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FAQs

General

1. What will the VRET scheme deliver?

The VRET scheme will save around 27 million tonnes of greenhouse gas in total – the equivalent of removing every car off Victoria’s roads for a period of two years. It is expected to drive up to $2 billion of new investment in clean energy as well as creating up to 2,000 new jobs, most of them in regional Victoria. The investment driven by the VRET scheme is expected to create 1,000 megawatts of additional renewable energy projects.

2. What impact will the VRET scheme have on electricity prices?

The VRET scheme has been designed to minimise the impact on households and the broader economy. A balance has been struck between the impacts on electricity prices, the profitability of existing generators and the interests of the renewable energy industry. Modelling shows that the VRET scheme will increase the average annual electricity bill for the typical Victorian household by less than $8 per year or around 15 cents per week. The impact on average power bills will be minimal and follows a reduction of the cost of electricity of up to $57 over 2006 and 2007 for the 1.2 million Victorian households on safety net tariffs.

3. What are the eligible renewable energy sources for generating electricity under the VRET scheme?

The eligible renewable energy sources include hydro, wave, wind, tide, solar (but not solar energy used primarily for heating hot water), geothermal-aquifer, wood waste, agricultural waste, landfill gas, biomass-based components of municipal solid waste, sewage gas and biomass based components of sewage gas.

4. What is the inter-relationship between the VRET scheme and the MRET scheme?

The VRET scheme applies in Victoria in addition to the requirements of the Commonwealth’s Mandatory Renewable Energy Target (MRET) scheme. Consequently, some Victorian generators and all Victorian retailers will participate in both schemes. Participants in the VRET scheme are prohibited from creating a VREC for electricity utilising scheme capacity if that capacity has been utilised to create a renewable energy certificate under the MRET scheme. Penalties apply for improper creation of VRECs.

Small Generation Units

1. What is a small generation unit (SGU)?

A SGU is a device whose energy source is:-

for hydro – it has a kW rating of no more than 6.4 kW and it generates no more than 25MWh of electricity each year;
for solar (photovoltaic) – it has a kW rating of no more than 100 kW and it generates no more than 250 MWh of electricity each year; or
for wind – it has a kW rating of no more than 10 kW and it generates no more than 25MWh of electricity each year.

2. How can I benefit from VRECs?

The implementation of the VRET scheme provides a market for VRECs by imposing a liability on retailers of electricity to purchase and surrender VRECs. SGU owners are able to participate in the VREC market by either creating VRECs and then selling them to these retailers or assigning their VRECs to agents in return for some type of benefit, such as a rebate or price reduction. The market value of VRECs is determined by the supply and demand for VRECs and may vary from buyer to buyer and from day to day.

3. Is this a government rebate program?

No. The Commission will check your eligibility to create VRECs and will allow you to transfer them to others if you wish. However, the Commission will not buy VRECs from you and will not provide you with any payment for your small generation unit.

4. How long do I have to create my VRECs?

VRECs for small generation units can be created at any time after the installation date of the unit and before the end of the VRET scheme on 31 December 2031.

5. When will I get paid for my VRECs?

Before receiving any financial benefit from your VRECs, you must either create them yourself and sell them to another party or assign your rights to create VRECs to an agent. The time taken for you to receive payment is dependent on your arrangements with the buyer. If you experience a delay in receiving payment for your VRECs you must contact the person to whom you have agreed to sell them directly. The Commission has no power to intervene in the commercial arrangements between buyers and sellers of VRECs.

6. How do I apply to create VRECs myself for a small generation unit?

There are a number of steps to creating the VRECs yourself:

(i) Complete and submit to the Commission a VRET account application form.

(ii) Complete and submit to the Commission a VRET registration form to become a registered person under the VRET scheme.

(iii) Provide the Commission with the $20 registration fee and the installation details of your small generation unit.

(iv) When you complete the registration process, the Commission will advise you of your the next step. In most cases you will be informed that you are now able to create VRECs for your installed system.

(v) You will then be able to create, sell and transfer the VRECs for your small generation unit. For more information, please visit the VREC page.

Note: You can submit the forms outlined in steps (i) and (ii) to the Commission simultaneously.

You should note that you do not have to sell your VRECs at all, or within a specified timeframe, but you must create the VRECs before they can be sold. You must ensure that the terms of your undertakings to the Commission are met.

7. How do I sell my VRECs?

First you have to create them and look for a potential buyer. Potential buyers will be:

large electricity retailers who may need to purchase VRECs to meet their VREC liability;
agents who have set up a business in creating and selling VRECs from small generation units; or
traders of VRECs.

When selling your VRECs you should agree on a price and a settlement date. The Commission does not monitor the price of VRECs nor does it get involved in disputes between buyers and sellers. Payment for VRECs is a contractual matter between the buyer and seller.

8. Do I have to create the VRECs myself?

No. Owners of small generation units may elect to assign the right to create the VRECs to another party, called an agent. In this case, the agent will buy your right to create VRECs and they will be responsible for creating the VRECs. You will have to sign a document stating that you have assigned your rights to create the VRECs. If you do assign your right to create VRECs to an agent you will not be able to create the VRECs yourself. Therefore you should ensure that you are happy with any benefit received for assigning your right to create VRECs to an agent (for example the purchase price of the VRECs or a price reduction of the small generation unit).

Agents

1. How do I apply to become an agent under the VRET scheme?

There are a number of steps to becoming an agent under the VRET scheme:-

(i) Complete and submit to the Commission a VRET account application form.

(ii) Complete and submit to the Commission a VRET registration form to become a registered person under the VRET scheme.

(iii) Complete and submit to the Commission a VRET agent registration form to become an agent in the VRET scheme.

(iv) Provide the Commission with the applicable registration fee - $230 for registering as an agent and $20 for registering as a registered person.

(v) The Commission will then advise you of the success or otherwise of your application. Once your application is approved, the Commission will advise you of your unique registration number.

Note: You can submit the forms outlined in steps (i), (ii) and (iii) to the Commission simultaneously.

2. What are the steps for assigning VRECs to me as an agent?

(i) You must have a VREC assignment form available for the SGU owner to complete. The Commission has detailed the minimum requirements for this form. Mandatory information required for VREC Assignment forms

(ii) Upon installation of a SGU, the SGU owner must complete and sign the form and return to you.

(iii) You must retain the signed form for at least five years and must provide it to the Commission if requested.

You should note that you are not allowed to reassign the right to create assigned VRECS to another registered person or agent.

3. What do I need to pay for the VRECs which are assigned to me?

The Commission does not monitor the price of VRECs nor does it have the power to intervene in the commercial arrangements between agents and SGU owners. Payment for VRECs is a contractual matter between you as the agent and the SGU owner.

4. How do I sell my VRECs?

First you have to create them and look for a potential buyer. Potential buyers will be:

large electricity retailers who may need to purchase VRECs to meet their VREC liability;
other agents who have set up a business in creating and selling VRECs from small generation units; or
traders of VRECs.

Power stations

1. What is scheme capacity?

Scheme capacity is the generating capacity of the power station which was not utilised to generate electricity on a commercial basis before 1 January 2007. An accredited power station under the VRET scheme can only create VRECs in respect of generation from eligible renewable energy sources utilising scheme capacity.

2. Will interstate generators be eligible under the VRET scheme?

The Act provides that a relevant power station accredited under the Act and a small generation unit may be situated in Victoria and another jurisdiction in which a scheme similar to the VRET scheme is in place and approved by the Minister under section 5 of the Act. An interstate renewable energy regime could be approved if amongst other things, the approval would complement, and not detract from the achievement of the purposes and objects of the Act and the approval would not impose unreasonable costs on purchasers of electricity in Victoria. Currently, in the absence of an approved interstate scheme, power stations or small generation units situated outside Victoria are not eligible to participate in the VRET scheme.

Relevant entities

1. Who is a relevant entity for the purposes of the VRET scheme?

A relevant entity is a person or organisation that:-

acquires electricity from NEMMCO for use in Victoria; or
generates electricity for use by them in Victoria from a device that generates more than 40MWh of electricity in a year

2. What is the renewable power percentage for 2007?

The renewable power percentage (RPP) establishes your rate of liability for each year of operation of the VRET scheme. The RPP for the first year of the scheme (i.e. 2007) has been set at 0%. RPP for subsequent years will be determined and published in the government gazette on or before 31 May of the relevant year. The RPP is published in advance to allow relevant entities time to plan their VREC acquisition strategies.

3. What are my responsibilities under the VRET scheme?

Relevant entities are required to:-

surrender certificates each year equal to the prescribed renewable power percentage of the electricity acquired by it for the year; and
lodge an audited energy acquisition statement with the Commission annually.

You should note that relevant entities are required to lodge an audited energy acquisition statement by 30 April 2008 for the 2007 calendar year even though the RPP for 2007 is zero. These statements will be used to assist in the setting of the RPP for the 2008 year.

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