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A carbon price might still appear years away, but a voluntary “white certificate” market where corporations and individuals trade the benefits of reduced energy consumption could be in place by July next year. That is one of the key recommendations of the prime minister’s task force on energy efficiency, released last Friday, which calls for something of a culture shock in this country on the way it consumes energy.

The task force said a formal trading scheme should be in place by mid-2012 as one of the key policy platforms to lift the country’s energy efficiency by 30% and a voluntary market where corporations and households could gain benefit from early action could take place as early as July 2011.

The underlying goal of the task force is to replace the mish-mash of ineffective and half-hearted policies with a focused national scheme that would support a trading mechanism with strict national efficiency targets. To date, Australia has implemented less than one fifth of the key energy efficiency recommendations made by the International Energy Authority and trails the OECD so badly that, even if its policy recommendations were implemented, there is no guarantee Australia would be able to make up lost ground. In a world of high energy costs (yes, including Australia) and reduced emissions, that could pose problems.

The task force believes that the trading market would be one of the principal mechanisms that could help cut household energy costs by up to $296 a year from where they would be otherwise, reduce peak energy demand by up to 1400MW below the reference case through to 2020 and save up to $12 billion in avoided energy infrastructure costs.

The scheme would work something like this: The government might set a mandatory obligation for an energy retailer to find 40,000 units of energy efficiency savings a year — and the failure to do so would incur a penalty of $40 a unit.

A householder installing a new heating system that achieves an energy efficiency saving of 10 units would be able to sell those units to the retailer, potentially for up to $400, either directly or through a reduced purchase price from an energy services company.

The task force notes that this would be similar to what occurs for renewable energy through the renewable energy target, where households investing in solar water heaters or small solar power systems can claim renewable energy certificates and sell them to electricity retailers, or installers offer water heaters to householders at a price that is reduced by the value of the certificates.

It would mean that Australia would have three market mechanisms to support the reduction of energy use, the transition to renewable energy and reduced emissions.

The task force suggests that the RET and the energy savings initiative would not be able to achieve the current 2020 emissions reduction target by themselves, but it could better prepare the economy to respond to a carbon price.

“An explicit price on carbon will underpin and catalyse energy efficiency throughout the economy — greatly enhancing the effectiveness of proposals in this report. Energy efficiency policy is an important part of a suite of responses to climate change, but it cannot realistically be expected to do the ‘heavy lifting’ needed to deliver Australia’s greenhouse gas reduction targets.”

Energy efficiency will also help major emitters cope with emission reduction targets. The report notes that smelting and refining group Nyrstar, one of the most vocal critics of the CPRS, had identified energy savings of 11% from the first initiatives spawned from the energy efficiency opportunities program.

If the task force recommendations are adopted, it seems certain that Australian business and households are in for something of a culture shock when it comes to energy consumption, particularly those businesses (and banks) that will only invest in initiatives that increase production and ignore those that could provide a higher rate of return by reducing costs.

The report notes that Australia compares badly with the OECD average on energy intensity, and has done comparatively little in terms of programs and standards, simply because energy has been so cheap and formed such a small part of business and household expenses.

Indeed, it says there has been such limited demand that most Australian financial institutions do not even have the intellectual property and products needed to finance energy efficiency, meaning that few projects that have been proposed have gotten the finance to go ahead.

Because energy costs have been considered so immaterial, company boards have not investigated potentially very profitable energy efficiency options that would deliver a quick payback on investments. Some substantial energy efficiency upgrades that could deliver good rates of return were unable to access capital expenditure budgets as they were dumped in favour of projects that increased production but delivered lower rates of return.

The task force wants businesses to move from a position where energy efficiency is considered to be a useful means of saving money and getting good PR, to becoming part of a company’s core business and fundamental to its competitiveness, productivity and social licence to operate.

All of this will present a challenge to electricity generators and retailers, who have built up large franchises based on the simple concept that selling more electrons and building more power stations means making more money.

The task force says that, if its recommendations are taken up, the gains in energy efficiency and fall in energy consumption would also lead to lower wholesale prices, and lower profits for existing generators — possibly of between $600 million and $1.5 billion over the period 2012 to 2020.

It says, though, that over this time total generator profit is estimated at about $40 billion and “does not represent a loss to the economy”, as there is a countervailing benefit to energy users through lower energy costs. Indeed, it nominates a net benefit to the economy from the scheme of $6.6 billion.

And it notes that some companies have learned to deal with the change and focus on other metrics. The UK retailer E.ON, for instance, now states on its website: “Our business is selling energy. The more energy people use, the more money we make, surely? Except, for a forward-looking energy company with an eye on more than short-term profit, it doesn’t. Our ideal would be to have more customers. All using less energy.”

*This article originally appeared on Climate Spectator

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]]> http://www.energy-options.info/2010/10/carbon-tax-in-australia/feed/ 0 http://www.energy-options.info/2010/10/so-you-want-to-make-75000-pa-tax-free-from-your-solar-home-power-installation-easy/ http://www.energy-options.info/2010/10/so-you-want-to-make-75000-pa-tax-free-from-your-solar-home-power-installation-easy/#comments Sun, 10 Oct 2010 04:28:42 +0000 Editor http://energy-options.info/?p=766

TAXATION RULING ON INCOME FROM SOLAR POWER GENERATION @ HOME AUSTRALIAN GOVERNMENT RULING ON SOLAR POWER GENERATION INCOME 92788 Edited version of private ruling Authorisation Number: 92788 This edited version of your ruling will be published on the public Register of private binding rulings after 28 days from the issue date of the ruling. The Information about private rulings fact sheets have more information. Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. Ruling 1. Are credits or payments you receive for power generated by solar panels on your residence, assessable for income tax? Answer: No. 2. Are you entitled to either an outright deduction or a decline in value deduction for the cost of the solar panels? Answer: No. 3. Are you entitled to any deductions in relation to funds borrowed in order to purchase the solar panels? Answer: No. This ruling applies for the following period(s): Year ended 30 June 2008 Year ended 30 June 2009 Year ended 30 June 2010 Year ended 30 June 2011 Year ended 30 June 2012 The scheme commences on: 1 July 2007 Relevant facts and circumstances You have a solar electric system on the roof of your principal residence. You are not registered for GST You intend to expand your current system. Under the legislation, the electricity retailer will be required to credit you 50.05 cents/kwh for the electricity exported to the grid. Your purpose for installing your current system was to offset the cost of electricity now and in the future, and to contribute to greenhouse emission reductions. Your reasons for wishing to expand your system are to offset 100% of the electricity consumed in your home and to generate income from a green source. Relevant legislative provisions Income Tax Assessment Act 1997 Section 8-1. Income Tax Assessment Act 1997 Section 6-5. Income Tax Assessment Act 1997 Section 6-10. Income Tax Assessment Act 1997 Section 40-25. Reasons for decision While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Income Sections 6-5 and 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provide that the assessable income of a resident taxpayer includes ordinary income and statutory income derived directly or indirectly from all sources during the income year. Generally, if an amount received is not considered ordinary income or statutory income, it is not included in assessable income. Ordinary income has generally been held to include three categories, namely, income from rendering personal service, income from property and income from carrying on a business. Amounts that are not ordinary income, but are specifically included in assessable income by a provision of the taxation legislation, are called statutory income and are also included in assessable income. There are no specific legislative provisions relating to payments or credits received for the supply of electricity. Therefore the payments or credits are not considered to be statutory income. Consequently, it is only necessary to consider if the payments or credits should be included as ‘ordinary income’. They will be ordinary income if you are carrying on a business of generating electricity. Subsection 6(1) of the ITAA 1997 defines ‘business’ to include ‘any profession, trade, employment, vocation or calling, but does not include occupation as an employee’. However, this definition simply states what activities may be included in a business. It does not provide any guidance for determining whether the nature, extent, and manner of undertaking those activities amount to the carrying on of a business. For this purpose it is necessary to turn to case law. The cases provide a number of indicators that are relevant to determining whether activities constitute the carrying on of a business. These indicators are set out below. Significant commercial purpose or character The ‘significant commercial purpose or character’ indicator is linked to the size and scale of activity, the repetition and regularity of activity and the profit indicators. A way of establishing that there is a significant commercial purpose or character is to compare the activities with those of a taxpayer who is carrying on a similar activity that is a business. The intention of the taxpayer The intention of the taxpayer in engaging in the activity is a relevant indicator. This indicator is particularly related to: - whether the activity is preparatory or preliminary to the ultimate activity - whether there is an intention to make a profit, and - whether the activity is better described as a hobby or the pursuit of a recreational or sporting activity. Prospect of profit We believe it is important that the taxpayer is able to show how the activity can make a profit. Stronger evidence of an intention to make a profit occurs when the taxpayer has conducted research into his/her proposed activity, consulted experts or received advice on the running of the activity and the profitability of it before setting up the business. Repetition and regularity It is often a feature of a business that similar sorts of activities are repeated on a regular basis. The repetition of activities by the same person over a period of time on a regular basis helps to determine whether there is the carrying on of a business. Is the activity of the same kind and carried on in a manner that is characteristic of the industry? An activity is more likely to be a business when it is carried on in a manner similar to that in which other participants in the same industry carry on their activities In considering this indicator the following factors might be compared with the characteristics of others engaged in the same type of business: - the volume of sales - the sort of expenses incurred by the taxpayer - the amount invested in capital items - previous experience of the taxpayer Organisation in a businesslike manner and the use of system Business should be conducted systematically. A business is characteristically carried on in a systematic and organised manner rather than on an ad hoc basis. An activity should generally conform with ordinary commercial principles to amount to the carrying on of a business. Size or scale of the activity The larger the scale of the activity the more likely it will be that the taxpayer is carrying on a business. However, this is not always the case. Hobby or recreation The pursuit of a hobby is not the carrying on of a business for taxation purposes. Money derived from the pursuit of a hobby is not regarded as income and therefore is not assessable. Expenses incurred in relation to the hobby activity are not allowable deductions. However, we recognise that a hobby can sometimes turn into a business. Application to your circumstances: One of your reasons for wishing to expand your solar panel system is to receive income. This is a factor which points towards the carrying on of a business. However, the following factors point towards the opposite conclusion: · the solar panel system will be attached to your home rather than located at a dedicated business facility. · although large for a home system, it is designed for domestic rather than commercial use. · your other reasons for expanding the system are to offset 100% of the electricity consumed in your home and to support the production of renewable energy. · although you wish to receive income from the system, given its substantial capital cost, there is no prospect of profit in the short or medium term. The likelihood of profit in the long term is also questionable as it is dependant both on the length of time the panels will remain effective before requiring replacement and you not changing residences. As you intend to borrow the funds needed to expand the system, the prospect of profit is even further reduced due to the additional interest expenses that will be incurred. · your activity will not be carried on in a manner similar to other participants in the electricity generation industry. Commercial electricity providers operate on a size and scale vastly larger than the activity that you propose. Having regard to all of the above, it is considered that you would not be carrying on a business of generating electricity. Therefore, any payments or credits you receive from your solar panels will not be assessable income. Deductions The general deduction provision is section 8-1 of the ITAA 1997 which allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. The cost of an asset used to produce assessable income is not deductible outright under section 8-1 of the ITAA 1997 as the expenditure is capital in nature. However, a decline in value deduction claimed over the effective life of the asset is available under section 40-25 of the ITAA 1997. No deductions are available for any of your expenditure in relation to your solar electric system (including expenditure relating to funds borrowed to purchase the system such as interest) as the payments or credits you receive in relation to the system are not assessable income. DISCLAIMER You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you (or to someone acting on your behalf). For more information about relying on rulings refer to the relevant private rulings fact sheet(s). The Register of private binding rulings is a public record of private rulings issued by the Tax Office. The Register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies. The rulings in the Register have been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict Tax Office policy or decisions. © Commonwealth of Australia 2010 This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968 all other rights are reserved. Requests for further authorisation should be directed to the Manager, Commonwealth Copyright Administration, Intellectual Property Branch, Department of Communications, Information Technology and the Arts, GPO Box 2154, Canberra ACT 2601, or by email to commonwealthcopyright@dcita.gov.au Sourced & published by Henry Sapiecha

]]> http://www.energy-options.info/2010/10/so-you-want-to-make-75000-pa-tax-free-from-your-solar-home-power-installation-easy/feed/ 0 http://www.energy-options.info/2010/08/first-electric-vehicle-charge-station-set-up-in-america/ http://www.energy-options.info/2010/08/first-electric-vehicle-charge-station-set-up-in-america/#comments Fri, 13 Aug 2010 06:08:35 +0000 Editor http://energy-options.info/?p=724
America’s first public-use quick-charge station for electric vehicles opens

Portland General Electric and NEC have joined forces to declare North America’s first public-use, quick-charge station for electric vehicles open for business. Heralded as a tipping point for the roll-out of electric vehicles in the U.S., the Takasago Rapid Charging Station is said to provide batteries with up to 80 per cent full strength in 20 to 30 minutes. Company officials and Governor Ted Kulongoski took the opportunity to power up a visiting Nissan LEAF before it left for a two-day tour of the area. Read More

Received & published by Henry Sapiecha

OROVILLE, Calif. (UPI) — A California college says it is set to become the nation’s only grid-positive college, producing more energy from its own on-site solar power than it uses.

Butte College in Oroville, Calif., will add 15.000 solar panels to its existing 10,000 by May 2011 to become the largest solar-producing college in the world, a college release said Wednesday.

“Once this solar project is completed, Butte College will provide enough clean renewable energy to cover all of our electricity needs and generate slightly more than we use — which will be a source of additional revenue for the college,” Dr. Diana Van Der Ploeg, Butte College President, said.

The school’s solar panels will generate more than 6.3 million kilowatt hours per year, enough energy to power more than 9.200 average-sized homes, the release said.

The 15,000 new solar panels will be placed atop rooftops and will create covered parking areas and walkways.

The project will cost $17 million, with $12.65 million coming from federal Clean Renewable Energy Bonds, which are low-interest loans that can be used for clean energy projects.

The college will fund the remainder, up to $4.35 million.
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45 Clarence Street
Sydney  NSW  2000
PH: 02 9249 6100 FAX: 02 9299 1519
Email: Unknown
Website: www.seda.nsw.gov.au

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PO Box 6366,
Blacktown NSW 2148
Phone: 131 081
Facsimile: 02 9853 6000
Website: www.integral.com.au
Email: integral@integral.com.au
The second largest state-owned energy corporation in New South Wales, Integral Energy was incorporated under the Energy Services Corporations Act 1995

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570 George Street
Sydney  NSW  2000
PH: 131 535 FAX: Unknown
Email: Unknown
Website: www.energy.com.au

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Enertrade

Level 10, Comalco Place, 12 Creek Street, Brisbane QLD 4000
GPO BOX10, Brisbane QLD 4001

PH: 07 3331 9900 FAX: 07 3331 9901
Email: enertrade@enertrade.com.au
Website: www.enertrade.com.au

Enertrade owns and operates the North Queensland Gas Pipeline, a gas-fired power station at Barcaldine and purchases electricity from privately owned power stations through Power Purchase Agreements and trades this into the National Electricity Market.

Sourced & published by Henry Sapiecha