Following speculation by both industry and politicians as to the impact of the enhanced Renewable Energy Target (RET), McLennan Magasanik Associates were engaged by the Federal Government to conduct economic and electricity market modelling of these changes.

The report found that total renewable energy generation, including the contribution from small-scale generators and from electricity displacement technologies, is expected to grow from approximately 27,000 gigawatt hours(GWh) in 2010 to around 66,000 GWh in 2020.

Introduced into Parliament in May, the legislation to reform the RET was first announced on 26 February 2010. A discussion paper was released on 29 March 2010, and on 13 May 2010 the Senate jointly referred the proposed legislation for inquiry and report. The final vote in the Senate was yet to take place when this article went to print.

The Large-scale Renewable Energy Target (LRET), covering large-scale renewable energy projects such as wind farms, commercial solar and geothermal, is designed to deliver the vast majority of the 2020 target that outlines that 20 per cent of energy must be generated from renewable sources by 2020. The Small-scale Renewable Energy Scheme (SRES) will cover household-scale technologies such as solar panels and solar hot water systems, delivering the remainder of the target.

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In 2020, the LRET is expected to contribute 39,000 GWh and the SRES is expected to contribute approximately 11,000 GWh. The level of renewable energy generation as a proportion of total electricity generation is expected to be around 22 per cent in 2020. The remaining 16,000 GWh is from generation in existence before the Mandatory RET scheme commenced operation in 2001.

McLennan Magasanik Associates found that both large and small-scale generation will benefit from higher certificate prices and higher effective targets over the life of the scheme.

“Large-scale renewable energy generation is set to expand markedly as a result of the enhanced RET. Generation from eligible renewable energy generation sources increases three-fold under the LRET scheme,” says the report.

Small-scale generation is projected to decrease in the early years under the proposed SRES compared with the current scheme design. Certificate prices received for these technologies are expected to be lower than the modelled contract price under the SRES proposal until 2017. The report then predicts that from this year on, uptake of small-scale technologies will be lower, and by 2030, uptake will be approximately the same for large and small-scale technologies.