Capacity charges are payable for each capacity year from 1 October to 30 September. To keep things fair, your capacity charges are calculated based on your usage during the '12 Peak SWIS Trading Intervals' for the previous capacity year.

The 12 Peak SWIS Trading Intervals are determined by AEMO who identify the 12 trading intervals (half hourly periods) for the preceding capacity year based on the four days that had the highest demand for electricity in the SWIS between 1 December and 31 March.  The three trading intervals (half hourly periods) in which electricity demand was at its highest on these days are the 12 Peak SWIS Trading Intervals. 

The median amount of electricity your business uses in the 12 Peak SWIS Trading Intervals is known as your Median Peak Load (MPL) and used to calculate your capacity charges for the next capacity year.  The higher your MPL, the higher the capacity charges will be for your business.

As the market operator, AEMO has responsibility for managing capacity in the SWIS and does this through the administration of the Reserve Capacity Mechanism. The Reserve Capacity Mechanism is an element of the WEM that is designed to ensure that there is enough generation capacity available each year to meet demand at any time including during peak system demand periods.

Through the Reserve Capacity Mechanism, AEMO pays generators for making their generation available to meet demand for electricity at all times including peak system demand periods. The total costs associated with obtaining this capacity are then allocated to electricity users based on their contribution to peak demand the previous capacity year.

To reduce your future capacity charges you can look to reduce your electricity consumption between 4pm and 8pm during the hottest days between December and March when demand is generally highest.

It’s important to note that what you use during peak periods from December to March this year won’t have an impact on your capacity charges until the following capacity year, which starts on 1 October each year.

The Reserve Capacity Price is part of the Reserve Capacity Mechanism and determined by AEMO. This price is used to calculate your capacity charges and is influenced by a number of factors including: type of generation plant in the SWIS, new generation or expansions, forecast peak demand and system security requirements.

Capacity represents the need for adequate generation resources to ensure WA’s electricity supply is reliable and the demand for electricity can be met at all times.
To understand how the capacity market works in WA, it helps to know these key terms:

• SWIS – This is the South West Interconnected System, which is the grid (or electricity distribution network) that covers the south-west of WA.
• WEM – This stands for the Wholesale Electricity Market, which is the electricity market for the SWIS.
• AEMO – The Australian Energy Market Operator is the body which oversees the operation of the WEM which includes the electricity and capacity market.

The 12 SWIS Peak SWIS Trading Intervals determined by AEMO which were used to calculate capacity charges for the capacity year beginning 1 October 2022 and ending on 30 September 2023 were:

Peak demand is based on the overall electricity demand in the SWIS, which includes both business and residential energy consumption.

It is therefore impacted by weekends, public holidays and school holidays and will be highest when both businesses and residential households are using electricity at the same time.  Demand for electricity also tends to rise when temperatures increase. For example, when we experience consecutive hot days, air conditioners are in constant use to combat accumulated heat in buildings and homes.

Solar PV installation helps to reduce the amount of demand on the system (or demand to be supplied from generation) during the day but later in the day it becomes less effective and can also be unpredictable.

Usually peak demand occurs on weekdays between 4pm and 8pm. 

The Renewable Energy Target (RET) is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.

• The Large-scale Renewable Energy Target (LRET), encourages investment in large renewable power stations like wind farms and large scale solar farms to achieve 33 000 gigawatt hours of additional renewable electricity generation by 2020. The annual target will be rising each year in order to achieve this target.
• The Small-scale Renewable Energy Scheme (SRES), supports small-scale installations like household solar panels and solar hot water systems.

In order to meet the Federal Government’s Renewable Energy Target (RET) Synergy is liable to purchase a certain amount of renewable energy for you each calendar year. This is done through the purchase of renewable certificates from large renewable power stations and the owners of small-scale systems who are eligible to create certificates for every megawatt hour of power they generate.

• For the Large-scale Renewable Energy Target these certificates are known as “Large-scale Generation Certificates” (LGCs).  The number of LGCs to be purchased each calendar year is calculated using the Renewable Power Percentage (RPP), set annually and published by the Clean Energy Regulator (CER) in accordance with the Renewable Energy (Electricity) Regulations 2001 (Cth).  For example for 2020 the RPP is 19.31% which means Synergy must purchase LGCs for 19.31% of your energy consumption; and
• For the Small-scale Renewable Energy Scheme Synergy purchases “Small-scale Technology Certificates” (STCs). The number of STCs to be purchased is calculated using the Small-scale Technology Percentage (STP), set annually and published by the Clean Energy Regulator (CER) in accordance with the Renewable Energy (Electricity) Regulations 2001 (Cth). For example in 2020 STP is 24.40% which means Synergy must purchase STCs for 24.40% of your energy consumption

For customers on an Energy Sales Agreement or other Synergy contract where renewable energy charges are passed through, you can see a line item on your bill for the Small-scale Renewable Energy Scheme charge and the Large-scale Renewable Energy Target charge.  

The Clean Energy Regulator (CER) publishes the Small-scale Technology Percentage (STP) and Renewable Power Percentage (RPP) by 31 March each year, for the relevant calendar year.  Your bill will be adjusted after the STP and RPP have been published to reflect your consumption from 1 January.

The CER has published the STP and RPP for 2022:

Renewable Power Percentage (RPP)

• The Large-scale Renewable Energy Target (LRET) has reached the 33,000 GWh annual target mandated by the government from 2020 to 2030.
• Over the past few years the volume of electricity consumed in Australia has been relatively static, resulting in the RPP not changing significantly from year to year.

Small-scale Technology Percentage (STP)

• The STP is determined based on the estimated number of Small-scale Technology Certificates (STCs) that will be created during the year from the installation of eligible small scale generation (such as solar photovoltaic (PV) systems, solar hot water systems, heat pumps etc.). 
• It is important to note that the number of STCs created is determined from the time of installation of the small scale renewable energy generation technology until 2030. This means there is more volatility in the STP and it can increase or decrease year to year. 
• The estimated number of STCs created is adjusted based on the difference between the previous year’s estimated number of STCs created and the sum of the STCs surrendered.

For customers on a Business Flexi product, your renewable energy charges are built into your existing energy rates and supply charge and there is no change to your SRES or LRET charges.

Customers on other products in which renewable energy charges are passed through will be directly affected.    

If you are on an Energy Sales Agreement or product where renewable energy charges are passed through, the relevant charges for your consumption this year have been based on the 2022 percentages.  

As the Clean Energy Regulator (CER) has now published the 2023 percentages, Synergy will adjust your account to backdate the commencement of the STP and RPP for 2023 to 1 January 2023.  This will be reflected in your April or May bill issued after 31 March 2023.

Synergy will be notifying customers of the new RPP and STP for 2023.

The RPP for 2023 has increased compared to the RPP for 2022 and consequently you can expect your Large-scale Renewable Energy Target charges will increase in 2023 based on the same total electricity consumption. 

The STP for 2023 has decreased compared to the STP for 2022 and consequently you can expect your Small-scale Renewable Energy Scheme charges will decrease in 2023 based on the same total electricity consumption. 

You can visit the Clean Energy Regulator’s website or Synergy pricing updates for more information.