Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2019-2020-2021-2022
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Renewable Energy (Electricity) Amendment (Cheaper Home Batteries) Bill 2022
EXPLANATORY MEMORANDUM
and
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Circulated by authority of Dr Helen Haines MP Member for Indi
Cheaper Home Batteries Bill 2022
OUTLINE
This Bill amends the Renewable Energy (Electricity) Act 2000 to add home batteries as an eligible
technology to create small-scale technology certificates (STCs) under the Small-Scale Renewable
Energy Scheme (SRES).
Currently, the SRES creates a financial incentive for individuals and small businesses to install eligible
small-scale renewable energy systems such as solar panel systems, small-scale wind systems, small-
scale hydro systems, solar water heaters and air source heat pumps. It does this through the creation
of STCs which Renewable Energy Target liable entities have a legal obligation to buy and surrender to
the Clean Energy Regulator on a quarterly basis.
Generally, householders who purchase these systems assign the right to create their certificates to
an agent in return for a lower purchase price. The number of small-scale technology certificates
required to be submitted by electricity retailers is set each year by the small-scale technology
percentage.
In addition to State and Territory-based incentive schemes, the SRES has driven extremely high
uptake of rooftop solar in Australia with around one third of households having installed rooftop
solar, the highest rate in the world.
This Bill aims to replicate the success that the SRES delivered for rooftop solar in the home battery
sector, by lowering the installation cost of home batteries and driving increased uptake.
This is consistent with the first object of the Renewable Energy (Electricity) Act 2000 which is to
"encourage the additional generation of electricity from renewable sources". Increased storage
capacity on the grid is critical to enabling higher penetration of renewables into Australia's electricity
mix. In some parts of the grid, with excessive daytime rooftop solar production, installing storage
capacity is essential to encouraging further uptake of rooftop solar.
This Bill would retain the existing legislative architecture for the creation and transfer of STCs, simply
extending it to home batteries. The 'deeming rate', the period for which a home battery can create
certificates is set at 15 years, until 2027 at which point it is calculated as the number of years until
2041. The number of certificates a home battery can create each year is determined by the
megawatt hours of electricity it will discharge over the course of a year, as set out in regulation.
As in the existing scheme, home batteries can only create STCs if they are installed by 2030. Home
batteries must create STCs within 12 months of installation and can only create certificates once, for
the duration of their deeming rate.
This Bill also requires the Minister to conduct a review of the operation of the home battery SRES
incentive scheme, issuing a final report to the Minister by 1 January 2029. That review should
determine, among other things, whether the scheme should be extended beyond 2030.
RATIONALE
Just 1% of Australian households have installed home batteries. Yet analysis shows that households
could save around $5000 a year in lower power and fuel costs by switching to renewable electric
heating, cooling, and vehicle transportation. Home batteries are critical to unlocking these savings.
Yet currently, home batteries are prohibitively expensive for Australians. Just as the Howard
Government, in introducing the original Renewable Energy (Electricity) Act 2000, recognised that
accelerated deployment of rooftop solar in the early 2000s would be critical to reducing costs, so too
in the 2020s is the accelerated deployment of home batteries critical to reducing battery costs.
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FINANCIAL IMPACT
This bill complies with the financial initiative rules for private members bills.
The Parliamentary Budget Office published an official costing for the Cheaper Home Batteries Bill.
The total departmental expenses for the forward estimates from the 2021-22 Budget would
decrease the fiscal and underlying cash balances by $3.2 million. This involves:
• $2.2 million in expenses in 2022-23;
• $0.5 million in 2023-24;
• $0.5 million in 2024-25.
The proposal would have an ongoing impact beyond the 2021-22 Budget forward estimates
period, likely in the vicinity of $0.5 million per year.
The costing shows no impact on administered expenses.
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NOTES ON CLAUSES
Clause 1 - Short Title
This clause specifies that the Act may be cited as the Renewable Energy (Electricity)
Amendment (Cheaper Home Batteries) Act 2022.
Clause 2 - Commencement
This clause provides for the commencement of the Act on a day to be fixed by Proclamation.
Clause 3 - Schedules
This clause specifies that this Act involves amendments to existing legislation. This Act
includes one Schedule which makes amendments to the Renewable Energy (Electricity) Act
2000.
Schedule 1 - Amendments
Clause 1 - Definition of home batteries
This clause inserts a new definition of "home batteries" into subsection 5(1) of the
Renewable Energy (Electricity) Act 2000 which deals with definitions.
The definition of a home battery is "a device that stores electricity that is specified by the
regulations to be a home battery". This allows the technical definition of a home battery to
be determined through regulation.
Clauses 2 - 3 - Definition of small-scale technology certificates
These clauses make technical amendments to section 5(1) of the Renewable Energy
(Electricity) Act 2000 which deals with the definition of small-scale technology certificates.
These clauses specify that certificates created by home batteries are small-scale technology
certificates.
Clauses 4 - 5 - Definition of renewable energy certificates
These clauses make technical amendments to section 8 of the Renewable Energy (Electricity)
Act 2000 which deals with the definition of renewable energy certificates. These clauses
specify that certificates created by home batteries are small-scale technology certificates.
Clauses 6 - 8 - Creation of renewable energy certificates
These clauses make technical amendments to Section 17B of the Renewable Energy
(Electricity) Act 2000 which deals with the creation of renewable energy certificates. These
clauses simply specify that certificates created by home batteries are small-scale technology
certificates.
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Clause 9 - Small-scale technology certificates for home batteries
This clause inserts a new subdivision BAA into Division 4 of the Renewable Energy
(Electricity) Act 2000 which outlines how each eligible technology can create renewable
energy certificates. This new subdivision outlines how home batteries can create small-scale
technology certificates.
When the scheme applies
This new subdivision outlines that small-scale technology certificates can be created by
home batteries that are installed between the date of the commencement of this
subsection and the 31st of December 2030, inclusive of both dates.
It also specifies that regulations can outline further conditions or requirements for the
creation of small-scale certificates by home batteries.
When certificates can be created
A home battery can only create certificates within 12 months of the installation of the
battery. A home battery can only create certificates once.
How many certificates can be created
The number of certificates an individual home battery can create is determined by two
factors: the annual electricity discharge of the battery (measured in megawatt hours)
multiplied by the deeming rate (measured in years).
On installation, the home battery can create certificate for a period specified in the bill,
known as the deeming rate. The deeming rate depends on the year it is installed:
• Before 2026: 15 years
• 2026: 15 years
• 2027: 14 years
• 2028: 13 years
• 2029: 12 years
• 2030: 11 years
For instance, if a battery is installed in 2027, it can immediately create certificates for a
period of 14 years.
The amount of electricity that a battery will discharge over the course of the year will be
determined through regulation.
This formula is consistent with the existing formulae for calculating the number of
certificates eligible technologies can create under the scheme under the current legislation.
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For instance, if the regulations determine that a battery will discharge 1.5 megawatt hours
over the course of a year, and that battery is installed in 2027, it will receive:
1.5 x 14 = 21 STCs
Who may create a certificate
The owner of the home battery at the time that a right to create a certificate arises in
relation to the home battery is the party entitled to create certificates. However, that party
may assign the right to create certificates to another person.
This is consistent with the existing legislation governing the creation of certificates under
other eligible technologies under the SRES. The purpose of this clause is to allow the owner
of a battery to transfer the right to create certificates to the installer of the home battery to
reduce the effective installation cost of the battery.
Regulations may be made in relation to the assignation of the right to create certificates.
The owner of the battery may elect not to create certificates under this Bill.
Clauses 10 - 13 - Returns
These clauses amend subdivision BB of Division 4 of Part 2 of the Renewable Energy
(Electricity) Act 2000 which relates to returns provided to the Regulator from individuals
who create more than 250 certificates in a year.
Currently, this subdivision only applies to certificates created by solar water heaters and
small generation units. These clauses would add home batteries to this list. This means that
an individual who creates more than 250 small-scale technology certificates in a single year,
from any SRES technology including home batteries, would have to provide a return to the
regulator.
Clauses 14 - 17 - Improper creation of certificates
These clauses amend Section 24 of the Renewable Energy (Electricity) Act 2000 which
relates to the improper creation of certificates.
These clauses would amend the existing legislation to specify that the circumstances in
which a certificate has been improperly created (and the penalties for the improper creation
of a certificates) that currently apply to existing technologies under the Act will apply to
home batteries.
Clause 18 - Form and content of small-scale technology certificates
This clause amends Section 25 of the Renewable Energy (Electricity) Act 2000 which relates
to the form and content of small-scale technology certificates.
This clause would amend the existing legislation to specify that small-scale technology
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certificates created by home batteries must have the same form and content as those
certificates created by existing technologies.
Clauses 19 - 22 - Registration of Certificates
These clauses amend section 26 of the Renewable Energy (Electricity) Act 2000 which relates
to the requirement for certificates to be registered.
These clauses impose the same registration requirements for certificates created by home
batteries as currently apply to existing technologies.
Clause 23 - Clearing House Price
This clause amends section 30LA of the Renewable Energy (Electricity) Act 2000 which
relates to the clearing house price for small-scale renewable energy certificates.
This clause implements the same rules relating to the clearing house price for certificates
created by small-scale technology certificates as currently apply to existing technologies
under the legislation.
Clause 24 - Renewable Energy Special Account
This clause inserts a new section after section 30T in the Renewable Energy (Electricity) Act
2000 to clarify that this Bill does not change the purposes of the Renewable Energy Special
Account.
Clauses 25 - 26 - Regulations to specify small-scale technology percentage
These clauses amend section 40A of the Renewable Energy (Electricity) Act 2000 which
relates to the regulations specifying the small-scale technology percentage.
Currently, in determining the small-scale technology percentage for a given year, the
Minister must consider the estimated value, in megawatt hours, of small-scale technology
certificates that will be created in the current year under solar hot water systems and small-
scale generation units. This would add home batteries to this list of technologies the
Minister must consider in determining the small-scale technology percentage.
Clause 27 - Contents of register of small-scale technology certificates
This clause amends section 141AA of the Renewable Energy (Electricity) Act 2000 which
relates to the contents of the register of small-scale technology certificates.
This clause simply outlines that the register must contain the same information regarding
certificates created by home batteries as it currently contains regarding certificates creates
from already eligible technologies.
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Clause 28 - Review of Cheaper Home Batteries Bill 2022
This clause inserts a new provision into Part 16 of the Renewable Energy (Electricity) Act
2000.
This new clause 160C requires the Government to conduct a review of the operation of the
new subdivision BAA of Division 4 of Part 2 of the Act, that is, the addition of home batteries
into the Small-Scale Renewable Energy Scheme implemented by the Cheaper Home
Batteries Bill 2022.
That independent review must consider:
• the effectiveness of the scheme in lowering the cost of home batteries;
• the effectiveness of the scheme in accelerating the deployment of home batteries;
• the impact of the scheme on electricity prices;
• the distributional impacts of the scheme (this refers specifically to the share of the
costs and benefits of the scheme accruing to people based on their income level,
demography, geography, and other relevant characteristics);
• whether the scheme (including the small-scale technology shortfall charge) should
be extended beyond 2030;
• other measures (whether or not relating to home batteries) that should be put in
place beyond 2030 in order to continue to drive the deployment of technologies that
lower household power bills.
The review must commence no sooner than 4 years after the commencement of the bill,
and no later than 1 July 2028.
It must involve public consultation, the final review must be handed to the Minister within 6
months after commencing the review, and the Minister must cause to be tabled a copy of
the report in each House of Parliament within 15 sitting days of receiving the report.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
This Cheaper Home Batteries Bill 2022 is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
Overview of the bill
The bill will add home batteries to the list of eligible technologies than can earn small-scale
technology certificates under the Small-Scale Renewable Energy Scheme.
Human rights implications
This bill engages the following rights:
• the right to an adequate standard of living in Article 11(1) of the International
Covenant on Economic Social and Cultural Rights (ICESCR) and Article 27(1) of the
Convention on the Rights of the Child (CRC);
• the right to enjoy the highest attainable standard of physical and mental health in
Article 12(2) of the ICESCR and Article 24(1) of the CRC;
Right to an adequate standard of living
Article 11(1) of the International Covenant on Economic Social and Cultural Rights provides
that everyone is entitled to an adequate standard of living and the continuous improvement
of living conditions.
The Australian Government Attorney-General's Department notes that policy-makers must
consider the right an adequate standard of living when working on legislation, policies and
programs that deal with economic and resource issues that could have an impact on the
realisation of the right to an adequate standard of living.
The supply of accessible, reliable, low-cost electricity is critical to the realisation of an
adequate standard of living. Home batteries are a powerful technology to lower the cost of
electricity, and increase the reliability of electricity, especially for people in rural and
regional areas who experience disproportionate rates of energy insecurity and energy
poverty. This bill therefore contributes to the continuous improvement of living conditions.
Right to the highest attainable standard of physical and mental health
Article 12(2) of the International Covenant on Economic Social and Cultural Rights and
Article 24(1) of the Convention on the Rights of the Child provide that everyone is entitled
to the right to enjoy the highest attainable standard of physical and mental health.
The Australian Government Attorney- General's Department notes that the right must be
understood as a right to the enjoyment of a variety of facilities, goods, services, and
conditions necessary for the individual to realise his or her highest attainable standard of
health.
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The combustion of fossil fuels in domestic settings, especially in relating to domestic heating
and cooking, has demonstrated deleterious impacts on human health. Specifically, the
combustion of methane gas for domestic cooking is demonstrated to generate harmful
levels of nitrogen dioxide, formaldehyde, and ultra-fine particles.
By supporting greater accessibility of home batteries, this bill enables individuals and
households greater choice in switching to electric-based domestic heating and cooking, and
therefore contributes to the progressive realisation of the highest attainable standard of
physical and mental health.
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