Liable entity

Written and checked by the Energy Merchants desk · Reviewed 2 October 2026

A liable entity is a business with a legal obligation to buy certificates. Under the Renewable Energy Target, most are electricity retailers. They must acquire a number of STCs and LGCs each year, based on how much electricity they sell, and surrender them to the Clean Energy Regulator.

The obligation is the entire reason certificates have value. Without liable entities, an STC would be a registry entry with no buyer.

How the obligation is set

For STCs, the Clean Energy Regulator publishes the Small-scale Technology Percentage (STP) each year, which is the share of a retailer’s electricity that must be covered by STCs. A retailer selling more electricity needs more certificates. Retailers can buy from traders, from the clearing house, or from the market.

State schemes work in a similar way. In Victoria, retailers are liable under Victorian Energy Upgrades and surrender VEECs. In NSW, obligated parties surrender ESCs and PRCs. See VEEC meaning.

In practice

Installers rarely deal with liable entities directly. A trader sits between you and them. You sell to the trader, and the trader sells on to the retailer or whoever needs certificates. That is why the trading layer exists: retailers want volume and a clean certificate history, while installers want fast money.

What you feel from liable entities is price. Demand from retailers, the supply of new certificates from installs, and the $40 clearing house ceiling shape the spot price. If installs surge, supply rises and the price can ease. If the regulator adjusts the STP, demand moves. See STC spot price.

Common confusion

“Liable” does not mean the entity has done something wrong. It is a legal term for a party with an obligation.

A liable entity is also not the same as a trader. A trader may also be liable, or may only sell to those who are. Likewise, the customer who buys a solar system is not a liable entity, even though they benefit from the scheme through the discount.

For how selling works step by step, read how it works and the STC trading page. More terms are in the certificate trading glossary.