited waste coal mine gas power stations
New regulation 20FC allows the nominated person for two or more accredited power stations to apply to the Regulator to redistribute the total of the 2008 limits between the power stations under certain circumstances. This provision enables the Regulator to take into account the practical operational needs of power station operators to move generation capacity between their WCMG assets from time to time.
Subregulation 20FC (1) enables the Regulator to redistribute the 2008 WCMG limit for a particular year between accredited power stations, provided that the nominated person for each power station makes an application and has generated at least one Large-scale Generation Certificate, and the Regulator considers the 2008 WCMG limits should be redistributed.
Subregulation 20FC (2) clarifies that the redistribution could not increase the combined total of the 2008 WCMG limits of the affected power stations.
Subregulation 20FC (3) prescribes that an application for such redistribution must be in writing, in a form approved by the Regulator, to be received by the Regulator no later than the 30 September in the year preceeding the proposed redistribution. It must clearly identify the related power stations and proposed changes as well as any other documentation required by the approved form.
Subregulation 20FC (4) clarifies that the Regulator could not redistribute the 2008 WCMG limit unless all nominated persons for the relevant power stations have submitted applications with the identical information relating to the redistribution.
New Regulation 20FD - Notification of determination under regulation 20G
This regulation stipulates that, as soon as practicable after a determination is made to vary a power station's 2008 WCMG limit at the Regulator's own initiative, or to vary or not to vary this limit at the nominated person's request, the Regulator must notify the nominated person of the decision. The notification must include a copy of the determination and a statement of reasons for the determination.
A note to this regulation explains that a determination varying the 2008 WCMG limit is reviewable under section 66 of the Act.
Item 4 - after clause 10, Schedule 1
The effect of paragraph 14 (1) (a) of the Act is that if the Regulator receives an application for accreditation as an accredited power station, the Regulator must determine which components of the system are to be taken to be a power station for the purposes of the Act. Subsection 14 (4) of the Act provides that the Regulator must determine this matter in accordance with guidelines prescribed in the regulations. These guidelines are set out in Schedule 1 to the Principal Regulations.
This item inserts new clause 11 in Schedule 1 to the Principal Regulations.
This clause specifies the components of a WCMG-based electricity generation system that may be taken to be part of a power station for the purposes of the Act. Consistent with clause 1 of Schedule 1 to the Principal Regulations, this list would include but not be limited to system infrastructure, fuel processing, delivery and handling components (for example, gas treatment, extraction and pumping equipment, control system and electrical switchyard/transformer) as well as equipment that operates to transform eligible WCMG into electricity (for example, combustion turbine / engine and generator).
Item 5 - Schedule 3, before clause 1
This item inserts a note in clause 1 in Schedule 3 to the Principal Regulations. The note provides a reference to clause 7 which provides that electricity generated using WCMG is taken to have been generated using an eligible energy source, even though WCMG was not an eligible energy source at the time the electricity was generated.
Item 6 - Schedule 3, after clause 6
This item inserts new clause 7 in Schedule 3 to the Principal Regulations.
New clause 7 provides that for the purposes of Schedule 3 (including the accredited power stations eligible electricity generation calculations in accordance with Subdivision 2.3.1) electricity generated using waste coal mine gas is taken to have been generated using an eligible energy source, even though WCMG was not an eligible energy source at the time the electricity was generated.
Under the RET, accredited power stations that operated prior to 1997 must receive an annual baseline (the 1997 baseline) which can be zero. As such, waste coal mine gas power stations operating prior to 1997 must have a 1997 baseline determined when applying for accreditation. Large-scale Generation Certificates (LGCs) may only be created for annual generation above this baseline.
This regulation, which removes a potential ambiguity in the treatment of pre-2008 WCMG gas generation, reflects the Government's policy intention that a waste coal mine gas power station in operation prior to 1997 is not to be given a zero baseline.
Item 7 - after Schedule 3
In accordance with new regulation 5A, this item inserts a new Schedule 3A to the Principal Regulations. It would provide guidelines for determining the annual cap on eligible generation (2008 WCMG limit) for a power station which utilises WCMG to generate electricity.
Schedule 3A - Guidelines for determining 2008 WCMG limit
Clause 1 - Definitions of WCMG power station
This clause defines the term 'WCMG power station' for the purposes of this Schedule. The definition is consistent with the definition of 'eligible WCMG' provided in paragraph 17A (1) (b) of the Act. Specifically, the power station must have been in operation using WCMG as a fuel during May 2009, or have been in operation using WCMG prior to May 2009 and had a plan to resume generation before the end of September 2009.
Clause 2 - Overall 2008 WCMG limit
This clause prescribes the limit, for each year from 2012 to 2020 inclusive, on the total amount of WCMG-based electricity, generated across all accredited power stations using WCMG, for which LGCs may be created. The limit of 425 Gigawatt-hours (GWh) in 2012 is based on a 1 July 2012 commencement date for eligibility, and 850 GWh from 2013 - 2020 inclusive. The limit for 2012 reflects that only WCMG-based electricity generated in the second half of the year is eligible to earn LGCs.
These limits are consistent with the increases in annual targets provided for in subsections 40 (2) to 40 (5) of the Act to ensure no renewable energy is displaced by WCMG under the RET scheme.
Clause 3 - 2008 WCMG limit - general
Subclause 3.1 provides that subject to the special circumstances set out in clause 4 and the moderating calculation set out in clause 5, the upper limit on the amount of WCMG-based electricity generated by an individual WCMG power station for a year for which LGCs may be created (the 2008 WCMG limit) is the amount of electricity generated in 2008 (worked out in accordance with Subdivision 2.3.1 of the Principal Regulations) less the amount of the 1997 eligible renewable power baseline (if any) for the power station as determined in accordance with guidelines in Schedule 3 to the Principal Regulations.
Subclause 3.2 states that for the year 2012, the 2008 WCMG limit for a power station is half the limit established by subclause 3.1, and that the 1997 eligible renewable power baseline is taken to be half the baseline determined for the power station.
Subclause 3.3 stipulates that if the amount of electricity generated using WCMG is not measured in the manner provided by the Principal Regulations, then the amount is to be estimated from the measurements that were made and worked out in accordance with Subdivision 2.3.1 of the Regulations. Regulations 14 to 16 of Subdivision 2.3.1 set out the method for calculating the amount of electricity generated by an accredited power station in a year.
Subclause 3.4 stipulates that for the purposes of working through the calculation required to determine electricity generated from a waste coal mine power station in 2008, WCMG is to be considered as an eligible energy source at the time.
Clause 4 - 2008 WCMG limit - special circumstances
This clause sets out the circumstances under which the Regulator may determine that the 2008 WCMG limit for a power station should be greater than that outlined in clause 3, and the methods the Regulator may use in determining the 2008 WCMG limit in these circumstances.
Subclause 4.1 provides that the Regulator may determine that the 2008 WCMG limit for a power station should be greater than that outlined in clause 3 if the nominated person for the power station (the applicant for accreditation of the power station) presents evidence to the Regulator's satisfaction that:
* during 2008, the power station did not generate electricity continuously due to an unplanned outage affecting the power station, for example an equipment breakdown that necessitated temporary cessation of operation;
* the power station first came into commercial operation after the beginning of 2008 (and before the end of 2008);
* during 2008, the power station experienced an unplanned constraint on its capacity to generate electricity, for example due to an isolated instance of a temporary and unscheduled reduction in the available flow or quality of the waste gas resource or temporary and unscheduled reduction in performance or capacity of the electricity generation equipment. It is not intended that reduction in capacity by relocating a power generation unit (gas engine or turbine) to another power station is to be regarded for the purposes of this clause as an unplanned and unusual constraint on its capacity to generate electricity;
* during 2008, the power station increased its generating capacity by adding power capacity (for example via additional gas engines), increasing the flow of waste gas to the plant to take advantage of excess installed power capacity or increased efficiency of generating equipment in order to produce more electricity from the existing waste resource; or
* an expansion to the WCMG power station was underway in 2008. It is intended that evidence that substantive work was undertaken in 2008 would include, evidence of delivery of substantial plant and equipment and evidence of completion of a substantial portion of the modification to the physical power station in 2008.
Subclause 4.2 provides that if the Regulator is satisfied that the power station did not generate electricity continuously or had its generating capacity affected for reasons set out in subclause 4.1, the Regulator may determine the 2008 WCMG limit for the power station by extrapolating the amount of electricity generated. This extrapolation would establish the amount that would have been generated if the power station had operated for the whole of 2008 and without the constraint(s) on the power station's generating capacity as evidenced to the Regulator. However, where a power generation unit (generally a gas engine or turbine) is relocated away from the power station, the generation from this capacity would not be extrapolated as the generation from this unit after relocation would be included as part of the 2008 WCMG limit of the power station to which it was moved during 2008.
Subclause 4.3 provides that if the Regulator is satisfied that the power station increased its generating capacity in accordance with subclause 4.1, he or she may determine the 2008 WCMG limit for the power station, in consultation with the nominated person for the power station, by modelling the power station's output to establish the amount of electricity that would have been generated if the power station had operated at the expanded capacity for the whole of 2008. The modelling would be expected to take into account, among other things, generation, conversion efficiency and waste gas availability during the part of the year before the enhanced capacity was brought into operation. It is the policy intent that in modelling the 2008 generation, the Regulator may have regard for factors such as the power station's maximum rated capacity, WCMG gas forecasts for 2008, and any submissions made to the Regulator by the nominated person regarding the 2008 WCMG limit for the eligible power station.
Subclause 4.4 clarifies that the 1997 eligible renewable power baseline must be subtracted from the amount determined under subparagraph 4.2 or 4.3. It is intended that only an amount of annual generation above the 1997 baseline and up to the power station's 2008 WCMG limit would be eligible to create LGCs under the Act.
Subclause 4.5 states that for 2012, the 2008 WCMG limit is half that determined under subclause 4.2 or 4.3, and that the 1997 eligible renewable power baseline is taken to be half that determined for the power station.
Clause 5 - Moderating the 2008 WCMG limit
As described above, it is the policy intent that, to ensure generation from non-renewable WCMG does not displace any renewable generation, the total of all individual power station WCMG 2008 limits is not to exceed 425 GWh for 2012 or 850 GWh for any of the years 2013 through 2020.
This clause describes the circumstances where moderation of the individual 2008 WCMG limits is required and the method for calculating the amounts of these moderated limits.
Subclause 5.1 provides for a formula to work out the 2008 WCMG limit for a power station if the total of limits for all WCMG power stations calculated under clauses 3 and 4 exceeds the amount of electricity specified in subclause 2.1. In this case, the following formula is to be used, expressed in GWh:
2008 WCMG limit = (year total / 2008 WCMG total) × station total
For the purposes of this equation, 'year total' is the amount of electricity specified in the table in subclause 2.1, 'station total' is the limit for a power station worked out in accordance with clause 3 or 4 and '2008 WCMG total' is the sum of all 'station total' amounts.
It is assumed four power stations have applied for accreditation as WCMG power stations under the Act and the Regulator has determined under clauses 3 and 4 the following 'station totals' for each of the four WCMG power stations:
Station A - 215 GWh
Station B - 300 GWh
Station C - 250 GWh
Station D - 170 GWh
The 2008 WCMG total = 935 GWh, which exceeds the 850 GWh upper limit.
The limits would therefore be revised down using the following calculation:
Station A - (850/935) × 215 = 195 GWh
Station B - (850/935) × 300 = 273 GWh
Station C - (850/935) × 250 = 227 GWh
Station D - (850/935) × 170 = 155 GWh
Total: 850 GWh
Subclause 5.2 specifies that all moderated results would be rounded down to define the 2008 WCMG limit in whole units for each power station to ensure that the total annual WCMG limit of 850GWh is not exceeded.
Subclause 5.3 stipulates that the 2008 WCMG limit for a power station for a year is not to be increased if the total for all power stations is less than the amount specified in subclause 2.1.
Item 8 - Further amendments - renewable energy
This item replaces the term 'renewable energy' with 'energy' in the Principal Regulations where necessary to ensure consistency with the amendments made to the Act by the Renewable Energy (Electricity) Amendment Act 2010 which related to the inclusion of waste coal mine gas as an eligible energy source.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Renewable Energy (Electricity) Amendment Regulation 2012 (No. 3)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Renewable Energy (Electricity) Amendment Regulation 2012 (No. 3) support the provisions of the Renewable Energy (Electricity) Act 2000 that deal with the circumstances under which electricity generated by existing power stations using waste coal mine gas is eligible for Large-scale Generation Certificates under the Renewable Energy (Electricity) Act 2000.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.