An LGC is supposed to be the carrot that funds new renewable generation. Right now it is a modest one. LGC spot was roughly $6 to $9 per certificate in September 2026, a fraction of the price at which the market traded a few years ago. The reason is not mysterious. The Large-scale Renewable Energy Target (LRET) is a fixed volume of generation, enough projects have been built to cover it, and when supply of a certificate meets or exceeds the demand set by law, the price slides.
If you own, sell or finance commercial solar above 1 MW, or an older system above 100 kW installed before 1 October 2026, this matters, because your system earns LGCs year by year rather than STCs up front. (Solar above 100 kW and up to 1 MW installed from 1 October 2026 creates STCs; see mid-scale solar STCs.) A revenue line you assumed would be worth $15 a certificate may be worth $9. This article explains how oversupply arises, what the 2030 end date does to the picture, and how to quote with LGCs in a way that does not embarrass you in three years. For the mechanics of creating and selling them, read LGC trading.
How a certificate market becomes oversupplied
LGC demand is fixed in law. Liable entities, mainly retailers, must surrender enough LGCs each year to cover a share of their electricity sales, and the overall annual target is set at 33,000 gigawatt-hours across the scheme years to 2030. It does not rise because more renewable projects get built.
Supply is not fixed. Every accredited power station, whether a wind farm, a large solar plant, hydro or a 150 kW rooftop array, creates certificates for what it generates. Projects get built for many reasons that have little to do with the LGC price: corporate power purchase agreements, state targets, reverse auctions, falling equipment costs. Each adds certificates to a market whose demand does not move.
When supply meets the target, buyers can get all the certificates they need at a modest price. When it exceeds the target, the surplus is banked, and the price falls further. That is oversupply. It is a sign the target has done its job, not that something has gone wrong.
What it looks like in numbers
Take the 150 kW commercial system from our LGC trading article, generating roughly 200 MWh a year.
| LGC price | Annual LGC revenue | Ten-year revenue (before degradation) |
|---|---|---|
| $5 | $1,000 | $10,000 |
| $10 | $2,000 | $20,000 |
| $15 | $3,000 | $30,000 |
| $40 | $8,000 | $80,000 |
If a financier modelled the project at $40 a few years ago, and the market is at $5 to $10, the project has lost $60,000 to $70,000 of expected certificate revenue over ten years. Even at $15 the gap is $50,000. For small systems the shortfall is a rounding error against the power bill saved. For a large site it can change the case.
What the 2030 end date does
The LRET runs to 2030. That has two effects on a certificate you create today.
A shrinking window. A certificate created in 2026 can be sold into several more years of demand, while one created in late 2030 has almost none. Forward prices for later delivery typically reflect that.
A cliff in the revenue stream. For a system that goes live in 2028, the LGC stream is short, perhaps three years, not the ten that appear in an old financial model. If your proposal assumes LGCs for the life of the system, it is wrong.
What replaces the scheme after 2030 is a matter for government policy, and we do not speculate about it here. Follow announcements from the Clean Energy Regulator and the federal energy department, and check what happens to existing certificates and to the obligations of retailers.
Four ways to respond as a commercial solar seller
- Quote LGCs as a range, with a floor. Show the revenue at $4, $7.50 and $12, and make the business case work at the lower figure.
- Show the years. State how many years of LGC creation remain at the time of installation.
- Separate certificates from power savings. Show the customer the savings first. Treat LGCs as upside.
- Settle ownership. Make sure everyone knows who owns the certificates: the owner, the host or the financier. We cover the point in LGC trading.
From the desk: If you are quoting a system close to the 100 kW or 1 MW line, do not size to game the certificate type. STCs up front, which look attractive beside a $7 LGC, are now available up to 1 MW for installs from 1 October 2026. But the CER looks at whether a single site has been split, and artificial splitting is a compliance risk. Design to the customer’s load, then see which scheme applies. Our audit explainer shows how reviews start.
The STC comparison
It is worth setting the two schemes side by side, because it explains why LGC economics are a weak fallback and why installers now prefer the STC route up to 1 MW.
| STC (up to 100 kW, or 1 MW from 1 Oct 2026) | LGC (above 1 MW, or above 100 kW before 1 Oct 2026) | |
|---|---|---|
| Timing | Upfront, within days of install | Annual, as generated |
| Price | Roughly $38 to $40 spot | Roughly $6 to $9 in September 2026 spot |
| Admin | Claim at installation | Accreditation, generation reporting |
| End | Installs to 31 December 2030 | Scheme ends in 2030 |
An up-front STC payment of 45 certificates at $38 on a house is about $1,710 in days. A commercial LGC stream measured in $2,000 a year is slower and smaller per kW. See what is an LGC, LGC versus STC and LGC price today for the basics.
What to do if you already have LGCs
If you hold certificates now, you have three choices: sell at spot, hold for a possible recovery, or contract forward. Holding is a bet. With a fixed end date, a rising price is possible if supply tightens, and a falling one is possible if it does not. The honest answer depends on your cash needs and appetite for risk. Many small owners sell regularly rather than speculating, because the administrative cost of tracking is the same either way.
Who is exposed
Large generators with merchant exposure feel it most, since certificates are part of their revenue. Rooftop commercial owners with a power purchase agreement feel it less if the offtaker keeps the certificates. Installers feel it in a different way: a customer who was promised LGC income as part of the business case will return to you when it comes in lower. Having shown a range and a floor on the original proposal is the best defence. It turns a difficult conversation into a reminder of what you said.
Financiers also look at it. A lender who sized a loan assuming certain certificate income will want evidence the project still services the debt at today’s price. If you work with commercial clients, build the downside case before they ask for it.
What to do next
- Re-run any commercial proposal with LGCs at $4, $7.50 and $12
- Count the years of LGC creation actually left on the project
- Read what ends in 2030 and renewable energy certificates explained
- For the up-front side of your work, see the STC trading page and the resources hub