Market Update | 5 April

• PDRS updated to only allow PRC creation for larger heat pump units not eligible for STC creation
• CER Data Shows Extent of Hot Water Heat Pump Installation Surge
• Shadow Carbon Price to be Introduced – Demonstrating the Value of Emissions Reduction (VER)
• Solar Contributed 67% of New Large-Scale Generation Capacity Approved by the CER in 2023

PDRS Rule Change Update Announced Today – 05 April 

Today DCCEEW announced three changes to come into effect in the new PDRS which were not consulted on. The changes are designed to prevent the over incentivisation of hot water heat pumps (HWHP) and to remove redundant activities. The changes will be announced in the PDRS release this month, and will take effect 3 months after publication. This is estimated to be between 01 July to 01 August. 

1. Limiting the commercial water heater activity to larger units that cannot receive Small Scale Renewable Energy Scheme incentives
2. Removing the removal of old fridges and freezers activity
3. Removing the installation of high efficiency motors activity.

CER Data Shows Extent of Hot Water Heat Pump Installation Surge 

This week the Clean Energy Regulator released its Quarterly Carbon Market Report, which demonstrated the surge in hot water heat pump (HWHP) installations seen throughout 2023. A total of 159,848 systems were installed in the year, rising just shy of 50% from 2022’s 80,859 systems installed. The step up may largely be attributed to the notable increase in incentives under both the Victorian Energy Upgrades (VEU) program and the NSW Energy Savings Scheme (ESS) within the year. Though install volumes have slowed in Victoria as of late, new mandatory copayment amounts coupled with reduced certificate creation per unit are likely to see NSW follow a similar reduction. 

Shadow Carbon Price to be Introduced – Demonstrating the Value of Emissions Reduction (VER)

A ‘Shadow Carbon Price’ has been included in the National Energy Objectives this week, which will demonstrate the Value of Emissions Reduction (VER). The price is designed to assist regulatory decision-making in lieu of a formalised national carbon price. The 2023 VER starts at $66.00 for 2023, and follows a somewhat linear increase of 6-9% per annum, with the higher percentage increases weighted toward 2030-2036. The price is set to settle at $420 by 2025 in the current forecast. 

Solar Contributed 67% of New Large-Scale Generation Capacity Approved by the CER in 2023

In 2023 a total of 2.2 GW of large-scale renewable capacity was approved by the CER for the purpose of creating LGCs. Solar power stations made up approximately 67% (1.5 GW) of the 2.2 GW of Power Station approvals, a 10% growth from 2022. NSW accounted for almost half of this amount, closely followed by QLD contributing over 30% of the approved capacity.

In 2023, there was substantial change within the policy landscape for the renewables sector in Australia, most namely including:

• On 3rd December, Australia joined the global renewables and energy pledge to be a part of the initiative to triple the world’s installed renewable energy capacity by 2030 and double the global average annual rate of energy efficiency improvements.
• In November, the Government expanded the Capacity Investment Scheme (CIS) to 32 GW nationally.
• Also in December, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) published the Annual Climate Change Statement 2023, which prioritises increasing renewables.

At Ecovantage, we consistently analyse market activity, policy changes, consultation releases, and creation rates in conjunction with wider landscape activity. This allows us to keep our clients at the forefront of all relevant changes, and to leverage the advantage that this presents. Thank you for your continued support, and please reach out if you have any general or project-specific questions.