STP Percentage Released for 2021 (STC Target)

source: Clean Energy Regulator

STP Percentage - STC Target

This means liable entities (generally electricity retailers) are required to surrender approximately 50.6 million small-scale technology certificates (STCs) to meet their Small-scale Renewable Energy Scheme (SRES) obligations for 2021. See Setting the small-scale technology percentage and Calculating the STP sections below for more information.

Contents

• About the small-scale technology percentage
• Setting the small-scale technology percentage
• Calculating the small-scale technology percentage
• Non-binding small-scale technology percentage
• Previous small-scale technology percentages

About the small-scale technology percentage

The SRES aims to balance supply and demand by requiring all STCs that are created to be surrendered over time. To do this each year the STP is set to require liable entities to surrender STCs equal to the amount estimated to be created in that year, plus or minus an adjustment for previous under or over surrenders.

The number of STCs each liable entity is required to source and surrender each year is calculated by multiplying the amount of wholesale electricity (relevant acquisitions) they acquire (minus exemptions) by the STP for that compliance year. Liable entities surrender STCs quarterly to the agency to meet their Renewable Energy Target obligations.

The Quarterly Carbon Market Report provides regular information on the markets the agency administers, including STC creation trends and whether a surplus or deficit is likely to emerge for the year.

Setting the small-scale technology percentage

Each year the agency recommends a percentage to the Minister for Energy and Emissions Reduction (the Minister) using actual data or estimates for the matters the Minister must consider, as set out in the Renewable Energy (Electricity) Act 2000 (the Act). These matters are:

• estimated STC creations for the year
• estimated relevant acquisitions of electricity for the year
• the cumulative adjustment (the difference between previous STC creations and surrenders)
• estimated exemptions.

The Minister may also consider other matters when determining the STP.

The STP must be set by regulation by 31 March of the setting year, otherwise a default percentage is applied.

Estimated STC creations for the year

The STC creation estimate is the average of consultants’ forecasts (see the consultants’ modelling reports). For 2021, the estimated number of STC creations is 42.1 million.

These estimates are made in January of the setting year and are based on data to 31 December of the preceding year. They do not reflect STC creations for the first quarter of the setting year.

Estimated relevant acquisitions of electricity for the year

Relevant acquisitions of electricity are wholesale electricity purchases by a liable entity, as defined in the Act. Relevant acquisitions of electricity are estimated based on the sum of acquisitions reported by liable entities in the  REC Registry two years prior to the setting year, rounded to the nearest 100,000 megawatt hours (MWh).

Data two years prior is used because compliance and assessment activities for that year have been completed and the number is unlikely to change. This process assumes electricity demand remains relatively stable, in line with the  Australian Energy Market Operator’s predictions.

Estimated relevant acquisitions of electricity for 2021 is 214,200,000 MWh.

Cumulative adjustment

The cumulative adjustment accounts for over or under supply of STCs in previous years. It equals the sum of all STCs created minus the sum of all STCs surrendered, since the SRES started. The cumulative adjustment is added to the STC creations estimate.

In recent years STC creations have significantly exceeded estimates, resulting in a significant positive cumulative adjustment. Under or over estimating relevant acquisitions and exemptions has a relatively minor impact on the cumulative adjustment.

Other considerations included in the cumulative adjustment are the:

• 660,000 STCs that were converted to LGCs when the Renewable Energy Target was split into the Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme
• the cumulative total of STCs that have been voluntarily surrendered. For 2021 this is 203,908 STCs.

For the 2021 STP the cumulative adjustment was 8,565,467 STCs. This is a positive number, which means total STC creations exceed total surrendered STCs by this amount.

Estimated exemptions

Businesses receive exemption certificates (in MWh) for electricity used in emissions-intensive trade-exposed (EITE) activities. Businesses exchange these certificates with their electricity retailer to reduce electricity costs. The electricity retailer surrenders exemption certificates to the agency to reduce their RET liability.

Each year we estimate the EITE exemptions and deduct this amount from the acquired electricity estimate for that year.

In 2021 the estimated exemption is 38,300,000 MWh.

Calculating the small-scale technology percentage

The matters the Minister must consider when setting the STP are expressed by the formula:

For the purpose of calculating the STP, 1 MWh of electricity is equivalent to 1 STC.

The 2021 STP calculation is:

Default small-scale technology percentage

If the STP is not set by 31 March in the setting year, a default value automatically comes into force. To date the default STP has not been applied.

Non-binding small-scale technology percentage

The Act requires the agency publish non-binding STPs for the two years following the setting year. The non-binding STP is intended to give an indication of what the STP could be in those years, however, the non-binding STP is not accurate in years when there is a large difference between STC creations and STC estimates. Non-binding estimates should be considered a general guide only.

The non-binding STPs do not bind the Clean Energy Regulator or affect the determination of a liable entity’s liability in those years.

The non-binding STP is calculated using the following formula. As with the STP, STC creations are the average of consultants’ forecasts (see modelling reports). For 2022, this is 39.4 million STCs and for 2023 it is 37.2 million STCs.

Previous small-scale technology percentages

Small-scale technology percentage