Energy savings certificates
Q. What is an energy savings certificate, or ESC?
A: An energy savings certificate, or ESC, is equivalent to 1 tonne of carbon dioxide (equivalent), which is equal to 1.06 Megawatt hours of energy:
ESC = TCO²eq. = 1.06xMWh
After implementing a Recognised Energy Savings Activity (RESA), an Accredited Certificate Provider will be able to create Energy Saving Certificates for each tonne of carbon dioxide (equivalent) saved, or 1.06 times megawatt hours of energy saved. The certificate can be traded and sold to Liable Entities who have an obligation to meet a predetermined energy savings quota.
Q. What is a certificate worth?
A: The certificates are open to market fluctuations so the price varies depending on supply and demand. In 2011 the price fluctuated between $25 and $30.
If a Liable Entity does not meet the annual target for energy savings, they are required to pay a penalty rate. This rate can be consider a ceiling price of the certificates and in 2011 the penalty price is $25.52, which will increase annually with inflation. Liable Entities can also purchase additional certificates to meet the following year’s quota. There is no minimum price for certificates.
There are a number of trading firms that specialise in certificate trading and will be able to give you more accurate information.
IPART is the Scheme Administrator only and are is involved in the sale or pricing of certificates and cannot provide any further information in this regard.
Q. What is the difference between creating and registering certificates?
A: To create certificates you need to complete a Recognised Energy Savings Activity and calculate the energy savings and eligible certificates, which will be added to the Accredited Certificate Provider’s internal database. To register certificates you need to take the number of certificates created in your database and claim them on the Registry.
Q. How and when can certificates be created?
A: Certificates can be created upon completion of a Recognised Energy Savings Activities. Once all the documentation and calculations have been completed an Accredited Certificate Provider will add the projects details and number of certificates to a database, or ‘create’ the certificates.
Q. How are certificates registered?
A: Once certificates have been created, an Accredited Certificate Provider can log on to the Registry and claim the number of certificates the activity has created in their database. Once the $0.70/certificate payment has been received the certificate will be registered and will appear in the Registry against your account. You will then be able to trade your certificates.
Q. How do I sell my certificates and who will buy them?
A: The Liable Entities have an obligation to purchase certificates under the ESS legislation, and are required to surrender a certain number each year; therefore they are the most common purchasers. However, there are a number of brokers, or third parties, who trade and deal in certificate who will also purchase certificate. All Liable Entities are listed on this website.
IPART is not involved in the sale of certificates, but simply manage the Registry which is the medium to create and transfer certificates between account holders (Liable Entities, Accredited Certificate Providers and brokers). All transactions occur independently of the Scheme Administrator.
Generally Accredited Certificate Providerss who create and register certificates will enter into a contract with a specific Liable Entity who will guarantee a fixed price in return for a constant supply of certificates. There are many different ways to sell certificates; Some Accredited Certificate Providers even sell to other Accredited Certificate Providers who have a pre-existing agreement with a Liable Entity.
Q. What is the market for certificates?
A: The Energy Savings Scheme energy savings target is set at 2% of annual NSW electricity sales in 2011, and rising annually to 4% in 2014. In 2010 approximately 750,000 certificates were required by the Liable Parties to fulfill their obligation. The 2011 target is in the vicinity of 1,500,000 certificates.
Q. What is the Certificate Conversion Factor (CCF)?
A: The Certificate Conversion Factor is a multiplier used in all Energy Savings Certificate calculations to convert energy savings, in mega-watt hours (MWh), to tonnes of carbon-dioxide equivalent (TCO2eq).
In NSW for every mega-watt hour of electricity produced, approximately 1.06 tonnes of carbon-dioxide is released into the atmosphere. As the generation mix in NSW changes from primarily coal based to gas and renewables, this multiplier will decrease to reflect the emissions from energy production.
Currently the CCF is set as 1.06 until 2020 (Schedule 5B of the Act). However, the Governor may amend the Act to change this number on the advice of the Minister.
See Electricity Supply Act 1995, Section 130
Q. I was eligible for funding under the NSW Energy Efficiency for Small Business Program, am I eligible for funding under the ESS?
A: The ESS reduces the payback of energy saving projects through the creation and sale of Energy Savings Certificates (ESCs) in an open market. The ESS does not provide funding directly to businesses in the form of grants or other payments. In order to create ESCs from your energy savings project, you need to apply to become an Accredited Certificate Provider (ACP) or engage an ACP to create certificates for you. The application process is the same for any project that creates ESCs and has specific requirements to verify savings, which, if accepted, are subject to audit (with the cost borne by the ACP). For more information, please familiarise yourself with the ESS Rule and see the section on our website relating to becoming an ACP.