Australian REC prices (Renewable Energy Certificates)

06/08/10

Origin, AGL and other electricity retailers and large electricity users operate under the RET (renewable energy target) scheme where they need to purchase a percentage of their electricity from renewable sources (actually there is a fixed industry wide target in GWh rather than a percentage).  1 REC = 1MWh of renewable electricity.

Buying RECs is the way they meet that obligation.  If they don't meet their obligation they need to pay a fine, equivalent to $40/REC (increasing to $65 in 2010), but it's not tax deductible so the real value could theoretically be as high as $57 (increasing to $93 in 2010), not counting the reputation cost of being fined.

Installing a PV Solar system, or Solar Hotwater system creates RECs.  Our website talks about the various number of RECs created for various sizes of systems, based on a 15 year period (15 year RECs need to be created within 12 months of installation - see the REC website for all the details on how to calculate them etc.). 

For a 1kW PV system in most eastern capital cities you get about 21 RECs, so when the REC price was near $50, this was worth more than $1000.  Most people are happy to assign/sell their RECs to lower their overall install price, but some people disagree.  You can find more information about RECs here

Below is a graph with some historical Australian REC prices based on information we have received over the last couple of years from various REC brokers.  They are the price paid to assign a REC to a broker.  REC brokers take the assignments and then create and sell the RECs for several dollars more.  We don't guarantee this graph is totally historically accurate, and there are lots of gaps, but you can see the price can vary quite a bit.  There may be a better graph here.

In mid 2010, the REC price is hovering around $37, but can easily jump around by $4.  Most of the RECs created in 2009 were as a result of solar hotwater systems (& heat pumps) and to a lesser degree solar PV systems.  The REC multiplier will dramatically increase the solar PV contribution to the supply of RECs.