The Federal Government is now offering up to five renewable energy certificates (RECs) for every megawatt (MW) of power produced by small scale (up to 1.5 MW) solar, wind and hydroelectricity systems. Legislation to extend Australia’s renewable energy target (RET) from 9,500 gigawatt hours (GWh) to 45,000 GWh in the year 2020 (4.7 times the original target) is expected to come into effect next year.

People installing renewable energy systems will now be entitled to create five RECs per MWh of renewable energy expected to be produced by their system. That will be phased down to four RECs for systems purchased between 1 July 2012 and 30 June 2013, three RECs for the 2013–14 financial year, and two RECs for the 2014–15 financial year. From 1 July 2015 onwards, there will be no multiplier – therefore owners will be entitled to just one REC per MWh as is currently the case.

The solar credits multiplier as it is being called – misleadingly, as it applies to wind and hydro generation units as well as photovoltaic (PV) units – replaces the rebates that were available under the Solar Homes and Communities Plan (SHCP). Applications that were completed and sent before 10 June 2009 will be processed under the SHCP; all other installations will fall under the Solar Credits Scheme (SCS).

The SHCP rebate could total a maximum of $8,000. In contrast, the amounts that purchasers can expect to receive under the SCS will vary according to the market value of the RECs. At today’s market (June 2009) value of $47 per REC, this means that a purchaser entitled to the maximum SHCP rebate would receive around $4,000 less under the SCS.

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Fiona O’Hehir, CEO of Greenbank, Australia’s largest independent trader of RECs and other environmental instruments, sees the multiplier as a positive step toward increasing the amount of PV installations in Australia.

She believes that the broader scope of the SCS will see a greater uptake of clean energy systems in areas that are connected to the grid.

“Previously, only households earning less than $100,000 were entitled to the rebate,” she says. “In reality, the high cost of PV systems means that it is higher income earners and businesses that are likely to be thinking about solar power, and most probably for environmental, rather than economic, reasons.

“Also, the SCS applies to wind and hydro systems as well as PV systems, so that will give people extra flexibility when considering what system will suit their needs.”

And while some commentators believe that the ‘phantom’ credits will have a deflationary effect on the value of RECs as a mechanism to increase renewable energy generation, Ms O’Hehir disagrees.

“The government has removed that risk by increasing the RET to 20 per cent. In fact, the expectation is that overall we’re going to see a jump from 1 per cent of RECs attributable to PV installations to 4 per cent by 2020.”

Ms O’Hehir hopes that the introduction of the multiplier will raise awareness of RECs and the role that everyday consumers can play in meeting Australia’s renewable energy targets. “People can get their head around rebates, but very few people currently understand RECs,” she says.

“There are millions of dollars of unclaimed RECs out there because people don’t understand the legislative framework or the registration process. Hopefully, this will help more people realise the financial benefits of using renewable energy in their own homes and businesses.

“It also sends out a signal to the solar industry that if there’s a huge market out there. If they can streamline their processes and get a more economic product out there, the opportunities are huge.”