No one can forecast the LGC price with confidence, and a published forecast that sounds certain should make you more careful, not less. What can be done is to identify what moves the price, say which way each factor pushes and then test a project or a quote against a spread of outcomes.
At the time of writing, LGCs are oversupplied and cheap. The spot price was roughly $6 to $9 in September 2026, after a low near $4 in February and about $11 at the start of the fourth quarter of 2025. For the path that got us here, read LGC price history 2020 to 2026. This article looks forward, and the numbers below are scenarios for stress-testing, not predictions.
The drivers
Supply: a persistent surplus
The Clean Energy Regulator has said the LGC oversupply is expected to persist to 2030, and market commentary put the 2026 surplus at roughly 10 to 15 million certificates. The Capacity Investment Scheme and state contracts continue to bring renewable capacity into the market, and each new accredited power station creates certificates against a fixed target. The pressure is down.
Demand: a fixed target and a voluntary tail
Compliance demand comes from the target of 33,000 GWh a year to 2030, expressed as the Renewable Power Percentage (16.67 percent for 2026). That is fixed. The variable part of demand is voluntary: corporate buyers claiming renewable electricity, mandatory climate-related reporting and speculators. Voluntary demand has grown, but it has not been enough to absorb the surplus.
REGO: a substitute instrument
The Guarantee of Origin scheme began on 3 November 2025, creating Renewable Electricity Guarantee of Origin certificates alongside LGCs. REGOs continue beyond 2030, when the RET ends. Many buyers may prefer them for hourly matching and longevity, which can draw demand away from LGCs.
The 2030 end date
LGC creation under the RET runs to 2030. Each year the number of remaining years falls, and certificates with a shorter shelf life are worth less to buyers who want a long-dated claim. Forward prices for later vintages have been quoted lower than spot.
Mid-scale solar moving to STCs
From 1 October 2026, systems above 100 kW and up to 1 MW installed from that date create STCs with a fixed five-year deeming period, not LGCs. That removes a slice of future LGC supply. It is small beside the existing surplus, and it takes time, because applications open mid to late November 2026. See mid-scale solar STCs.
Three scenarios for 2027
These bands are illustrations to stress-test revenue. They are not predictions.
| Scenario | Illustrative range | What would have to be true |
|---|---|---|
| Soft | $3 to $6 | Surplus grows, REGO draws demand and voluntary buying stalls |
| Central | $6 to $10 | Surplus persists at roughly 2026 levels with steady voluntary demand |
| Firm | $10 to $15 | Supply slows, reporting rules lift voluntary demand and the surplus narrows |
The ranges are deliberately wide. In 2025 the price moved by roughly a third in a single quarter, so a band narrower than that would be false precision.
What it means in revenue
Take a 5 MW solar installation with a 25 percent capacity factor. It generates 5 x 8,760 x 0.25 = 10,950 MWh a year, so about 10,950 LGCs.
| Scenario price | Annual certificate revenue |
|---|---|
| $4 | $43,800 |
| $8 | $87,600 |
| $12 | $131,400 |
The spread between soft and firm is about $88,000 a year for this system. A project that depends on that line to meet its debt service has a problem in the soft case. A project where LGCs are a bonus on top of power purchase revenue does not.
For a smaller system the shape is different. A 700 MWh a year commercial rooftop earns $2,800 to $8,400 a year across the same $4 to $12 band. For a business owner that is rounding error compared with the STC route, where a 500 kW system created from 1 October 2026 earns 500 x 1.382 x 5 = 3,455 STCs, about $134,700 at $39, up front. That is why a commercial customer’s decision may hinge on whether the system fits under 1 MW.
From the desk: if a quote or model assumes an LGC price, put the price and the date on the page, and show what happens at half that price. Customers forgive a conservative quote far more readily than an optimistic one that cannot be met.
Quoting commercial solar in a soft LGC market
- Do not rely on LGC revenue to make the case for the system.
- Check whether the system qualifies for STCs. If it is installed from 1 October 2026 and sits between 100 kW and 1 MW, the STC route may be worth far more than a stream of LGCs. See the installer guide to selling commercial solar.
- Treat LGCs above 1 MW as a minor line. Model them at the soft case and treat anything above as upside.
- Be clear about who owns the certificates in the contract with the customer.
Where to watch
The Clean Energy Regulator’s quarterly carbon market reports are the main public source. Watch the surplus estimate, the REGO uptake figures and the forward curve. For the causes of the slide, see why LGC prices are falling, and for a plain definition, the LGC glossary entry. The answer on what an LGC is worth covers the arithmetic.
How to use the scenarios in practice
A scenario band is only useful if it changes a decision. For a developer, it might mean testing the debt service coverage at the soft case. For an installer quoting a customer, it might mean leaving LGC revenue out of the headline payback and showing it as an upside. For a customer deciding between a system just over 100 kW and a design just under 1 MW, it might mean choosing the route that does not depend on a forecast at all. The STC route pays up front at a price that has been held within a few dollars of $40, while the LGC route pays over years at a price that has fallen by more than three quarters in two years.
Our answers on what an LGC is worth and LGC versus STC cover the basics for customers new to certificates.
What to do next
- Run any LGC-dependent model at $4, $8 and $12 and see which cases hold.
- Review commercial pipeline for systems that could qualify for STCs.
- Read the pillar at /lgcs/ and the STC price forecast guide for the small-scale equivalent.
- If you sell STCs, compare traders on our pricing page.