The Renewable Energy Target has two parts. The Small-scale Renewable Energy Scheme covers rooftop solar and other small systems through STCs. The Large-scale Renewable Energy Target covers utility-scale and larger commercial generation through large-scale generation certificates. This page is the scheme view. For a one-line definition, see what is an LGC.
How the scheme works
- A renewable power station is accredited by the Clean Energy Regulator.
- It generates electricity, and the output above its baseline is registered.
- The owner creates LGCs in the registry, one for each megawatt hour.
- Liable entities, mainly electricity retailers, calculate their annual obligation based on the electricity they have acquired.
- They surrender LGCs to cover it, or pay a shortfall charge.
The shortfall charge is what gives the scheme its teeth, and it is why retailers buy certificates in the market.
Who participates
- Generators. Wind farms, large solar farms, hydro, biomass and commercial solar above 1 MW, and older commercial solar above 100 kW installed before 1 October 2026.
- Liable entities. Retailers and some large electricity users.
- Traders and brokers. Intermediaries that match supply and demand and offer prices.
The scale
LGCs trade in thousands, and the volumes are very different from the household flow of STCs. At the time of writing the spot price has been roughly $6 to $9 in September 2026. See LGC price.
The end date
The target runs to 2030. The market watches policy announcements about the period after, so keep an eye on the Clean Energy Regulator and the Department of Climate Change, Energy, the Environment and Water for updates.
From the desk: if you are an installer, the practical point is the threshold. Systems up to 100 kW earn STCs, and from 1 October 2026 so do systems up to 1 MW; bigger ones create LGCs. See mid-scale solar STCs and commercial solar and the 100 kW limit.
Where the money goes
The shortfall charge that retailers pay if they fall short of their obligation is set by legislation. It is a penalty that is not tax deductible, which is why buying certificates is the cheaper option for them. That is the backstop behind the market, and it explains why demand for LGCs is reliable even when the price is low.
What this means for you
Most installers deal in small-scale certificates, with LGCs arising on the occasional commercial job. Our STC trading page and the resources hub cover the small-scale side in depth, and LGC vs STC sets out the differences.