Solar water heaters
The Mandatory Renewable Energy Target (MRET) supports the reduction of Australia's greenhouse gas emissions by increasing the proportion of Australia's electricity that is derived 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. For solar water heaters each REC represents the displacement of one megawatt hour of electricity generation by solar energy.
Owners of water heaters that use renewable energy may be able to create and sell RECs to help offset the cost of installing renewable energy technologies in the home. Under the MRET the following technologies may be eligible to create RECs:
- Solar water heaters; and
- Air-sourced heat pump water heaters.
Under the legislation the calculated REC values for each solar water heater or air-sourced heat pump system (SWH) are "deemed" to represent the number of megawatt hours displaced by the SWH over the life of the system.
Often owners of these technologies 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, from a Registered Agent (see below for details). If this has not occurred, then please read on to determine whether your system may be eligible for RECs and how to receive a benefit from them.
The person who is entitled to create RECs for a SWH system is the owner of the system at the time it is installed. In some circumstances where SWHs 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 SWH eligible and how many RECs is it entitled to?
The installation of a SWH may be eligible for RECs under the MRET, provided that the model is listed in the Register of Solar Water Heaters and certain other conditions are met.
To help you determine whether or not your new SWH is eligible for RECs refer to Determining Eligibility and Renewable Energy Certificate (REC) Entitlement for Solar Water Heater and Heat Pump Water Heater Installations.
The Register of Solar Water Heaters contains as many models as the manufacturers choose to have included. Sometimes the quickest way to find out how many RECs your SWH installation is eligible for is to contact the manufacturer, or by contacting the ORER via e-mail at orer@orer.gov.au or via telephone on 02 6274 2192.
How do I create RECs or get value from them?
The owner of an eligible SWH 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 much simpler and it 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 SWHs 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. This can be done by creating an account in the internet-based REC Registry and sending the following completed form to the ORER:
Once an owner has become a Registered Person with the ORER they may create certificates for their new SWH installation through the online REC Registry.
The main details required to create RECs include the following: exact brand and model of SWH, tank serial number, number of panels, installation date, installation address, installer's details, owner's details etc. The REC Registry contains online help screens and a REC Registry Support Desk to assist in the use of the Registry.
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 your SWH installation 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:
- large electricity retailers who may need to purchase RECs to meet their REC liability;
- registered agents for deemed units, who create and trade RECs from SWHs; or
- traders of RECs.
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 solar water heaters
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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