Large-Scale Generation Certificates
Large-scale generation certificates (LGCs) offer a financial incentive for eligible power stations to generate renewable energy.
They are offered as part of the Australian Government-run Renewable Energy Target (RET) Scheme, which encourages both individuals and larger enterprises to reduce greenhouse gas emissions from the electricity sector.
In this guide, we’ll explain how LGCs are contributing to the nation’s renewable energy targets and helping to minimise climate change across Australia.
What Are Large-Scale Generation Certificates?
Large-Scale Generation Certificates represent the amount of eligible renewable electricity generated by power stations. One LGC is awarded for every 1 megawatt-hour (MWh) of renewable energy generated or displaced by eligible power stations, which includes wind or solar farms.
Once generated, these tradable certificates can then be sold to liable entities such as electricity retailers, companies wishing to demonstrate their use of renewable energy sources, or private buyers on the secondary market.
What is the Renewable Energy Target Scheme?
LGCs are created and traded under the Renewable Energy Target (RET) Scheme, which incentivises investment in renewable energy power stations, such as wind farms, solar farms, and hydro-electric power stations.
This is part of the Large-Scale RET Scheme, which aims to deliver an additional 33,000 gigawatt hours of renewable energy per year between 2020 and 2030 as stated by the renewable power percentage (RPP).
As of 2024, the RPP is 18.48%, which refers to the number of LGCs that must be surrendered to the Clean Energy Regulator by liable entities each year. This target is set by the Australian government to boost the proportion of electricity generated from renewable sources rather than fossil fuels.
Another part of this is the Small-Scale Renewable Energy Scheme, which provides financial incentive for households and businesses to install renewable energy systems such as solar water heaters, rooftop solar panels, or small-scale hydro or wind-powered systems.
Owners of these eligible systems will generate small-scale technology certificates after installation, which can be traded in the same way as LGCs.
Buying and Selling LGCs
Both the trading of LGCs and the Renewable Energy Target Scheme is administered by the Clean Energy Regulator, a government body that creates a market to incentivise renewable energy generation.
Liable entities or electricity retailers can meet their renewable energy generation obligations by purchasing LGCs from eligible power stations. These can either be bought:
- On the Secondary Market: Source LGCs from traders and brokers of environmental certificates online, or certificate holders in the REC Registry.
- Directly from Renewable Energy Power Stations: A power purchase agreement must be established with an accredited power station developer to allow the electricity retailer to source LGCs created by the power station.
Entities must also surrender a certain number of these renewable energy certificates to create a market for LGCs.
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FAQs
What Are Large-Scale Generation Certificates?
Large-scale generation certificates (LGCs) encourage eligible power stations, such as wind and solar farms, to generate renewable energy. An LGC is created for every 1 megawatt-hour (MWh) of renewable energy generated or displaced, which can then be sold to liable entities or electricity retailers to help them meet their obligations under the Renewable Energy Target (RET) Scheme.
Who Can Buy LGCs?
Electricity retailers and liable entities can buy large-scale generation certifications to help them meet their renewable energy obligations under the Renewable Energy Target (RET) Scheme. Making the switch to renewable energy sources helps to reduce the amount of greenhouse gas produced and minimise Australia’s contribution to climate change.
What is the Difference Between LGCs and STCs?
Large-scale generation certificates (LGCs) are allocated to eligible renewable energy generation installations with power sources above 100kW, including wind and solar farms, as well as hydroelectric power stations. Small-scale generation certificates (STCs) are for installations below 100kW and can be earned by householders or landlords for solar panels, water heaters, air source heat pumps, and small-scale hydro or wind-powered systems.
How Long Do LGCs Last?
LGCs can be created on either a quarterly, monthly, or yearly basis throughout the lifetime of a power station right up until the Renewable Energy Target (RET) ends in 2030, which aims to create an additional 33,000 gigawatt hours of renewable energy per year. These LGCs are produced based on data readings of the energy generated by each power station.
