3. High Level Issues

Generating community support for increasing the uptake of renewables is not simply a matter of identifying the technologies to be used and then selecting appropriate business models to roll it all out. There are two ‘high-level’  issues that first need to be taken into consideration.  These should be raised at the community consultation sessions because they may affect the technology choices and the types of business models that people wish to use.

1.   Will the renewable energy be in addition to the Renewable Energy Target?

2.   To what extent should the renewable energy systems be owned by the community within
East Gippsland Shire?

Will the renewable energy be additional to the Commonwealth Renewable Energy Target?

The  Renewable  Energy  Target  (RET)  is made  up  of  the  Large-scale  Renewable  Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). It is expected to result in about  23.5%  of Australia’s  electricity  coming  from  renewable  sources  by 2020.  The Victorian Renewable Energy Target (VRET), which is separate to the RET, is discussed below.

The LRET is to have 33,000 GWh of renewable electricity generated in 2020, maintained until
2030. Renewable energy systems with a rated peak capacity of 100 kW upwards create a Large Generation Certificate (LGC) for every MWh of electricity they produce. In brief, if the renewable energy systems built in East Gippsland are 100 kW or greater, they can be used to meet the LRET. This would just mean that other renewable energy systems, that otherwise would have been  built  to  meet  the  target,  no  longer  need  to  be  built.  Thus,  these  systems  built  in East Gippsland  would  not  increase  the  total  amount  of  renewable  energy  generated  in  Australia (unless  the  LGCs  are  instead  extinguished  and  not  used  to  meet  the  target,  as  occurs  for GreenPower and the ACT government’s reverse auctions).

This is all complicated by the fact that the target does not increase beyond 2020. This means that, after this date, there should already be enough renewable energy generation built to meet the 33,000 GWh target. This in turn means there will be no more demand for LGCs, which means their value should approach zero. In this case, any new large-scale plant would have to be built without using LGCs (and so would need to be cheap enough to not need LGCs), in which case they would be additional to the LRET target.

The SRES applies to renewable energy systems that are less than 100 kW, and also uses certificates that each correspond to 1 MWh of renewable electricity, but are called Small-scale Technology Certificates (STCs). The SRES is different to the LRET in that the STCs aren’t used to meet  a target,  but instead,  no matter  how  many  are  created,  they  must  all be bought  by electricity  retailers  in  Australia.  This  means  that,  if  renewable  energy  systems  built  in  East 

increase the total amount of renewable energy generated in Australia.

The VRET is different to both the LRET and the SRES in that it does not involve the use of certificates. As such it is not affected by the above additionality issues. Instead it involves a range of activities, including the use of reverse auctions to drive uptake of renewable energy, that aim to create the environment in which the ‘25% by 2020’ and ‘40% by 2025’ targets can be met.

Should the renewable energy systems be owned by the East Gippsland Shire community?

This doesn’t relate to the additionality of renewable energy but instead to the resulting social and economic benefits. Currently, a large amount of money leaves East Gippsland Shire every year through electricity bills. Just paying for the electricity to be generated outside the Shire costs around $11 million per year. 13

Where  renewable  energy  systems  are  owned  by  individuals  and  organisations  within  the
Shire,  the  money  saved  because  of the  electricity  they  generate  circulates  through  the  local economy, creating local employment.14


13 We have not included the costs for transmission and distribution of the electricity because transmission makes up a fairly small proportion of the cost and local distribution costs will still need to be paid one way or another.
14 Although the renewable energy systems need to be paid for, about a quarter of the system cost goes to local installers, and most PV systems pay themselves off after 4 or 5 years, so after that, all the avoided electricity costs represents money that stays in the area.