Office of the Renewable Energy Regulator

Increasing Australia's renewable electricity generation

Small Generation Units

The Mandatory Renewable Energy Target (MRET) supports the reduction of Australia's greenhouse gas emissions by increasing the proportion of Australia's electricity generated from renewable energy sources. This is achieved through an innovative market-based certificate trading scheme. The commodity in this market is the Renewable Energy Certificate (REC). Each REC represents the equivalent of one megawatt hour of electricity generation from an accredited renewable energy source.

Owners of eligible Small Generation Units (SGUs) may be able to create and trade RECs, which may help to offset the cost of installing renewable energy systems in the home. Under the MRET scheme the following types of SGUs may be eligible to create RECs:

Quite often owners of these SGUs may have already received a benefit from RECs by the time they have the system installed, possibly in the form of a product rebate or upfront discount from the full purchase price of the system, from a Registered Agent (see below for details). If this has not occurred, then please read on to determine whether your renewable energy system may be eligible for RECs and how to receive a benefit from them.

The person who is entitled to create RECs for a SGU is the owner of the system at the time it is installed. In some circumstances where SGUs are installed in new buildings, this can be the builder or property developer. Before you create RECs or assign your rights to create RECs you should make sure you are the owner of the system at the time it was installed.

Is my new SGU eligible and how many RECs is it entitled to create?

To simplify the inclusion of SGUs under the MRET, the number of RECs that an SGU can create has been calculated by the Office of the Renewable Energy Regulator (ORER). This is different from the situation for accredited renewable energy power stations, which must meter the generated electricity and create RECs based on their eligible electricity generation. Sometimes SGUs are referred to as 'deemed units' or 'deemed systems' to distinguish them from metered systems or renewable energy power stations. A generation system may create RECs as a deemed unit if it was installed after 1 April 2001, meets the definition of a SGU under the Renewable Energy (Electricity) Regulations 2001 (the Regulations) and certain other conditions are met.

The Regulations define a small generation unit (SGU) as:

If the kW rating or MWh generation for a SGU is above the respective thresholds or if the unit was installed prior to 1 April 2001, it is not eligible to have RECs created for it as a SGU. However, it may be eligible for accreditation as a renewable energy power station. Information on the power station accreditation process, is available on the power stations page of the ORER website or by contacting the ORER by phone on 02 6274 2192.

Different installations of SGU are deemed to be eligible for different numbers of RECs based on their rated power output (kilowatt capacity) and their geographic location. To help you determine whether your new SGU is eligible for RECs and how many RECs it may be entitled to create, please refer to the appropriate fact sheet:

Deeming Periods for SGUs

RECs may be created for SGUs in batches, for either 1, 5 or 15 year deeming periods, depending on the particular installation. At the beginning of each subsequent deeming period, the Regulator must be satisfied that the SGU is still installed and is likely to remain functional for the next deeming period. The ORER may request evidence to support this claim.

RECs may be created for wind and hydro SGUs either:

RECs may be created for solar (photovoltaic) SGUs either:

Time limits for creating RECs for SGUs

Time limits for the creation of RECs for SGUs may apply depending on their installation date and energy source:

How do I create RECs or get value from them?

The owner of an eligible SGU installation can choose to create and trade their RECs themselves or to assign their right to create RECs to a Registered Agent in return for some financial benefit. The majority of owners choose to assign their right to create RECs to a Registered Agent, as the process is simpler and typically means they can access a benefit sooner.

Assigning your right to create RECs to a Registered Agent

Assigning your right to create RECs must be done in writing - this is usually done through a REC assignment form provided by a Registered Agent. Many owners of SGUs assign their right to create RECs at the point of purchase in exchange for an upfront discount or a delayed cash payment. Alternatively, owners may assign their right to create RECs to any Agent registered with the ORER - please see the List of Registered Agents who have agreed to make their contact details publicly available.

The ORER recommends contacting a range of Registered Agents before entering into any contractual agreement to sell your right to create RECs. Price and payment date should be key considerations when negotiating the sale of your right to create RECs. You should ensure that you are satisfied with the price and payment date you receive for your RECs and ensure that such details are recorded in writing before entering any contractual arrangement to sell your right to create RECs. The ORER does not set the price of RECs nor does it get involved in disputes between buyers and sellers. Payment for RECs or the rights to create RECs is a contractual matter between the buyer and seller.

Creating and trading RECs yourself

If you wish to create and trade RECs yourself you will need to become a Registered Person under the MRET scheme. This can be done by creating an account in the internet based REC Registry (www.rec-registry.gov.au ) and sending the following completed form to the ORER:

Once an owner has become a Registered Person with the ORER they may create RECs for their new SGU installation through the online REC Registry (www.rec-registry.gov.au ). The main details required to create RECs include the following: brand and model of the SGU, product serial numbers, rated power output (kilowatt capacity), installation date, installation address, installer's details, owner's details etc. The REC Registry contains online help screens and a REC Registry Support Desk is available to assist in the use of the Registry - details available at www.rec-registry.gov.au .

Once you have created your RECs, they will be audited by an ORER Officer to ensure they have been created correctly. Once your RECs have passed the ORER audit, they will become 'registered' - registered RECs are able to be transferred in the REC Registry and surrendered either voluntarily or to meet a liability under the Renewable Energy (Electricity) Act 2000 . You should note that you do not have to sell your RECs at all, or within a specified timeframe, but if you wish to create RECs for a SGU installed on or after the 6 October 2007 you must create them within 12 months of the date of installation of the system.

If you wish to sell your RECs, it is your responsibility to find a buyer and negotiate the price and other terms of sale. Potential buyers may include:

Price and payment date should be key considerations when negotiating the sale of your RECs. You should ensure that you are satisfied with the price and payment date you receive for your RECs and ensure that such details are recorded in writing before entering any contractual arrangement to sell your RECs. The ORER does not monitor the price of RECs nor does it get involved in disputes between buyers and sellers. Payment for RECs is a contractual matter between the buyer and seller.

Once you have found a buyer and negotiated the terms of sale, you will need to transfer the RECs to the buyer through the REC Registry.

Other Government schemes involving Small Generation Units

Some installations of SWH may be eligible for rebates through other Government schemes - refer to the Rebates page of the Department of the Environment, Water, Heritage and the Arts website for details.

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