A power purchase agreement is a contract to buy electricity at an agreed price. It does not automatically cover the environmental certificates the generator creates. Each LGC represents a megawatt hour of renewable generation, and who holds it is a contractual and registry question.
Who creates and holds the certificate
LGCs are created by an accredited power station and recorded in the REC Registry against the account of its owner. That owner is the starting point. From there the PPA decides whether the certificates go to the offtaker, are sold to someone else, or are shared.
The common structures
| Structure | Who gets the LGCs |
|---|---|
| PPA with certificates (bundled) | Transferred to the offtaker, who may surrender them for its own claims |
| PPA without certificates (energy only) | Stay with the generator, who can sell them separately |
| Split or revenue-share | As written, for example a share of sale proceeds |
| Behind-the-meter PPA with a funder-owned system | The funder, as owner, unless the contract says otherwise |
What the offtaker should check
- Whether the price includes certificates and how many are transferred each period.
- Who bears the cost and timing of creating and registering them.
- What happens if the generator’s accreditation lapses or generation data is delayed.
- Whether the contract deals with future changes in law, including the shift of mid-scale solar into the STC scheme.
At the time of writing the LGC market is oversupplied (spot roughly $6 to $9 in September 2026), so the certificate value inside a PPA is modest. See the LGC spot price answer.
The mid-scale twist
From 1 October 2026 solar above 100 kW and up to 1 MW can create STCs with a fixed five-year deeming period instead of LGCs. That changes the economics of a funder-owned system: the funder can claim a large upfront certificate value, and a good PPA price should reflect that. The CER warns that selecting STCs may prevent REGO certificates during the deeming period. Read the mid-scale solar STCs pillar.
Questions to put to the counterparty
Ask who is the registered owner of the power station, whether the PPA mentions certificates by name, and what happens to certificates created before the PPA starts. If the answers are vague, get them written down before you sign.
What this means for you
If you are buying power, ask for the certificate position in plain words and see it in the contract. If you are developing or financing a system, model both pathways. The LGC pillar covers the basics, the LGC versus STC answer compares the certificates, and STC trading and pricing cover the other side.