Renewable Energy Certificates

Initiated by the Renewable Energy (Electricity) Act 2000;  Renewable Energy Certificates (RECs) is the umbrella term for residential and small business certificates, known as Small-scale Technology Certificates (STCs) and commercial-scale certificates known as Large-scale Generation Certificates (LGCs).

RECs are sometimes referred to as solar renewable energy credits, solar credits, green energy certificates, or renewable energy credits.

The Renewable Energy Target (RET) operates by developing a market for RECs. The REC system was originally implemented to encourage an additional 9,500 GWh of renewable energy generation per year by 2010 as part of the RET. The RET has two components that oversee the implementation and administration of the RECs: Large-scale Renewable Energy Target (LRET) and Small-scale Renewable Energy Scheme (SRES).

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What is the Renewable Energy Target (RET)?

Australia’s Renewable Energy Target (RET) is a government initiative aiming to reduce greenhouse gas emissions and boost the utilisation of renewable energy sources in the electricity sector. The RET comprises two main components: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). The LRET aims to generate an additional 33,000 gigawatt-hours (GWh) of electricity annually from large-scale renewable sources, such as wind and solar farms, by 2030. Meanwhile, the SRES encourages households and small businesses to install renewable energy systems like rooftop solar panels. By providing tradable certificates for renewable energy generation, the RET stimulates investment in renewable technologies and supports the transition towards a sustainable and low-carbon energy system

Large-scale Renewable Energy Target (LRET)

The LRET incentivises the development of renewable energy power stations in Australia through a Renewable Energy Certificate Market for the creation and sale of certificates called Large-scale Generation Certificates (LGCs).

The LRET was created to provide incentives for the development of renewable energy power stations across Australia. Large-scale Generation Certificates (LGCs) are generated by these power stations which can then be sold.

The LGCs are sold to:

  • Liable entities under the RET (mainly electricity retailers) who are required to buy LGCs from the market and surrender these certificates to the Clean Energy Regulator (CER) on an annual basis.
  • Companies and individuals looking to support their claims about reducing emissions, using renewable electricity, or by surrendering offsets such as Australian carbon credit units.


The LRET will continue until 2030.

Small-scale Renewable Energy Scheme (SRES)

The SRES administers the Small-scale Technology Certificates (STCs) that are assigned to small-scale renewable energy systems such as residential and small-business solar PV systems, solar hot water systems, heat pump hot water systems, and small-scale hydro and wind systems.

Much the same as the LRET, the SRES incentivises the purchase of small-scale systems by individuals and small businesses. The STCs generated by the systems purchased and installed are then sold to RET liable entities who are obligated to purchase STCs to offset their emissions.

The SRES will continue until 2030.

How the new Renewable Energy Target works

The Australian federal government initially set a target of 20% renewable energy-sourced electricity by 2020. The LRET achieved its goal of generating 33,000 GWh annually from large-scale renewable sources. The RET encourages investment in new large-scale renewable power stations through the LRET and the installation of new small-scale systems via the SRES.

The current LRET persists, requiring 33,000 GWh of renewable electricity each year from 2020 to 2030. RECs are tradable units, with 1 MWh of renewable energy equating to 1 REC. In 2023, 48,800 GWh were generated through large-scale renewable sources, and 27,900 GWh through small-scale renewable systems. Energy companies must surrender sufficient RECs yearly, reflecting their market share, and ensuring compliance. Non-compliance results in significant fines exceeding the value of RECs

How the new Renewable Energy Target works

The Australian federal government initially set a target of 20% renewable energy-sourced electricity by 2020. The LRET achieved its goal of generating 33,000 GWh annually from large-scale renewable sources. The RET encourages investment in new large-scale renewable power stations through the LRET and the installation of new small-scale systems via the SRES.

The current LRET persists, requiring 33,000 GWh of renewable electricity each year from 2020 to 2030. RECs are tradable units, with 1 MWh of renewable energy equating to 1 REC. In 2023, 48,800 GWh were generated through large-scale renewable sources, and 27,900 GWh through small-scale renewable systems. Energy companies must surrender sufficient RECs yearly, reflecting their market share, and ensuring compliance. Non-compliance results in significant fines exceeding the value of RECs

How much are renewable energy credits worth?

One REC is equivalent to one megawatt hour of electricity generation. A renewable energy certificate can trade for cash and the value of these certificates fluctuates according to market conditions. Essentially, a REC is a form of renewable energy currency.

The amount you get back from the STC scheme is based on three factors:

  • Zoning (where you live)
  • STC value (which fluctuates)
  • The deeming period (which decreases each year)


Owners of systems can claim RECs themselves by completing the appropriate application forms. However, this can be confusing and time-consuming, so most people choose to assign their right to claim RECs to an installer; which is a very simple process.

By taking advantage of Renewable Energy Certificates, you can save a substantial amount of money when you buy wind and solar power equipment!

Small-scale renewable energy system REC incentive

Renewable energy installers will deduct the total value of a system’s STC allocation as a point of sale discount on all eligible renewable energy systems installed. By offering a point-of-sale discount, the installer can save you the time and hassle of the application process related to the generation of renewable energy certificates.

The environmental implications

There’s been a great deal of criticism that the Renewable Energy Certificate system does not provide substantial reduction in greenhouse gas emissions, and that all it does is allow companies to pay to pollute.

When you install a renewable energy system and sell your RECs (or use their value as a point of sale discount), you are essentially selling the right to own the renewable energy (carbon dioxide emission reduction) delivered from that technology to an energy company who will buy those RECs in order to meet their obligation.

However, it’s very important to bear in mind you are supporting the country to meet the mandated Government targets and helping to support the Australian solar industry. This not only means more green jobs, but increased uptake of solar power drives costs of supply and installation down so that solar can become more competitive with traditional fossil technologies. In a nutshell, more solar-generated electricity = less coal-fired power generation required.

If you choose to retain your RECs by paying full retail price, congratulations! You are in the “ultra-green” zone as you are supporting Australia to go above and beyond the 2020 target!

Australia’s Renewable Energy Certificate system is far from perfect. But it’s a start and is a basis upon which to work and improve from. Without it, solar power would continue to stay out of reach for many, see our industry stagnate, and new development severely impeded.