I appreciate the committee is looking at a wide range of issues and it has received presentations from a number of delegations. I will deal with the current regulatory issues to do with renewable energy rather than the broader issues but we can answer questions afterwards.
The context in which the CER's regulation of renewable energy takes place is around the benefits that renewable energy brings. The purpose of renewables is to reduce emissions, increase the security of primary fuel source and sustainable fuel sources and to do this at least cost to customers. The commission has a statutory duty to have regard to the need to promote the use of renewable, sustainable or alternative forms of energy.
I presume the committee has been provided with many different statistics and forms in terms of the amount of renewable on the system. The renewable generation mix is shown on the slide and demonstrates that our current installed, renewable energy mix is increasingly made up of wind, which is an important element. The regulatory regime for wind, therefore, is quite important.
The installed wind capacity has increased significantly since 2000 and is now just short of 500 MW. Demand for connections by wind farms to the system is significantly greater. If the amount of connected wind, signed offers and the number of applications queueing is added up, it makes up more than 3,500 MW, which is a very significant amount of applications in the queue. This is just a snapshot of the situation CER is dealing with.
Regarding the regulatory measures in place and the regime to facilitate renewables, one measure is that renewable suppliers have been able to sell to customers well before the full market has been opened. This has allowed them get a foothold in the market. They can sell to any customers. With the market fully open to competition since February of this year, they are now on a level playing field with everybody else.
Other regulatory measures include issues to address the network connections and the backlog of connections. The committee will be aware of the group processing approach which has been introduced, which involves clustering of wind farms together to try to ensure they are connected to the grid in a more optimal and less costly way and can be processed more quickly. As part of that approach, the commission has ruled that wind farms connected to the network will be able to have what we call non-firm physical access, which means they will not have to wait for all the network reinforcements to be done before they can sell their power. They can use the access to the grid, inasmuch as this is physically possible, from the time they become connected.
The commission has put in place measures in market trading which include making green wholesale power available, which is known as a green VIPP. This was an early mover advantage for green energy suppliers. The commission has also introduced quite a degree of flexibility in allowing green energy suppliers to mix and match and use brown energy to balance up the remainder of their supply. This is more flexible than in a number of other jurisdictions. It is designed to deal with, for example, the intermittency of wind and to ensure that those who supply green energy can do so and make up the deficit with brown energy.
In addition, green suppliers have access to cheaper power than brown suppliers for that sort of balancing and this is called first-tier top-up. Those are a number of measures in the current market. The commission sees issues for renewables in the future and these include the continuation of the connection and application process. Based on the number of applications in the queue, it is important that the commission processes those quickly and fairly. The commission published a consultation paper last week on the rules in consultation with the industry.
Another issue for the renewable sector is disclosure and balancing, which will be a new requirement from next year. All customers will be able to see on their bill the source of their energy. This is a challenge to suppliers and the commission will be working with them to ensure they can do that in time. This will allow greater customer choice in terms of the amount of green energy they want to choose.
A major challenge is the all-island market and Mr. Reeves will deal with this subject. The commission is in the process of consulting the industry on how renewable generation can be facilitated with special rules above and beyond standard generation to assist them in participating in the all-island market.
My colleague, Mr. Tutty, will talk about interconnection. There are developments both on North-South and east-west interconnection. Interconnection is important to ensure that we can use intermittent sources such as wind because we have an alternative when the wind is not blowing.
The commission is involved with two important developments. The first is the Vision 2020 consultation document about which the committee was informed. This was produced under the auspices of the all-island project and is about the feasibility of developing policies and setting targets for renewable penetration on an all-island basis and CO2 reduction. This is a snapshot of the current position, what it will be feasible to achieve in the future and how we might be able to harmonise to a degree the existing rules in both jurisdictions. The commission is contributing to this project, which is a very important aspect of work for renewables in the medium rather than the short term.
The final development is on research, development and demonstration. A consultation paper has been issued by the Department of Communications, Marine and Natural Resources on that subject. The commission is very supportive of the co-ordination measures proposed in that paper and it has offered its assistance to study not just the currently commercially viable renewable technologies but also emerging technologies. I know this committee has heard much about emerging technologies but they are not currently part of the traded market and are not necessarily economically viable. The RDD, research, development and demonstration arena is the place where the commission sees that being developed.
I will hand over to my colleague, who will talk about interconnection.