This blog post has been updated in Dec 19 to reflect the re-branding of NCOS to ‘Climate Active’.
The treatment of energy generated from solar PV systems is an important consideration for organisations who have carbon reduction or renewable energy targets. Most people know that electricity generated from solar reduces their grid electricity purchases and thus their carbon emissions. However, what causes much confusion is how to correctly account for renewable electricity that your organisation has exported to the grid.
Why do solar PV systems send electricity to the grid?
Your onsite solar PV system can export to the grid when there is not enough energy demand at your building – for instance, on the weekend. It may also send solar power to the grid where you have oversized your PV system.
The old way of carbon accounting for exported solar electricity
It used to be that any excess electricity your solar PV systems produced was a carbon reduction ‘gift’ to the grid. You would have calculated your greenhouse gas emissions from electricity based on your grid electricity consumption at the applicable emissions factor, less GreenPower® or LGC purchases. Emissions from your organisation’s self-consumption of solar generation were zero, and solar energy exported to the grid was not accounted for.
Why this approach was problematic for some organisations
One of our clients with multiple sites receives a credit for exported solar energy under its retail agreement. From a billing perspective, the retailer nets off the exported energy against grid-supplied power. Effectively, our client receives a feed-in-tariff equal to retail energy rates at the applicable time-of-use period.
When presented on a bill our client sees a ‘net consumption’ figure on the retail energy section. This figure is captured by their carbon emissions software and emissions are calculated from this net figure. This led to our client claiming the abatement associated with the exported solar energy.
To accurately account for carbon, our client had to query their inverters and had to work with their carbon emissions software provider and their retailer to ensure that correct data was available – in other words, a lot of effort for a small benefit.
Luckily, in October 2018, the Department of Environment and Energy decided to trial a new carbon accounting approach.
The new way of carbon accounting for exported solar electricity
With a recent decision by the Department of Environment and Energy who administer the Climate Active to trial a new approach, you can now claim the carbon reduction from solar exports.
You are allowed to count electricity generated from renewable energy sources and exported into the electricity grid as a credit (or reduction) in your carbon account. The decision was made because exported energy is considered zero emissions and displaces the need for the generation of emissions-intensive energy elsewhere.
To claim exported renewable electricity as a reduction in your carbon account, the exported electricity must:
- be measurable and auditable, g. via electricity bills that show the amount of exported electricity; and
- be generated by a renewable energy system under the operational control of the claiming entity; and
- be generated from a small-scale renewable energy system (below 100 kW). It does not matter if small technology certificates have been received or sold for that generation; or
- be generated from a large-scale renewable energy system (100 kW and above) that has not created any large generation certificates (LGCs) for the exported electricity; or
- be generated from a large-scale system that has created LGCs for the exported electricity but have been voluntarily retired.
How to calculate the carbon emissions reduction for exported solar energy
You can calculate the value of the exported electricity by converting the amount of exported electricity into its carbon emissions equivalent. You need to multiply the amount of exported electricity by the scope 2 emissions factor for the state in which the electricity was generated. The scope 2 factor is used as it represents electricity generation as opposed to transmission and distribution.
The emissions value of exported electricity must be calculated using National Greenhouse Accounts (NGA) factors produced by the Department of Environment and Energy. At this stage, you cannot claim indirect electricity consumption calculated using alternative factors (non-NGA).
You can download the 2018 scope 2 NGA emissions factors here: http://www.environment.gov.au/climate-change/climate-science-data/greenhouse-gas-measurement/publications/national-greenhouse-accounts-factors-july-2018
For example, 10,000 kWh of exported electricity generated in NSW and the ACT is worth 8.2 tonnes of carbon dioxide equivalent (CO2-e). The following formulas show you how to calculate this:
10,000 kWh * 0.82 kg CO2-e/kWh = 8,200 kg CO2-e
8,200 kg CO2-e/1,000 = 8.2 kg CO2-e
How to report the carbon reduction
You can report the exported electricity in your Climate Active documentation by summing all total emission sources and then subtracting the emissions value of the exported electricity to give total net emissions.
You can use exported electricity (or Greenpower®/LGCs) to reduce all direct and indirect electricity emission sources, e.g. imported electricity, base building electricity, electricity consumed from street lights or a data centre. For more information on the treatment of LGCs you may also refer to two of our previous blog posts:
- Allowable offset mechanisms for 100% renewable energy and carbon neutral goals
- What you need to know about accounting for LGCs, STCs, ESCs, VEECs, ACCUs
Example of a carbon reduction calculation
The following table shows an example of how you would account for your exported solar electricity.
Example carbon account for exported solar electricity
|Source||Activity data||Scope||Emissions (t CO2-e)|
|Total net emissions||1,495|
|T&D losses electricity||1,000 MWh||3||100|
|Base-building electricity||54 MWh||3||50|
|Data centre electricity consumption||326 MWh||3||300|
|Water use||13 kL||3||3|
|Paper use||9 t||3||10|
|Business travel – flights||574,036 km||3||190|
|Food and catering||$23,490||3||35|
|Total gross emissions||1,533|
|Emissions reduced through GreenPower/ voluntarily retired LGCs||30|
|Emissions reduced through exported/ surplus renewable energy||8|
No matter whether your system is small-scale (under 100 kW) or large-scale (over 100 kW), you can claim the carbon reduction for your onsite as well as your export portion. Bear in mind that if your system is greater than 100 kW, you need to retire your LGCs to claim the carbon reduction benefit.
Carbon accounting can be difficult. If you need help with accounting correctly for your greenhouse gas emissions, or if you want to go carbon neutral, please contact Barbara.
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