The Renewable Energy Target (RET) is a federal policy that began in 2001 to increase renewable electricity. It has two parts and one funding mechanism: a legal obligation on electricity retailers.
The two schemes
- LRET. The Large-scale Renewable Energy Target creates LGCs for big generators like wind and solar farms. See LGC vs STC.
- SRES. The Small-scale Renewable Energy Scheme creates STCs for rooftop solar, batteries, solar hot water and heat pumps. From 1 October 2026 it also covers solar systems above 100 kW and up to 1 MW; see mid-scale solar STCs.
How the money moves
Each year the Clean Energy Regulator sets a percentage, the Small-scale Technology Percentage (STP) for STCs and the Renewable Power Percentage for LGCs. Retailers (liable entities) multiply the percentage by the electricity they sell and must surrender that many certificates. The 2026 STP has been reported at about 11.67%. Retailers buy certificates from the market, from traders and, for STCs, from the clearing house at $40 each.
Because the obligation scales with sales, the cost is spread across all electricity customers. It is a small part of a retail bill, passed through in tariffs, rather than a line item. This is why an STC discount at your door is, in effect, funded by retailers’ compliance spending, not by a tax levy. See who buys STCs.
Why the price of an STC is capped near $40
The STC clearing house lets anyone with a valid certificate sell it at a fixed $40, so the market price has stayed at or just under that level, roughly $38 to $40 at the time of writing. See the STC spot price versus the clearing house price.
Where the federal budget comes in
The Cheaper Home Batteries Program uses the same STC mechanism but increased demand for certificates and was reported to have its budget expanded from $2.3 billion to $7.2 billion. The scheme’s cost therefore has a budget side as well as a retailer side. Read battery rebate funding.
Why it matters for installers
Understanding that retailers fund the scheme explains why the price is pinned near $40 and why policy changes move the market. When the government changes a target or a factor, the effect shows up in how many certificates retailers need and how many installers create. That is the context behind every rate you are quoted, and a reason to value a trader that explains its pricing plainly.
What this means for you
The scheme is legislated to end on 31 December 2030, so the rebate shrinks yearly; see will there be a rebate after 2030. To turn certificates into cash, look at STC trading, the daily rate on pricing and the market and policy hub. The glossary defines the RET and STP.