Solar Credits & RECs
What you need to know
Solar Credits are an incentive that reduces the cost of installing a Grid Connect Solar Power system.
Solar credits are part of a new Federal Govt Solar incentive scheme, and are based on the value of Renewable Energy Certificates (RECs). RECs are calculated from the amount of renewable energy your system will produce over 15 years, and are paid to you post installation. The Solar credits scheme is also known as The RECs Multiplier, ie you now receive 5x the RECs for your Solar System up to the size of 1.5kw.
As an example, a 1.5kW system will currently receive $6000 worth of RECs.
A 1.5kW system currently costs between $6000 and $9000 (fully installed) after RECs.
| System size | Example system price | Solar Credit Value | Total Cost |
|---|---|---|---|
| 1.5kw | $11000 | $6000 | $5000 |
Ausenergy includes the calculation of Solar Credits when quoting for your Solar System.
To arrange a quote, please call 1300 785 009
or simply enter your details through our web form.
Detailed Government Policy info
For explanation of how Solar Credits will affect the price of your system call 1300 785 009
If you'd like more detail on the Solar Credits scheme go to Environment.Gov site- Solar Credits Scheme Commences (Offsite link)
RECs in detail
Renewable energy certificates (RECs) are created by renewable energy generators, and are part of the Australian Government’s Mandatory Renewable Energy Target. The Mandatory Renewable Energy Target aims to increase the production of renewable energy in Australia.
Under the Mandatory Renewable Energy Target electricity retailers and major electricity users are required to purchase a specified percentage of their electricity from renewable energy generators, and surrender RECs to prove that they have done so (or pay financial penalty). The current target is for 20% of electricity to come from renewable sources by 2020.
The mandatory target is the main reason there has been any growth in renewable energy in Australia over the last ten years, as REC sales bridge the gap between electricity from coal and electricity from renewable energy.
Customers are eligible for 21 RECs for every 1kW of solar power installed. In the case of solar power, the amount of electricity likely to be produced during the panel’s lifetime is calculated up front, and RECs are allocated based on that amount.
In reality RECs are a financial payout of the environmental benefit (the solar energy generated) of your solar power system for the first 15 years of its life. The financial and environmental consequences for each of the options you have with your RECs are detailed below to best inform your decision of how to handle them. To balance environmental and financial needs the New England Sustainability Strategy recommends the "RECs Middle Path". This is detailed below.
Customer Options with RECs
Customers have four options to choose from in regards to what they do with their RECs:
- Sell them
- Voluntarily surrender them
- Register and retain them; or
- Take the "RECs Middle Path".
Ausenergy can assist with whichever option is chosen.
Below are details of the financial and environmental consequences of each of these options, to help inform customers in their decision of what to do with their RECs.
Surrendering your RECs produces the greatest environmentally responsible outcome.
Option 1– Selling RECs
Customers can choose to sell their RECs.
The price of RECs varies because sellers and purchasers directly negotiate price and payment arrangements. The average REC price ranges between $36 and $40, their value dropped to $28 in October 2009, but they have been as high as $56 in the past.
The environmental consequences of selling RECs depend on who purchases them and how they are used by the purchaser. If you choose to sell the RECs, the electricity from the systems on your house either becomes part of the mandatory renewable energy target, or will be counted as ‘extra’ renewable energy by both you and a Green Power customer.
RECs being part of the Mandatory Target:
If your RECs are purchased by an electricity retailer (other than for their GreenPower program), then your RECs will contribute to meeting the electricity retailer’s mandatory target, and the electricity from your system will count towards the national target. If your RECs are not available for purchase, then at some point between now and the end of the scheme, additional renewable energy will be developed to meet the target.
RECs sold as GreenPower:
Alternatively, your RECs may be bought for a GreenPower scheme, in which case they will be surrendered (taken out of circulation) on behalf of the GreenPower customer. This means it is additional to the mandatory target, so it won’t count towards the 20% and extra renewable energy will still have to be built to meet that target. However, both you and the GreenPower customer will believ you have done the ‘green’ thing with the same renewable electricity, and are likely to both think that you have contributed to emissions reduction and renewable energy additional to the mandatory target – creating the impression of double the actual environmental benefit. Ausenergy can arrange the sale of RECs for customers choosing this option.
Option 2– Register and Retain RECs
Customers can also choose to register and retain their RECs. This is essentially a ‘wait and see’ option as while not receiving any immediate payment for doing this you continue to have the option to sell the RECs later, and similarly the option to voluntarily surrender their RECs later as well.
To register and retain your RECs you need to pay an 8 cent registration fee to cover the cost of the REC registry service via the REC-registry
Once the payment has been received and the invoice settled your RECs will be registered. Once registered RECs can be traded or surrender to the Office of the Renewable Energy Regulator to discharge a liability under the Act- which are the Options 1, 3 and 4 detailed above and below.
Option 3– Voluntarily Surrender RECs
By voluntarily surrendering your RECs you forgo any financial value from them.
However, due to the issues detailed under Option 1, voluntarily surrendering RECs has the greatest environmental outcomes, which include:
- Encouraging additional generation of electricity from renewable sources;
- Reducing greenhouse gas emissions; and,
- Demonstrating the use of additional renewable solar electricity accredited under the mandatory renewable energy target.
Customers who voluntarily surrender their RECs do not receive any money for them. RECs accepted for voluntary surrender are permanently removed from the REC market and cannot be transferred or sold to another owner. However, the RECs will still be seen on the REC Registry but will be marked 'Invalid due to voluntary surrender'.
To voluntarily surrender their RECs a customer needs to open an account with the REC registry and make an online voluntary surrender offer.
Option 4– The "RECs Middle Path"
The "RECs Middle Path" option is designed to balance both environmental and financial benefits. While Option 3 is certainly the 'greenest' option, is has potentially very significant financial consequences by not selling your RECs.
At the same time, Option 1 provides you with a financial dividend however there is every likelihood that your RECs are being used by someone else for 'green electricity' or even to offset the carbon-footprint of their lifestyle or business.
The "RECs Middle Path" is:
- Sell your RECs using Option 1; and,
- Reinvest all or some of the money into environmental projects - either personal, business or further afield.
Examples of how you might reinvest your RECs money include:
- Install further solar or renewable energy (power, hot water, heating);
- Invest in energy efficiency measures (insulation, low voltage lighting, double glazing);
- Donate to environmental projects (land regeneration, habitat restoration, private conservation).
Each of these options has a further advantage in providing you future savings, or tax refunds, which in turn provide you further means to go green.
Choose wisely.
Some analysts have even calculated that the environmental outcomes you can achieve by selling your RECs and reinvesting them in these ways are greater than the value of holding onto the RECs and not selling them!
