Shortfall charge

Written and checked by the Energy Merchants desk · Reviewed 3 October 2026

The shortfall charge is what a liable entity pays when it does not surrender enough certificates to meet its annual obligation. It is the enforcement end of the Renewable Energy Target.

How it works

At the time of writing, the charge is set at $65 for each certificate short, and it is not tax deductible. Because a retailer would pay far more by missing the target than by buying certificates, the charge acts as a theoretical ceiling on certificate prices. In practice the STC price is held lower still by the clearing house at $40.

The charge applies in both schemes. The small-scale version covers STCs, and the large-scale version covers LGCs. Check the Clean Energy Regulator’s page for the current figure, since a legislated amount can change.

Worked example

A retailer needs 10,000 STCs and surrenders 9,000. The shortfall is 1,000. At $65, the charge is $65,000, and because it is not deductible the true cost is higher than the same spend on certificates. Buying the missing 1,000 STCs at about $40 would have cost $40,000.

In practice

Retailers rarely pay the charge. The practical effect is that they buy certificates, which creates steady demand for installers’ STCs. See liable entity. It also explains why the LGC market, which has no clearing house, can swing widely while the STC market stays in a narrow band.

Common confusion

The shortfall charge is not a fee on installers or customers. It is a penalty on the buyers of certificates. It is also not the clearing house price. See STC clearing house.

For more on how certificates are priced, see what is an STC worth and the glossary.