The Renewable Energy Target is a demand-side scheme. Someone has to be required to buy certificates, or the certificates would be worthless. Those someones are liable entities.
The definition
A liable entity is an entity that acquires electricity, typically a retailer buying wholesale power to sell to customers, and that therefore has an obligation to surrender renewable certificates to the Clean Energy Regulator. The obligation is proportional: the more electricity acquired for use or resale, the more certificates required.
Who this covers in practice
- Electricity retailers. The great majority of the obligation sits here, as they buy wholesale electricity and sell it on.
- Large direct purchasers. Some businesses buy electricity directly from the wholesale market and become liable for that load.
- Entities buying under certain arrangements. The regulator’s guidance sets out who counts as acquiring electricity in a given situation.
Electricity that is exempt, such as that used in certain emissions-intensive trade-exposed activities, is excluded from the calculation. The exemptions are why the formula for the STP subtracts them from acquisitions, as shown in how the STP is calculated.
What a liable entity must do
Each liable entity works out its relevant acquisitions, applies the RPP and STP, and surrenders the matching number of LGCs and STCs. Reporting and surrender are done in the REC Registry. STCs are surrendered quarterly and LGCs annually, as set out in how liable entities surrender STCs. Missing the target brings a shortfall charge, covered in the shortfall charge page.
Why it matters to installers
You do not have an obligation. Your customers do not either. But liable entities are why your certificates have a value. They are the buyers at the end of the chain, even if you sell to a trader or an agent first. The trader aggregates and sells on to retailers, and the Clearing House exists to make sure a buyer is always available at $40 ex GST. See who buys STCs.
A note on the Cheaper Home Batteries Program
STCs created under the battery program are not bought by liable entities. The regulator describes them as purchased by the government, so they sit outside the retailer obligation. That is why the STP estimate excludes them. See the small-scale technology percentage.
What this means for installers
Understanding who the liable entities are helps you judge your trader. A trader with strong relationships and settlement with retailers is a safer counterparty than a one-person broker. Read how STC trading works, compare options with our trader checklist, and see current rates on the pricing page.