Commonwealth · Effective 1 January 2026 · High urgency

Renewable Energy (Electricity) Act 2000

Generators must now choose between creating Renewable Energy Certificates or new Guarantee of Origin certificates, forcing a strategic decision on project revenue streams. Simultaneously, the *Renewable Energy (Electricity) Act 2000* has de-risked energy storage investments by exempting charging electricity from liability calculations. This update creates a clear split in environmental commodity value while significantly improving the business case for battery projects, effective from 1 January 2026.

Executive summary of update

This update to the Renewable Energy (Electricity) Act 2000 introduces two significant changes effective from 1 January 2026. Firstly, it prevents the “double dipping” of environmental certificates by prohibiting the creation of Renewable Energy Certificates (RECs) for electricity that has already been used to create a certificate under the new Future Made in Australia (Guarantee of Origin) Act 2024. This forces a choice between schemes for renewable energy generators. Secondly, it clarifies the treatment of electricity used for energy storage, exempting it from being a “relevant acquisition” and thus reducing the Renewable Energy Target liability for entities operating storage systems. This provides greater certainty for the business case of energy storage projects.

Impacted parties

This update primarily impacts renewable energy generators, energy storage facility operators, and liable entities such as electricity retailers.

Change Analysis

1. Prevention of Dual Certificate Creation (Double Dipping)

  • What has changed: New provisions have been added to prevent the creation of both Large-scale Generation Certificates (LGCs) and Small-scale Technology Certificates (STCs) if a certificate under the Future Made in Australia (Guarantee of Origin) Act 2024 has already been created for the same electricity. Section 18(4)(d) now excludes electricity from LGC calculations if it has been used for a Guarantee of Origin (GO) certificate. Similarly, the new Section 23A(1AA) prevents the creation of STCs for a small generation unit once a GO certificate has been created for that facility.
  • Why it matters: This change establishes that a single megawatt-hour of renewable electricity can only be used to create a certificate under one federal scheme, not both. Project developers and owners must now choose between creating RECs or GO certificates. This decision will impact project revenue streams and financial modelling, as the value and market for each type of certificate may differ. It prevents the potential for a single unit of renewable energy to be counted twice for different policy objectives.

2. Favourable Treatment of Energy Storage Systems

  • What has changed: The Act now formally defines an energy storage system in Section 5. More importantly, Section 31(2)(d) has been added to exclude electricity acquired for the purpose of energy storage from the definition of a “relevant acquisition”. This means electricity drawn from the grid to charge a battery is no longer counted towards a liable entity’s renewable energy obligations. Furthermore, the new Section 33A clarifies that electricity discharged from a storage system is treated as newly generated electricity.
  • Why it matters: This is a significant clarification that supports the business case for energy storage projects. By excluding charging electricity from liability calculations, it reduces the operational costs for storage facilities that interact with the grid. Treating discharged electricity as new generation opens the possibility for storage facilities (when part of an accredited power station) to create LGCs, providing a potential new revenue stream. This reduces regulatory uncertainty and encourages investment in energy storage infrastructure.

Corrective and preventive actions

Legal

  • Section 18, 23A: Review the Future Made in Australia (Guarantee of Origin) Act 2024 to understand the new certificate scheme and advise on the legal implications of choosing between RECs and GO certificates.
  • Section 18, 23A: Update all compliance manuals and legal advice documents to reflect the prohibition on creating both RECs and GO certificates for the same electricity generation.
  • Section 31, 33A: Advise on the legal definition of an “energy storage system” and the conditions under which electricity used for charging is exempt from being a relevant acquisition.

Commercial and Procurement

  • Section 18, 23A: Update financial models for all new and existing renewable energy projects to account for the choice between creating RECs or GO certificates.
  • Section 18, 23A: Review and amend template Power Purchase Agreements (PPAs) to clearly define ownership and rights to create either RECs or GO certificates.
  • Section 31, 33A: Re-evaluate the business case for all current and proposed energy storage projects based on the new exemption for charging electricity and the potential to create LGCs from discharged electricity.

Operations

  • Section 18, 23A: Implement or update tracking systems to ensure that electricity generation is not used for creating both RECs and GO certificates, preventing compliance breaches.
  • Section 31, 33A: For sites with energy storage, ensure metering and data systems can accurately differentiate between electricity consumed for charging the storage system and other site consumption to correctly report relevant acquisitions.

Government & Regulatory Affairs

  • Section 31: Monitor the development of regulations that will define the specific requirements for the energy storage and electricity generation exemptions under Section 31(2)(d) and (e).
  • Section 18, 23A: Engage with the Clean Energy Regulator to seek clarification on the practical implementation and reporting requirements for the new rules preventing dual certificate creation.

Risks & opportunities assessment

Risks

  • Compliance Risk: There is a risk of non-compliance and financial penalties if generation data is inadvertently used to create both RECs and GO certificates. Robust internal controls and tracking systems are essential.
  • Revenue Risk: For some projects, the inability to claim both types of certificates may reduce potential revenue if the value of one certificate type is significantly lower than the other. This requires careful market analysis before committing to a scheme.
  • Regulatory Uncertainty: The exemptions for energy storage in Section 31 are subject to further requirements in regulations. This creates some uncertainty until those regulations are finalised.

Opportunities

  • Investment in Energy Storage: The clarification on the treatment of energy storage significantly de-risks investment in this sector. The exemption from REC liability for charging and the potential to create LGCs on discharge provides a clearer and more favourable financial model for battery energy storage systems (BESS).
  • New Market Mechanisms: The introduction of the GO scheme provides an alternative market for renewable energy attributes. This could attract a different class of buyers focused on specific origin claims, potentially creating new revenue opportunities for generators.
  • Simplified Liability Calculation: For businesses operating large-scale energy storage, the exemption simplifies their liability calculations under the Renewable Energy Target, reducing administrative burden and cost.

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