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19 February 2023
Department of Climate Change, Energy, the Environment and Water
GPO Box 3090
Canberra ACT 2601
Australia
Via email to: RenewableEnergy@industry.gov.au
RE: Feedback on the Renewable Energy Certification Policy Paper
Microsoft welcomes the opportunity to contribute to the Department of Climate Change, Energy, the
Environment and Water’s consultation process on the Renewable Energy Certification Policy Paper.
We believe that Microsoft and the broader private sector have an important role to play in advocating for effective and innovative sustainability policy. To this end, Microsoft has publicly released briefs on both carbon and electricity policy to share the priorities and principles that guide Microsoft’s advocacy work on these topics1. Microsoft’s priorities in carbon and electricity policy include advocating for effective carbon disclosure and procurement reporting, as well as initiatives that will accelerate the transition to clean electricity generation. Microsoft is pleased to note that the proposal within the
Renewable Energy Certification Policy Paper to capture more granular information such as time and location of generation is well aligned with these two priorities areas. However, Microsoft believes that the proposed REGO scheme could be improved by adopting best practice frameworks on granular certification of renewable electricity. To this end, Microsoft has made recommendations in response to some of the policy positions put forward by the Department.
Microsoft has made several sustainability commitments linked to carbon-free energy use which make us an interested stakeholder in the proposed REGO scheme. For example, Microsoft has committed to execute power purchase agreements equivalent to 100% of our global electricity needs by 2025.
This near-term commitment has positioned Microsoft as one of the largest corporate purchasers of renewable energy in the world, with Microsoft having signed power purchase agreements (PPAs) for around 13.5 gigawatts of new renewable energy capacity across the globe2. Microsoft is an active participant in the Australian renewables market, having recently announced a 15-year PPA with
Fotowatio Renewable Ventures Australia (FRV Australia) for its new Walla Walla Solar Farm in the
Riverina region of New South Wales3.
Beyond Microsoft’s commitment to 100% carbon-free electricity by 2025, we are innovating with our energy purchasing and contracting to help bring more zero carbon electricity onto the grid and move more high carbon intensity electricity off the grid, helping to rebalance the carbon intensity of any grid
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Microsoft, Using our voice to advance carbon and electricity policy, 22 September 2022
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MSN, Microsoft and Qcells team up in major U.S. solar push, 25 January 2023
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Microsoft, Microsoft and FRV Australia team up to add renewable energy to the grid, 20 December 2022
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on which we operate. Therefore, in addition to Microsoft’s 2025 commitment, we have made a further commitment to have 100 percent of our electricity consumption, 100 percent of the time, matched by zero carbon electricity purchases by 20304. The Department’s proposal to include information about the time and location of renewable electricity generation on REGOs is well received by
Microsoft, as this supports our 2030 commitment by allowing us to match our consumption on an hourly basis, and on the grid where the consumption occurs5. The availability of detailed time and location information also enables purchasers of renewable electricity to assess the emissions reduction impact associated with renewable electricity generation. This means purchasers of renewable electricity can make more informed investment decisions that can accelerate grid decarbonisation.
The following submission provides responses to each of the policy position proposals outlined in the
Consultation Paper. For further detail on any of the responses, please contact Robert Montgomery,
Senior Program Manager – Energy & Sustainability at Microsoft (rmontgomery@microsoft.com).
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Microsoft, Made to measure: Sustainability commitment progress and updates, 14 July 2021
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Ibid.
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Response to Policy Position Proposals
Overall design
1. Voluntary tradeable certificate
The Department proposes to develop and implement an enduring tradeable renewable electricity certificate mechanism administered by the Clean Energy Regulator.
Microsoft Response – Broadly Agree
Microsoft supports the development and implementation of an enduring tradeable renewable electricity certificate mechanism.
Eligibility
2. Large and small-scale generation
The Department proposes to allow renewable electricity generation to create REGOs where that generation has not already created LGCs, STCs (unless the certificate creation period has passed) or other certificates.
Microsoft Response – Neither Agree nor Disagree
Microsoft agrees that double counting should be avoided to maintain the integrity of renewable energy claims. However, Microsoft is concerned that Large-scale Generation Certificates (LGCs) and
Small-scale Technology Certificates (STCs) may not be able to include the same granular detail as
REGOs. In our response to Policy Proposal 12, we recommend that it should be possible for REGOs to be issued in sizes smaller than 1MWh. LGCs and STCs are equivalent to 1MWh of renewable electricity, therefore if only an LGC or STC is created then granularity below 1MWh cannot be able to be achieved.
One method to overcome this obstacle may be to link LGCs/STCs to REGOs, while requiring that
LGCs/STCs are surrendered with corresponding REGOs. This would mean REGOs could be created and surrendered independently, but LGCs/STCs could not be surrendered without matching REGOs.
For REGOs linked to LGCs/STCs additional information such as time and location of generation could be optional.
This approach may also allow for a more seamless transition for renewable electricity generators transferring from the LGC/STC system to the REGO system in 2030.
Information such as time and location of generation is becoming increasingly important for purchasers of renewable electricity, like Microsoft, who have committed to match electricity consumption with the time and location of generation. Therefore, it is useful for LGCs/STCs to be able to provide the same granularity of information as REGOs. The increasing importance of granular information is highlighted by the numerous corporate buyers and organisations that have signed the
United Nations 24/7 Carbon Free Energy Compact6.
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United Nations, 24/7 Carbon Free Energy Compact (Our Partners)
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3. Eligible renewable energy sources
The Department proposes to allow eligible renewable energy sources as defined under the
Renewable Energy (Electricity) Act 2000 to create REGOs.
Microsoft Response – Broadly Agree
Microsoft notes the Department’s suggestion that:
“Consideration could be given to expanding the eligible renewable energy sources to include
secondary energy sources derived from renewable energy, such as renewable hydrogen used
as a fuel to generate electricity.”
Microsoft recommends that eligibility is extended to include secondary energy sources derived from renewable energy.
4. Storage facilities
The Department proposes to allow storage facilities to create REGOs for electricity dispatched if they demonstrate that the stored energy came from eligible renewable electricity generation by first surrendering an appropriate REGO or LGC.
Microsoft Response – Broadly Agree
Microsoft sees storage as a valuable solution to enable the matching of electricity consumption with renewable energy purchases throughout the day. Therefore, it is important to be able to prove that electricity dispatched from a storage facility was originally generated using renewable electricity.
5. Offshore generation and exported electricity
The Department proposes that electricity 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.
Microsoft Response – Broadly Agree
No written response provided.
6. Below baseline generation (power station vintage)
The Department proposes to allow all renewable electricity generation to create REGOs regardless of power station age.
Microsoft Response – Neither Agree, Nor Disagree
Microsoft agrees that there is a need for an enduring and comprehensive mechanism such as REGOs to certify renewable electricity generation and provide granular information on the time and location of generation. However, Microsoft notes that the introduction of certification of below baseline generation before 2030 when the Large-scale Renewable Energy Target (LRET) expires, may impact voluntary demand for LGCs. A reduction in voluntary demand for LGCs has the potential to
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dampen incentives for investment into new renewable energy generation over the coming years, which would delay the decarbonisation of Australia’s electricity sector. Therefore, Microsoft urges the Department to consider an implementation approach for the REGO scheme that maintains the current incentives for investment into renewables.
Microsoft also recommends that the commissioning date of the power station or storage facility is recorded on REGOs as this allows potential buyers of REGOs to make more informed decisions about generation sources. This is also discussed in our response to Policy Position 10.
7. Size threshold (power station capacity)
The Department proposes to allow all renewable electricity generation to create REGOs regardless of power station or storage facility capacity.
Microsoft Response – Broadly Agree
Microsoft agrees with the proposal to allow all renewable electricity generation to create REGOs regardless of capacity as this may support ‘just transition’ outcomes for clean energy, particularly with regards to community-led projects and distributed solar energy.
Microsoft recently partnered with SSE Airtricity7, Ireland’s largest provider of renewable energy, to install and manage internet-connected solar panels on the roofs of dozens of schools in Dublin. The solar panels gave the schools access to a renewable energy source that also enabled them to reduce their utility bills. Ensuring that renewable electricity certification schemes allow distributed solar projects, like the one above, to generate REGOs, will provide the distributed solar power sector with new revenue streams and addressable markets. It will also improve access to clean energy in communities where affordable sources of renewable electricity, such as solar power, have historically been unavailable.
In addition, Microsoft recommends that it be possible for REGOs to be issued in sizes below 1MWh, as this could enable market access to smaller producers and buyers of renewable energy, supporting a more robust and equitable market. This is further discussed in our response to policy proposal 12.
Energy Attributes
8. Information required on REGOs
The Department proposes to require REGOs include all the information currently displayed on
LGCs, and that this information be publicly visible.
Microsoft Response – Broadly Agree
Microsoft supports the inclusion of all the information currently displayed on LGCs.
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Microsoft Innovation Stories, Microsoft demonstrates how to increase green energy in Ireland one rooftop at a time, 27 September 2020.
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9. Optional information displayed on LGCs
The Department proposes to allow RET participants to choose to include on LGCs some or all of the additional information required on REGOs.
Microsoft Response – Broadly Agree
Microsoft agrees that RET participants should be able to include on LGCs some or all of the additional information required on REGOs.
As discussed in response to policy position 2 and policy position 12, Microsoft recommends that it should be possible to create REGOs in sizes smaller than 1MWh. Since LGCs currently represent a fixed 1MWh amount, an additional solution will be required to ensure LGCs have the option to include the sub 1MWh granularity of information that we recommend is included on REGOs.
Beyond the additional information suggested by the Department, Microsoft suggests also stamping
REGOs with the grid carbon emissions rate at the time and location of generation. This information could support the prioritisation of clean energy investments with the highest carbon reduction impact. This is further discussed in the “Additional Comments” section of our responses.
10. Policy position proposal 10: Additional vintage information required on REGOs
The Department proposes to require REGOs include the commissioning date of the power station or storage facility creating the certificates.
Microsoft Response – Broadly Agree
Microsoft supports the inclusion of the commissioning date of the power station or storage facility on REGOs as this allows potential buyers of REGOs to make more informed decisions about generation sources.
11. Additional grid information required on REGOs
The Department proposes to require REGOs to include the grid location of the power station or storage facility creating the certificates.
Microsoft Response – Broadly Agree
Microsoft agrees with the inclusion of grid location on REGOs as this will enable both the more granular matching of electricity consumption with renewable electricity generation and more accurate assessment of the emissions abatement impact of renewable generation.
In addition to time and location stamps, Microsoft urges the Department to consider stamping
REGOs with the grid carbon emissions rate at the time and location of generation as this could support the prioritisation of clean energy investments with the highest carbon reduction impact.
This is further discussed in the “Additional Comments” section of our responses.
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12. Additional timestamp required on REGOs
The Department proposes that REGOs created by power stations and storage facilities over 1MW in capacity be required to include a timestamp reflecting the hour in which the electricity was dispatched by the power station or storage facility.
Microsoft Response – Broadly Agree
Microsoft supports the inclusion of timestamps on REGOs as this will enable more accurate assessment of the emissions abatement impact of renewable generation and will help incentivise investment in renewable energy and storage solutions that lead to faster grid decarbonisation.
Microsoft also supports mechanisms to allow smaller power stations that are below 1MW in capacity to provide time of generation information, as this may enable smaller producers and buyers of renewable energy to access the benefits of matching time of generation with consumption. To enable market access for smaller producers and buyers of renewable energy, Microsoft recommends that it be possible to issue REGOs in sizes smaller than 1MWh. This would allow smaller power stations to timestamp more accurately and would support a more robust and equitable market.
Microsoft notes the Department’s suggestion that for those generating a partial MWh within a one- hour period the generation could be carried over to the next one-hour period. However, the “carry- over” approach could lead to a loss of accuracy in timestamping and therefore decrease the value of the information included on REGOs.
Microsoft also suggests that Department consider allowing for REGO’s to be issued in a fixed-time interval that ideally matches the National Electricity Market’s five-minute dispatch and settlement period.
In addition to time and location stamps, Microsoft urges the Department to consider stamping
REGOs with the grid carbon emissions rate at the time and location of generation as this could support the prioritisation of clean energy investments with the highest carbon reduction impact.
This is further discussed in the “Additional Comments” section of our responses.
13. Additional information on REGOs for exported electricity or storage
The Department proposes to require REGOs to include information indicating whether the certificate was created for generation exported overseas, or for electricity dispatched from a storage facility.
Microsoft Response – Broadly Agree
Microsoft agrees that information such as whether generation was created for export or for electricity dispatched from a storage facility should be included on REGOs. Ensuring generation exported overseas is tagged appropriately will provide additional protections against double counting. Moreover, an export tag would prevent exported renewable energy generation from being incorrectly counted towards the overall grid mix on Australian grids. Counting exported renewable electricity as part of Australia’s grid mix would invalidate calculations such as the grid carbon emissions rate and create widespread inaccuracies in carbon accounting.
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Surrender
14. Surrender of REGOs
The Department proposes that anyone may surrender a REGO at any time, including for the purpose of creating a product Guarantee of Origin certificate.
Microsoft Response – Neither agree, or disagree
No written response provided.
15. Voluntary matching of REGOs with load
The Department proposes that the Clean Energy Regulator develop systems and processes to facilitate the voluntary matching of certificates based on time or other energy attributes.
Microsoft Response – Broadly Agree
Microsoft welcomes the Department’s proposal to provide the functionality to support energy attribute matching. Microsoft’s vision for a carbon-free grid recognises that rapid grid decarbonisation is necessary both to eliminate emissions within the electricity sector itself and to enable emission reductions in other sectors via widespread electrification. That is why Microsoft has committed to have 100 percent of our electricity consumption, 100 percent of the time, matched by zero carbon electricity purchases, by 20308. This commitment requires the ability to track clean electricity production on a granular level - hourly instead of annually.
Microsoft is already piloting approaches to energy attribute matching in other parts of the world. For example, Microsoft is working with the European energy company Vattenfall to track load and clean energy production on an hourly basis9. Microsoft would welcome the opportunity to share learnings from this pilot project and others to support the Department’s efforts towards energy attribute matching.
16. Information on who is surrendering REGO
The Department proposes to require REGOs to include the name of the person or organisation on whose behalf the REGO is being surrendered, where applicable and if the surrender is being made on behalf of many organisations.
Microsoft Response – Broadly Agree
No written response provided.
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Microsoft, Made to measure: Sustainability commitment progress and updates, 14 July 2021
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Microsoft, Achieving 100 percent renewable energy with 24/7 monitoring in Microsoft Sweden, 24 November
2020
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17. Information on purpose of surrendering REGO
The Department proposes that additional information capturing the purpose of the REGO surrender be required to be provided when a person or organisation surrenders a REGO, and be publicly visible.
Microsoft Response – Broadly Agree
Microsoft agrees that the purpose of the REGO surrender should be recorded and recommends that the Department carefully considers the categories provided for selection. The categories should provide sufficient detail of the possible purposes for REGO surrender within the two broad categories of voluntary claims and compliance obligations. Moreover, given the intended enduring nature of the REGO scheme, the categories should be designed to accommodate possible future purposes such as the introduction of new compliance obligations. Microsoft also urges the
Department to avoid free-form text as an option in recording the REGO surrender purpose as this will make analysis of the purpose data more difficult.
Any additional comments?
Matching electricity consumption with renewable electricity that is generated at the same time as that consumption, and on the same grid as that consumption, is one pathway towards creating a carbon-free grid. In addition, Microsoft urges the Department to consider stamping REGOs with the grid carbon emissions rate at the time and location of generation as this could support the prioritisation of clean energy investments with the highest carbon reduction impact.
The preferred approach would add Locational Marginal Emissions (LME) data to REGOs, by considering the condition of the power grid at the time and location that the clean energy was produced. This data can be used to estimate the emission reduction benefit of renewable generation based on the specific time and place in which the generation occurs. LME data can thus enable energy actors to evaluate the relative decarbonisation impact of building new renewable facilities in one location or another and optimise for carbon impact. These insights can influence investment decisions that result in more targeted and rapid decarbonisation of the energy system.
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