2. Introduction
2.1 Background
11. The Act implements a comprehensive restriction on the operation of new thermal plants (greater than 10MW that uses more than 20% fossil fuels) for a period of ten years to coincide with the establishment of the Emissions Trading Scheme (ETS).
12. However, it allows for exemptions which can enable peaking and firming roles for fossil-fuelled thermal generation to provide security of supply and to support a high renewables future, based on intermittent wind and hydro generation. This proposal concerns regulations which provide for the granting of exemptions from the prohibition.
2.2 Purpose of regulations
13. The Act provides for regulations to be made to prescribe the processes and parameters for exemptions. Section 62N of the Act contains the regulation-making powers.
14. The discussion paper covers the following key matters that are to be prescribed in the regulations:
- Prescribing the limits for the average load factors, greenhouse gas emissions and start-up times for a plant to be exempted under s62G(1)(a), and how these limits are to be calculated and determined;
- Prescribing the minimum energy efficiency level that a co-generation plant must operate above to be exempted under s62G(1)(c);
- Prescribing the maximum fossil fuel proportion of total fuel energy input, the minimum energy efficiency level and the maximum greenhouse gas emission level for a plant that uses both renewable and non-renewable fuels to be granted an exemption under s62G(1)(d);
- Prescribing the methodology for determining projected emissions savings and security of supply margins for a plant to be granted an exemption under s62G(1)(e);
- Prescribing how applications for exemptions are to be made and dealt with; and
- Authorising the Electricity Commission (the Commission) to charge fees under the Act (this regulation will be made under section 169(1)(128) of the Electricity Act 1992.
- Prescribing the manner and amounts of these payments which the Commission can require (this regulation will be made under section 169(1)(28) of the Electricity Act 1992.
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