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February 2023
Department of Climate Change, Energy, the Environment and Water
Response to Renewable Electricity Certification Consultation Paper
Thank you for the opportunity to comment on the Department of Climate Change, Energy, the
Environment and Water’s Renewable Electricity Certification Consultation Paper (Paper).
Quinbrook Infrastructure Partners (www.quinbrook.com) is a private equity business that invests in clean energy in the UK, the US and Australia. Our portfolio companies include:
• a NEM connected baseload renewable energy generator, Cape Byron Power
(www.capebyronpower.com), consisting of two 30 MW biomass fired power stations that
generate both renewable electricity and steam for local sugar milling operations;
• an electricity retailer that prides itself on not gouging customers and who won the 2021 Finder
Award for green energy retailer of the year in Australia, Energy Locals
(www.energylocals.com.au);
• an embedded network business that prides itself on helping customers save costs by taking
control of their energy needs, Energy Trade (www.energytrade.com.au);
• Lockyer Energy Management Pty Ltd (https://lockyerenergy.com.au/) which is developing a
hybrid peaking and utility battery project in Queensland, and
• Supernode (https://supernode.com.au/) which is developing industrial scale data centre sites
across Australia, including the flagship Brendale site (https://www.quinbrook.com/news-
insights/quinbrook-launches-2-5-billion-supernode-data-storage-project-in-brisbane-to-be-
powered-by-renewables-and-battery-storage/).
Our multiples channels of involvement in Australia, across different levels of the industry, allows us to provide balanced “whole of industry” opinion and set of potential refinements to the Guarantee of Origin scheme. Additionally, our portfolio companies in UK and US markets (which include utility wind, solar and batteries, distributed peaking generation and demand response) give us an operating knowledge of the current schemes and proposals for tracing renewable energy certificates. Both UK and US markets are currently experiencing comparable issues to Australia in regard to credibility, transparency, and confidence of emission reduction claims.
Quinbrook is a supporter of the TCFD and publicly documents1 how we meet the TCFD reporting framework. Quinbrook also engages in policy advocacy to further our decarbonisation objectives, including: Signatory to the UN 24/7 Carbon Free Energy Compact; Signatory to the Principles for
1 See: https://www.quinbrook.com/wp-content/uploads/2022/04/Governance-Strategy-Risk-Management-and-
Process-Framework.pdf
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Responsible Investing (and recipient of a 100% PRI score in 20212); Signatory of the Net Zero Asset
Managers Initiative; Member of the EnergyTag Working Group; Member of the Energy Web Foundation;
Member of the Long Duration Energy Storage Council.
Our response is structured as a short paper. We have provided more detailed feedback in our responses to the Department’s Policy Position Proposals at the end of this paper.
BENEFITS OF RENEWABLE ELECTRICITY GUARANTEE OF ORIGIN (REGO)
We believe implementation of REGOs will bring significant benefits. Some of these benefits in our view include:
• Meeting customer preferences:
Increasingly, consumers of power want to ensure the source of supply is renewable and
that it matches the timing and location of consumption. Google and Microsoft3 have
committed to ensuring their operations are 100% zero carbon on an hourly basis by 2030.
Large corporate buyers are following the lead of these companies and increasingly
wanting to buy not just offsets, or renewable energy on an annual basis, but to ensure
their consumption of electricity is matched in real-time by renewable supply.
• Driving investment in renewable electricity, storage and demand response:
REGOs are an important enabler to allow the electricity supply industry to meet the
evolving preferences of customers. REGOs play an important role in enabling and
supporting the development of hourly renewable markets and products such as hourly
bundled PPAs4 plus spot and derivative markets for hourly certificates5.
Delivering verifiably renewable electricity on an hourly and locational basis will require not
just investment in renewables, but also supporting storage and industrial demand
response. REGOs are necessary to realise this investment.
• Providing transparency:
2 See: https://www.quinbrook.com/wp-content/uploads/2022/09/2021-Assessment-Report-for-Quinbrook-
Infrastructure-Partners.pdf
3 Google, 24/7 by 2030: Realizing a Carbon-free Future, 2020, see: https://www.gstatic.com/gumdrop/sustainability/247-carbon-free-energy.pdf
& Microsoft, see: https://blogs.microsoft.com/blog/2021/07/14/made-to-measure-sustainability-commitment- progress-and-updates/
4 https://www.ldescouncil.com/news/ldes-council-report-highlights-potential-for-new-type-of-power-purchase- agreement-to-accelerate-decarbonization-of-electricity-consumption/ (Quinbrook contributed to this report as a member of the LDES Council)
5 https://www.nordpoolgroup.com/en/message-center-container/newsroom/exchange-message-list/2022/q2/new- system-to-track-electricity-by-the-hour-launched-in-great-britain/
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REGOs provide a transparent and verifiable way of tracking the origin of consumed
electricity, ensuring that consumers know the source of the energy they are consuming.
This is a critical need for consumers in order to avoid appearance of greenwashing. It is
also fundamental to the business case of a range of new products and industries – green
hydrogen, green steel, green fuels, etc.
• Avoidance of double counting:
o Centrally administered REGO registries are the most efficient way to avoid double
counting a unit of renewable energy against multiple certificates. Governments and policy
makers have an important role to play in establishing such registries as public, digital
infrastructure which will support the next phase of decarbonisation.
• Compliance with regulations:
REGOs can help companies and governments meet their renewable energy targets, such
as 24/7 commitments, and comply with regulations, especially around carbon accounting
and related disclosures.
• Increased competitiveness:
Deep, liquid and competitive markets for REGOs will ensure decarbonisation is achieved
on an economically efficient basis. Centralised registries and a common framework that
can be leveraged by all market participants will reduce barriers to entry in REGO markets,
support innovation and drive competitive outcomes.
There are already a number of parties developing Hourly Renewable Energy Certificate (HREC) tracing and matching solutions6. Similarly, the industry has adopted a global, best practice standard for accounting for HRECs in the form of the EnergyTag standard7. Efforts are underway to reconcile these approaches to accepted Greenhouse Gas accounting standards (such as the TCFD reporting framework and the GHG Protocol).
What is needed to accelerate these innovations is the ability to integrate with legacy REC registries in each jurisdiction, and for those registries to record extra information on each certificate to facilitate greater use.
The REGO proposals are an opportunity for Australia to leverage the growing ecosystem of green tracing solutions. We believe that the REGO framework should adopt the following features:
1. Unified: Ideally, there would a single registry that serves all use cases – LGC, STC and REGO.
Fundamentally, the certificate registry allows for certificates to be created in an auditable way
and which avoids eligible sources creating more than one certificate per MWh of eligible
production. Maximum flexibility is achieved where a MWh of renewable generation today, can
be allocated to its most valuable use-case at any stage in the future. It would be simpler to
6 See https://www.energyweb.org/
7 See https://energytag.org/
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combine the LTC and STC registries by adding (mutually exclusive) LGC and STC eligibility
fields to each certificate. The addition of further new data fields (timestamp and location) could
then allow for more generalised REGOs. The critical difference regarding REGOs is that, unlike
the mutually exclusive LGC and STC certificates, a MWh of renewable energy produce at a
given time and place could be surrendered against more than one scheme. E.g. a MWh could
qualify against both the LGC target and against a participants hourly commitments. This is
analogous to how an LGC can be created today, but ultimately a participant can choose to
surrender the LGC against its RET liability or on a voluntary basis (for example via Greenpower)
to meet other objectives.
We feel it is important that participants can make the choice as to the best use case of a
certificate as part of the surrender process, rather than the creation process. A unified registry
ensures this. Another approach would be a conversion process, whereby an LGC or STC could
be converted into a REGO and vice versa, although this approach seems more complex to
administer.
2. Voluntary: The REGO framework should build on the existing REC registry through the addition
of voluntary data fields (timestamp and location). If a participant does not wish to create a
timestamped certificate then they can continue to register LGCs as they do today, although
those certificates would forego any value associated with the time or location attributes
associated with their creation.
A voluntary approach would minimise participant transition costs and ensure that systems were
only upgraded to support the additional features of a REGO where the participant assessed
there was a commercial case to do so.
3. Time based: Time stamping is necessary to meet the evolving preferences of consumers. We
support hourly timestamping using UTC (Coordinated Universal Time) for time stamping to
ensure using a single common time zone and to align REGOs with international standards such
as Energy Tag8.
We would also highlight the potential need to allow for more granular time stamping. In an
Australian context, it seems logical to allow timestamping to match the market dispatch period of
5 minutes. In future, there may be a need to timestamp on even shorter timescales. This is
particularly the case for storage assets. Batteries providing ancillary services often rapidly
fluctuate between charge and discharge modes of operation. Such fluctuations lead to material
differences between gross and net charge/discharge volumes on 60 minute, 5 minute and even
shorter timescales. Allowing REGOs to (voluntarily) record both a start time and end time for the
certificate fixes this issue in the general case. Participants who do not value timestamping can
leave the fields blank. Participants who pursue hourly tracing and matching can timestamp at
hourly granularity. Participants, such as storage operators, who see value in timestamping on
shorter timescales can do so. Such an approach will future proof timestamping on REGOs. In
practice, this would involve recording both a start and end timestamp on each REGO.
4. Location based: Location information similarly helps consumers realise their consumption
preferences for in-country, in-region or more local renewable power. LGCs are effectively location
stamped to a facility, although this information is not as user friendly as it could be. As with
timestamping, we would recommend a generalised and voluntary approach that spans the many
8 https://www.energytag.org/wp-content/uploads/2022/03/210830-ET-Whitepaper.pdf
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use-cases of users. In the case of location stamping, this should be via recording latitude and
longitude on the REGO.
We note that there may be some security and privacy issues when using more granular locational
information, especially in the case of behind the meter generation at residential households.
Allowing participants to include latitude and longitude to an arbitrary accuracy also manages these
issues.
Finally, a latitude/longitude approach would support richer, location-based analytics based on the
registry data.
5. Fractionalisation: LGCs and STCs currently fall into 1 MWh minimum sizes. This is fine for large
scale generators (LGCs) and for smaller scale facilities where certificates are deemed over years
in a single creation activity (STCs). There is no obvious way to maintain a minimum certificate
size of 1 MWh with timestamped certificates without creating a barrier to use for small sites.
Allowing ‘carry over’ whereby production accrues until it hits 1 MWh in aggregate is not compatible
with an hourly timestamping approach for small sites. This issue may be mitigated to some degree
through aggregation of small facilities into Virtual Power Plants (VPP), however this then creates
issues with the resolution of location stamping. For example, a participant VPP may need to
aggregate nationally to consistently product at least 1 MWh per hour, however this would mean
blending underlying physical production across the NEM, precluding use-cases that preferred in-
state renewable energy.
We suggest steps should be taken to fractionalise (or rebase) REGOs such that a watt-hour (Wh)
can be represented as the base unit. If the transition costs of moving immediately to fractionalised
REGOs are too high, then a policy position committing to a long-term intention to fractionalise by
a certain date would give participants certainly when designing their own systems and processes.
6. API access: Public registries should be easily accessible via best practice API interfaces. API
access is critical to allow participants to leverage the public dataset. All registry actions (create,
transfer, surrender, convert) should be achievable via a well-documented API.
7. International approach: Any REGO framework should align Australian standards and definitions
with international standards to remove any barriers for international companies to enter Australia
and for Australian companies to enter the international markets. In particular, the framework
should (as much as possible) align with the EnergyTag standard for HRECS, TCFD reporting
framework and the GHG Protocol9. As part of its recently proposed rule10, the US Securities and
Exchange Commission recently highlighted the TCFD and GHG Protocol frameworks as
comprising a globally accepted GHG reporting standard that companies should be required to
adhere to in their corporate disclosures. Aligning with these standards will ensure interoperability
between REGOs and global carbon accounting standards and disclosure regimes.
9https://ghgprotocol.org/
10 SEC, The Enhancement and Standardization of Climate-Related Disclosures for Investors, p34, see: https://www.sec.gov/rules/proposed/2022/33-11042.pdf
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WHERE THE CLEAN ENERGY REGULATOR CAN BE MOST IMPACTFUL
Quinbrook believes the CER is uniquely positioned to accelerate implementation of a credible and transparent scheme.
• The regulator can be a central entity to monitor, audit and prevent double counting. The
department can also play a role in ensuring the accuracy and reliability of REGO tracking systems
by conducting regular audits and monitoring the issuance, transfer, and retirement of REGOs.
This helps to identify and prevent any instances of double counting and ensuring that the
information being reported is accurate and credible.
• The regulator can implement and enforce clear policies and procedures that govern the issuance,
transfer, and retirement of REGOs. These policies and procedures should be designed to ensure
that REGOs are only issued once for each unit of renewable energy generated, tagged correctly
with accurate timestamp and locational information, and that they are only retired once they have
been used to offset energy consumption.
• The regulator can provide a common language and a standardised taxonomy around REGOs to
ensure clear and unambiguous definitions exists for the methodologies and processes. The
taxonomy will ensure consistency and comparability in reporting renewable electricity usage. The
regulator can ensure the Australian taxonomy is aligned with internationally recognised standards
such as the EnergyTag standard, TCFD reporting framework and GHG Protocol, removing
barriers for international companies to enter the Australian market and to support international
trade.
TRANSITIONAL PERIOD: KEEPING IT SIMPLE, WHILE FUTURE PROOFING IT
Quinbrook sees the need for fast implementation of REGOs to create certainty for participants. To this end, implementing simple and practical measures and processes on short timescales would be beneficial.
However, it is important to note that designing REGOs for the likely requirement of the future is critical for supporting the long-term decarbonisation of the economy.
Quinbrook suggests the Department to consider the following:
• Making additional information voluntary to lower transition costs for participants.
• Using latitude/longitude as locational information. Any concerns around privacy could be manage
via reduced accuracy of the latitude/longitude co-ordinates (such that location is only recorded to
1km/10km/100km accuracy).
• Using hourly time resolution and moving toward a fully flexible starttime/endtime resolution in due
course.
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• Using kWh as unit of electricity measurement for REGOs by fractionalising a REGO into 1000
subunits and moving to Wh in due course.
CONCLUSION
The push to use renewable electricity is happening due to economic and changing consumer preferences. Many large and small enterprises and major electricity consumers have committed to ambitious targets to procure their electricity from renewable sources. Renewable Electricity Guarantee of Origin certificates provide a credible and transparent way to demonstrate that participants are meeting their commitments. The recent crackdown of greenwashing claims in Australia11 and internationally12 only sharpens the requirement for practical approaches that addresses the challenges facing participants. A well-designed REGO scheme is a strong step in this direction, enabling Australia to leverage global innovation in decarbonising electricity consumption. We welcome its implementation and look forward to contributing to finalisation of the design.
Yours Sincerely,
James Allan
Senior Director
Quinbrook Infrastructure Partners
11 For example: https://www.accc.gov.au/media-release/accc-internet-sweeps-target-greenwashing-fake-online- reviews
12 For example see: https://www.wsj.com/articles/ftc-weighs-stiff-penalties-on-deceptive-green-marketing-
11673485112
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RESPONSES TO THE DEPARTMENT’S SPECIFIC POLICY POSITION PROPOSALS
Below we respond to the Department’s specific proposals in the consultation paper. We have only responded on questions where we have a specific comment, not on every question.
Policy Position Proposals Quinbrook Response
Proposal number
P1. The Department proposes to develop and We support the development and implementation of an enduring tradeable
implement an enduring tradeable renewable renewable electricity certificate mechanism administered by the Clean
electricity certificate mechanism administered Energy Regulator. Such a mechanism will provide certainty for investment
by the Clean Energy Regulator. decisions and accelerates investment in renewable energy market in
Australia.
P2. The Department proposes to allow We do not support this proposal.
renewable electricity generation to create
We believe economically efficient outcomes will be maximised by allowing
REGOs where that generation has not
certificates to be surrendered against their highest value use case. The
already created LGCs, STCs (unless the
best use case is typically only known by the participant surrendering the
certificate creation period has passed) or
certificate at the time of surrender, not by the participant creating the
other certificates.
certificate at the time of generation.
Forcing participants to effectively choose the final use of a certificate at
time of creation risks creating significant economic inefficiencies with
regard to decarbonisation.
We would prefer to see a certificate be created with a unique timestamp
and eligibility criteria (LGC, STC, REGO) such that a participant could
surrender the certificate at a later date as they saw fit.
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P3. The Department proposes to allow eligible We support this position.
renewable energy sources as defined under
We would note that the Act did not consider recently commercialised
the Renewable Energy (Electricity) Act 2000
renewable energy sources such as power generation using green
to create REGOs.
hydrogen or ammonia.
We would support The Department expanding eligibility to include these
sources (subject to appropriate verification of the renewable content of the
relevant green fuel).
P4. The Department proposes to allow We support this position.
storage facilities to create REGOs for
We would recommend that The Department follow Energy Tag’s approach
electricity dispatched if they demonstrate that
to storages and in particular to use Method 1 with respect to the treatment
the stored energy came from eligible
of electrical losses.13
renewable electricity generation by first
surrendering an appropriate REGO or LGC.
P5. The Department proposes that electricity We support this position.
generated by offshore renewable energy
power stations and storage facilities located
within coastal waters of states and territories,
the territorial sea of Australia, and Australia’s
Exclusive Economic Zone, and electricity that
is exported internationally, be eligible to
create REGOs.
13 Energy Tag, Granular Certificate Use Case Guidelines, Section 1.5.1, see: https://www.energytag.org/wp- content/uploads/2022/03/20220329-GC-Use-Case-Guidelines.pdf
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P6. The Department proposes to allow all We support this position.
renewable electricity generation to create
We know some participants are agnostic with regard to the age of the
REGOs regardless of power station age.
renewable generating facility, whereas others are focused on ensuring
additionality by contracting only with renewable generating facilities that
would not otherwise be built. Allowing both types of facilities to create
REGOs and recording the data that allows participants to differentiate them
is our preferred approach.
P7. The Department proposes to allow all We support this position.
renewable electricity generation to create
We would note the unit of measurement for REGOs should be chosen in
REGOs regardless of power station or
order to accommodate small generation and facilities, such as residential storage facility capacity.
PV and batteries. We support Wh as a unit of measurement instead of
MWh.
Also see response to P12.
P8. The Department proposes to require We support this position.
REGOs include all the information currently
“Power station accreditation code” would need to capture small scale displayed on LGCs, and that this information
facilities that were eligible to create REGOs. There may need to be a be publicly visible.
catchall value to allay privacy concerns for smaller sites, such as
households.
P9. The Department proposes to allow RET We strongly support this position. Having additional information included participants to choose to include on LGCs on a voluntary basis will ensure transition costs are minimised for some or all of the additional information participants.
required on REGOs.
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P10. The Department proposes to require We support this position consistent with our response to P6.
REGOs include the commissioning date of the
We note that commissioning date may need to be adjusted for the facilities power station or storage facility creating the
that undergo major upgrade or asset replacement.
certificates.
The treatment for aggregators of small generation and storage facilities
(e.g. VPP) should be detailed. Using the date at which the VPP crossed
the 1 MW registration threshold should be considered as an approach.
P11. The Department proposes to require We support this position conditionally. We believe latitude/longitude is the
REGOs to include the grid location of the most logical way to record location in the general case. Latitude/longitude power station or storage facility creating the supports richer analytics and can manage privacy concerns (through certificates. reduced accuracy of latitude/longitude coordinates).
Maintaining lists of ever-changing grid locations (which presumably map to
latitude/longitude co-ordinates in any case) would introduce unneeded
complexity and overhead into REGOs.
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P12. The Department proposes that REGOs In general we support voluntary timestamping of REGOs.
created by power stations and storage
We see benefits of mandating that large facilities (>1MW) include an hourly facilities over 1 MW in capacity be required to
timestamp. However, mandating such an approach materially increases include a timestamp reflecting the hour in
compliance costs for participants. This in turn ‘raises the stakes’ for the which the electricity was dispatched by the
REGO framework design and implementation process itself.
power station or storage facility.
We believe a voluntary regime can be implemented more quickly and with
less requirement on the Department to define the REGO framework to the
level of detail needed to support mandatory application. In our view many
participants will adopt the voluntary aspects and economic incentives will
drive wide uptake.
Alternatively, pursuing a mandatory approach is likely to slow
implementation as some participants may push back against new
mandatory requirements which they view as costly.
We ask the Department to carefully consider the trade offs with regard to
mandatory application. Our recommendation is to make REGO
timestamping voluntary. This maximises the probability of REGOs
decarbonisation outcomes sooner.
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P13. The Department proposes to require We have concerns regarding this proposal in the case of exports overseas.
REGOs to include information indicating
As discussed in our response to P2, we believe economically efficient
whether the certificate was created for
outcomes will be maximised by allowing certificates to be surrendered
generation exported overseas, or for
against their highest value use case. The best use case is typically only
electricity dispatched from a storage facility.
known by the participant surrendering the certificate at the time of
surrender, not by the participant creating the certificate at the time of
generation.
As such, we would support international entities surrendering certificates
where physical interconnection exists (consistent with the Energy Tag
guidelines14) and where the surrendering entity so chooses. We do not
think the creating entity is best placed in all cases to determine if renewable
power flows offshore.
We do support this proposal with regard to storages dispatch actions,
consistent with our response to P4 and reiterating that the Department
should follow the Energy Tag guidelines regarding treatment of storages.
P14. The Department proposes that anyone We support this position.
may surrender a REGO at any time, including
for the purpose of creating a product
Guarantee of Origin certificate.
Energy Tag, Granular Certificate Use Case Guidelines, p9, see: https://www.energytag.org/wp-content/uploads/2022/03/20220329-GC-
14
Use-Case-Guidelines.pdf
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P15. The Department proposes that the Clean We strongly support the role of the CER in establishing certificate registries
Energy Regulator develop systems and as public, digital infrastructure which will support the next phase of processes to facilitate the voluntary matching decarbonisation. Such registries will facilitate the voluntary matching of of certificates based on time or other energy certificates and associated markets for time- and location-stamped attributes. renewable energy. Such registries will ensure there is no double counting
and provide a trustworthy public resource.
However, we believe the CER’s role ends at the registry. We do not see a
role for the CER in producing matching software or standing up hourly
renewable markets. The private sector domestically and globally is already
well advanced in these areas and the CER would risk crowding out such
activity. We do not see it as appropriate for a regulatory body to engage
directly in these types of commercial activities. The existing precedent
where the CER manages the LGC registry but does not have a role in LGC
spot markets, brokerages or trading software is a good analogy.
P16. The Department proposes to require We support this position and any measures to enhance transparency of
REGOs to include the name of the person or the scheme. Care will need to be taken with regard to privacy of individuals.
organisation on whose behalf the REGO is being surrendered, where applicable and if the surrender is being made on behalf of many organisations.
P17. The Department proposes that We support this position. We would suggest that the Department provides additional information capturing the purpose a list of purposes that those surrendering certificates can choose from the of the REGO surrender be required to be list.
provided when a person or organisation surrenders a REGO, and be publicly visible.
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