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The renewable energy certificate market

The renewable energy certificate market

The Renewable Energy Target works by creating a market for renewable energy certificates. Like any market, it is based on supply and demand.


A renewable energy certificate can be created for each megawatt hour of renewable energy generated or displaced.

These certificates are either small-scale or large-scale:

  • Small-scale technology certificates—individuals or businesses that have installed small-scale renewable energy systems can create, or assign their right to create, small-scale technology certificates. One small-scale technology certificate is equivalent to one megawatt hour of renewable electricity generated by small-scale solar, wind or hydro systems, or displaced (no longer required from the grid) by solar water heaters or air source heat pumps. These certificates are created upfront based on the estimated amount of renewable energy the system will generate or displace over its lifetime. See the Small-scale technology certificates page for details.
  • Large-scale generation certificates—operators who have generated electricity from accredited renewable power stations can create large-scale generation certificates. One large-scale generation certificate is equivalent to one megawatt hour of renewable electricity generated above the renewable power station's renewable power baseline. These certificates are created after the electricity is generated. See the Accreditation page for details.


The Renewable Energy (Electricity) Act 2000 requires liable entities to surrender certificates to us, to meet their renewable energy obligations.

Liable entities are wholesale purchasers of electricity. They have separate obligations for both the Small-scale Renewable Energy Scheme and the Large-scale Renewable Energy Target. These obligations require them to surrender a certain number of renewable energy certificates in proportion to the amount of electricity they acquired during the year.

If liable entities do not purchase and surrender enough certificates each year, they are not compliant with the scheme and must pay a shortfall charge of $65 per certificate. This is not tax deductible.

For detailed information about liability and the percentages that determine the amount of certificates liable entities must surrender (the renewable power percentage and small-scale technology percentage) see the Number of certificates required page.

Voluntary surrender of certificates

How are we tracking?

Market activity in 2015:

  • 32.3 million certificates were validated
  • 123.4 million certificate transfers occurred
  • 1.3 million certificates were voluntarily surrendered, and
  • 39.8 million certificates were surrendered against liability obligations.

Owners of certificates can choose to surrender certificates for any reason. For example, supporting the generation of electricity from renewable energy sources over and above the Renewable Energy Target or meeting GreenPower obligations (a voluntary state government accreditation program). This is known as voluntary surrender.

Individuals or companies may also choose to offer certificates for surrender to offset the impacts of improper creation of certificates. If offers are made for these reasons they are considered to be non-compliance surrender offers to ensure the integrity of the scheme.

Certificates accepted for voluntary surrender are permanently removed from the market and cannot be transferred to another party or used to acquit a mandatory surrender liability under the Act.

In 2015, a total of 1 324 434 certificates (representing 114 offers) were accepted for voluntary surrender in the REC Registry. More than 98 per cent of these were large-scale generation certificates.

A total of 1 293 094 certificates were surrendered to meet GreenPower obligations.


Secondary market

Since renewable energy certificates are like a form of currency that can be sold or transferred at negotiated prices, there is a secondary market. It includes financial institutions, traders, agents and installers.

On the secondary market, large-scale renewable energy certificates and small-scale technology certificates that we have previously validated can be bought and sold.

We are not actively involved in the secondary market, but we do provide the REC Registry to facilitate transactions between parties. We also liaise with market participants to help them understand the workings of the schemes to ensure an efficient market for renewable energy certificates.

Clearing house

The Small-scale Renewable Energy Scheme has no set target. This means it is driven by supply, with demand set annually to equal the expected supply through the small-scale technology percentage (see page 54).

To provide liquidity to the market, a small-scale technology certificate clearing house provides certificates at a fixed price of $40, effectively setting a maximum price and ensuring sufficient certificates are always available for liable entities to meet their obligations.

Figure 1: The renewable energy market

Figure 1: The renewable energy market 

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