The Mandatory Renewable Energy Target

The Mandatory Renewable Energy Target (MRET) was established in 2001 to encourage additional investment in renewable energy generation. Under MRET, eligible accredited renewable energy technologies received one Renewable Energy Certificate (REC) for every megawatt hour (MWh) of renewable energy generated. Demand in the scheme was created via a legislated obligation which was put upon electricity retailers and other entities with wholesale electricity contracts. Each year, liable entities would need to surrender a specific quantity of RECs against their obligation or face a shortfall penalty of $40/MWh. To the eligible generator, the sale of RECs represented a subsidy to assist them to compete with the cheaper existing fossil fuel based forms of electricity generation.