The Large-scale Renewable Energy Target is a demand mechanism. It works because someone has to buy certificates, and the law names who: liable entities, mainly electricity retailers.
How surrender works
Each year the Clean Energy Regulator sets a Renewable Power Percentage (RPP), which is the share of a liable entity’s wholesale electricity purchases that must be covered by LGCs. The retailer multiplies the percentage by its acquisitions, which gives the number of LGCs it must hold. It then surrenders them through the REC Registry by the deadline, which is early in the following year for the previous compliance year.
Surrender is the opposite of retirement. Retired LGCs are removed voluntarily for a renewable claim, whereas surrendered LGCs are submitted to meet a legal obligation. Either way the certificate is used up. See the surrender glossary entry and the liable entity definition.
The shortfall charge
If a retailer does not surrender enough, it pays a shortfall charge per missing certificate, set in legislation at a level far above market prices and not tax deductible. That penalty is the reason retailers buy certificates even when the market is flat.
Where the target stands
The 33,000 GWh large-scale target has been met, and LGC supply is above what the obligation needs, which is why spot has been roughly $6 to $9 in September 2026 after a low near $4 in February. See whether the target is met.
Does the LGC cost reach electricity bills?
Yes, indirectly. Retailers buy LGCs and STCs, then recover the cost through the prices they charge. They do not itemise it. With LGCs cheap, the LGC share of a typical bill is small compared with network and wholesale costs, and the STC part depends on the Small-scale Technology Percentage (reported 11.67% for 2026). Both certificate costs are also part of why retailers are interested in power stations’ output: who funds the RET explains the flow, and how the STC obligation works covers the small-scale side.
What this means for generators and installers
If you sell LGCs, your buyers are retailers and traders who must surrender them, so your timing should respect their compliance calendar. If you install small systems, the same logic applies to STCs, which retailers surrender quarterly. After 2030 compulsory demand ends: see LGCs after 2030. For sale mechanics see the registry transfer process, and for STC settlement see how it works and pricing.