Renewable Energy Market
Snowy Hydro Limited is an eligible renewable energy generator under the Mandatory Renewable Energy Target (MRET) and one of the largest producers and traders of Renewable Energy Certificates (RECs) in the market.
The Renewable Energy (Electricity) Act 2000 requires electricity retailers to acquire additional electricity generation from renewable sources. It is designed to reduce greenhouse gas emissions, ensure that renewable energy sources are ecologically sustainable and develop a renewable energy industry in Australia.
The Mandatory Renewable Energy Target (MRET) was announced by the Commonwealth Government to meet the requirements of the Act and commenced operations on the 1st April 2001. To facilitate compliance with MRET, the government established standard certificates for the output of renewable energy generators called Renewable Energy Certificates (RECs).
MRET requires electricity retailers and wholesale electricity purchasers to be proportionately liable for meeting their share of the Mandatory Renewable Energy Target. For example, if a liable party purchases 10% of the electricity in Australia, they will need to meet 10% of the target renewable energy level for that year, while Generators producing renewable energy, in that year, will be able to create RECs for their eligible output.
To ensure compliance, liable parties, such as electricity retailers and wholesale electricity purchasers need to annually surrender RECs to the regulator equal to their share of the renewable energy target. Just like electricity traded in the National Electricity Market, liable parties can either develop their own contracts with renewable energy generators to purchase RECs or trade in the market at a price negotiated by individual parties. REC prices vary in the market and are independent of normal electricity prices in the spot and contract market.
Besides hydro generation, some other eligible renewable energy generation sources under the measure are Solar, Wind, Tidal, Wave, Hot dry rocks and Bagasse.
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