The Large-Scale Generation Certificate (LGC) program is a key component of the Renewable Energy Target (RET). The RET is a legislated scheme that aims to encourage investment in renewable energy technologies by requiring electricity retailers and large users of electricity to source an increasing amount of their total consumption from renewable sources. In order to meet these obligations, electricity retailers purchase Large Scale Generation Certificates (LGCs) on behalf of their customers, who then receive all or part of their annual bill rebate in the form of a LGC credit. This means that every time you pay your power bill, you’re supporting clean energy!
Key tool for supporting renewable energy
Large Scale Generation Certificate is a key tool for supporting renewable energy and reducing greenhouse gas emissions. LGCs can be created when renewable energy generators sell electricity into the National Electricity Market (NEM). LGCs have been around since 2001, but they’ve been used more widely since 2012.
Provides financial incentives to invest in them
The Large-scale generation certificates (LGCs) are a financial instrument that provides incentives for large-scale renewable energy developments by providing an income stream to generators investing in them. This helps offset some of the upfront costs associated with developing renewable energy projects like solar farms or hydroelectric stations, which can be significant because they require significant capital expenditure on machinery and infrastructure before they start generating electricity.
Provides an income stream for generators
LGCs are a financial incentive for renewable energy projects. They can be purchased by companies and individuals who want to reduce their carbon footprint, or they can be sold on the market by producers of large-scale clean energy projects. The LGC is a form of carbon credit that represents 1 tonne of greenhouse gas emissions that have been avoided through the production of electricity from renewable sources. The generator will receive an income stream from selling the LGCs and this helps fund further investment in renewable energy generation facilities such as wind farms, solar arrays or landfill gas generating plants.
How do Large Scale Generation Certificates work?
The Large-scale Generation Certificate (LGC) is the federal government’s way of encouraging investment in large scale renewable energy projects. When you buy an LGC, you are buying the right to claim that your electricity was generated by a large-scale generator. This means that every megawatt hour (MWh) of electricity generated by a large-scale renewable energy generator can be counted towards your annual Renewable Energy Target compliance obligations. An LGC represents one MWh of electricity generated from eligible renewable sources such as solar power, wind farms and biomass plants like sugar mills or waste treatment facilities. An LGC is created when this electricity is produced by a power station connected to an electricity grid operated by an Australian State/Territory network operator or retailer.
Conclusion
The Large Scale Renewable Energy Target (LRET) is a key tool for supporting renewable energy and reducing greenhouse gas emissions. LGCs encourage large-scale renewable energy developments by providing financial incentives to invest in them. The Large Scale Generation Certificates are distributed by the Clean Energy Regulator on behalf of the Federal Government under the LRET program.
