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Victorian Renewable Energy Target Scheme
The Victorian Renewable Energy Target (VRET) scheme is a market based measure that will increase the share of electricity consumption in Victoria from renewable energy sources to 10% by 2016. The VRET scheme was announced in June 2006 after months of detailed analysis and extensive stakeholder consultation.
The extra investment in renewable energy as a result of this scheme will reduce the State's reliance on coal fired power stations and lead to an additional 3274GWh of renewable energy. There are nineteen eligible sources of renewable energy listed under the VRET Act, eg. hydro, wave, tidal, wind, solar, geothermal and biomass.
Victorian energy retailers and large wholesale purchasers of electricity are required to purchase and surrender to Government, accredited renewable energy certificates on a yearly basis. These certificates are tradable and provide accredited renewable energy generators with an additional source of revenue, over-and-above the value of the electricity they produce.
In the short time the Scheme has been operating, VRET has encouraged significant growth in renewable energy in Victoria. Since its introduction in 2006, more 1550 MW of wind energy generation has received planning approval in Victoria and the State’s wind capacity has increased by 75%. Victoria’s wind farms now provide enough energy to power about 190,000 households a year, Other projects including solar and hydro have also been encouraged under the VRET Scheme.
Over the life of the Scheme, VRET is expected to encourage more than $2 billion worth of renewable energy investment and more than 2,000 new jobs, mostly in regional Victoria.
In summary, VRET will:
- encourage additional generation of electricity from renewable energy sources;
- encourage investment in the generation of renewable energy and the development of renewable energy technologies;
- encourage regional investment and employment;
- contribute to the diversity of Victoria’s energy supplies; and
- reduce emissions of greenhouse gases.
The VRET scheme commenced on 1 January 2007 and is administered by the Essential Services Commission (external link).
The Commonwealth’s expanded Renewable Energy Target
The incoming Labor Government committed to increase the previous national Mandatory Renewable Energy Target (MRET) Scheme to 20% renewable energy generation by 2020. The target has been increased by more than four times the MRET target, and the Commonwealth Parliament passed the Renewable Energy (Electricity) Amendment Act 2009 on 20 August 2009. For more information, visit the Department of Climate Change website (external link).
On announcement of the Commonwealth Scheme, Victoria committed to transitioning VRET into the expanded Renewable Energy Target Scheme (eRET) if the Commonwealth Scheme would deliver equal or greater renewable energy investment in Victoria than would be delivered by VRET alone.
The transition to a single Commonwealth Scheme will ensure Victoria benefits from the opportunities of the expanded target and it will minimise regulatory burden on Victorian businesses of complying with two Schemes.
Modelling commissioned by the Victorian and the Commonwealth Governments forecasts that Victoria will receive more than double the level of renewable energy generation by 2020 than would be delivered by VRET alone.
Transitional Arrangements
Victoria will enforce the VRET Scheme in 2009, before transitioning to the Commonwealth Scheme at the beginning of 2010. Victoria has introduced a Victorian Renewable Energy Amendment Bill into Parliament and this will enable a smooth transition to the Commonwealth Scheme. For a copy of the Bill, visit the Victorian Govenrment legislation and parliamentary document website (external link).
The VRET transitional arrangements dovetail with amendments made to the Commonwealth Act. The transitional arrangements maximise regulatory certainty for VRET Scheme participants and were developed in consultation with the Commonwealth Government, major VRET Scheme generators, certificate holders and peak industry bodies.
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