Draft Roadmap Report - Chapter 4

4.    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 a number of ‘high-level’ issues that first need to be taken into consideration and discussed. 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 additional to the Federal Renewable Energy Target?
  2. Will the Renewable Energy Target reduce the amount of renewable generation required to reach 100%?
  3. Do the renewable energy systems need to be built within Noosa Shire?
  4. Should the renewable energy systems be owned by the community within Noosa Shire?

1. 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 Queensland 50% Renewable Energy Target is separate to the RET, and 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 Noosa Shire 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 Noosa 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, that 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 Noosa Shire are less than 100 kW, they will be additional to any legislated target and so will increase the total amount of renewable energy generated in Australia.

The Qld 50% target 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 target can be met.

2. Will the RET reduce the amount of renewable generation required to reach 100%?

Although the RET will mean that by 2020, about 23.5% of the electricity used Australia-wide would be from renewables, this doesn’t mean that only another 76.5% of renewable electricity needs to produced to reach the 100% target. Say if 100 units of electricity are used, and say 20 units (20%) come from renewables (because of the LRET) and 80 units (80%) from fossil fuel sources. If another 80 units are generated from renewable sources, of the remaining 20 units, only 20% of that will be from the LRET, with the remainder being from fossil fuels. This means there is some level of diminishing returns, with the first 20% being very easy (need to do nothing). If another 10 units of renewable electricity (not under the LRET)(24)  are generated this would increase the total to 28%(25).  Then say another 50 units would increase the total to 60%, and 90 units would increase the total to only 92%. So, to reach 100 units of renewable electricity there is a need to generate 100%, not just 80%. This is shown graphically in Figure 8.
 

 Figure           SEQ Figure \* ARABIC      8       Total vs Local renewable Energy

Figure 8 Total vs Local renewable Energy

3. Which is most important: Electricity generated or electricity purchased?

The modelling in Chapter 2 estimated the amount of renewable electricity from different sources that would be required to achieve say 100% RE.  But are we talking about electricity generated from PV systems owned by the people of Noosa or are we talking about the electricity used?  Which is it that is most meaningful when claiming 100% RE?

It basically comes down to whether the renewable electricity is additional i.e. If you hadn’t done it, no one else have done it. It’s safe to assume that a residential or business behind-the-meter PV system that is less than 100kW will be additional. If that household or business hadn’t had it installed, then no one else would have, and as discussed above, it will be additional to the RET. In this case, the system is owned by someone in Noosa and the electricity will be used within Noosa.

PV systems greater than 100kW are more complex. As discussed above, if they use LGCs, they won’t be additional. This is the case even if it is built on a large privately-owned roof space - because even though no one else would have had it built there, the same amount of capacity would have been built somewhere else to meet the target.

So lets assume that a large system (greater than 100kW) is built without the use of LGCs (for example it could be built some time after 2020). In this case, if the system is built on a company’s roof, it is most likely additional. If it is a ground-mount system, it could be said to be additional and to contribute to Noosa’s 100% RE target if it came about solely because of the actions of people from Noosa. Note that it isn’t necessary for the system to be owned, or the electricity to be purchased, by people from Noosa. It would still reduce the amount of fossil-fuel electricity being generated and used.

 

(24)  Note that if the 10 units of renewable electricity is produced under the LRET then it is arguable that if Noosa Shire claims that as ‘it’s own’, then the amount of renewable electricity in the broader market is slightly less than 20% and so the amount of fossil fuel electricity is greater than 80%.
 (25) This is because 20% of the remaining 90 units is renewable, which is 18 units, plus the 10 units, makes 28 units, or 28%.
(26)  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.
(27) 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.

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