The Department of Climate Change has released a discussion paper for public consultation on the issue, in addition to a paper considering the treatment of new waste coal mine gas power generation in the RET.

These two discussion papers follow three other papers released in October 2009 concerning the eligibility of new small-scale technologies and heat pumps; self generation provisions under the expanded national RET scheme; and support for small-scale off-grid renewable generation. All papers are part of the initial COAG review of the RET, which began late last year following the sharp fall in REC prices.

Under the national RET scheme, which was passed by Parliament in August 2009, owners of small-scale solar photovoltaic systems, small wind turbines and micro-hydro systems are able to create RECs equivalent to the output of up to 15 years operation at the time of installation, depending on the system type.

To support to households, businesses and community groups that install these systems, the number of RECs created will be multiplied by a rate which will decrease between now and 2015. The RECs will be mutliplied by a rate of 5 between 9 June 2009 and 30 June 2012, then a rate of 4 until 30 June 2013. In 2015 multiple RECs will be phased out in line with the falling costs of renewable technology.

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By providing multiple RECs for each MW hour, Solar Credits create RECs that are not backed by actual generation, also known as ‘phantom credits’. Although the Department of Climate Change expects the 20 per cent by 2020 RET target to be achieved despite the creation of multiple RECs under Solar Credits, it says there has been concern from some stakeholders that RECs created by the multiplier will lead to less actual renewable generation than would otherwise occur.

On the other hand, the Department of Climate Change says that expanding annual targets under the RET could also increase the cost of the RET for energy suppliers as they would be forced to acquire more RECs. This in turn would likely increase energy prices for consumers.

Submissions on the topic are due by close of business 28 January 2010.

The discussion paper, submission guidelines, templates and further details can be viewed here.