LGCs available for the 2021 assessment year is expected to be at the upper end of the estimated 43 to 46 million range. This consists of 6.1 million LGCs carried forward from previous years, and the expected creation of 37 to 40 million LGCs in 2021.
Approximately 32.6 million LGCs will be required to be cancelled to meet obligations against the 2021 Renewable Power Percentage.20 Demand from liable entities eligible for shortfall charge refunds is estimated to be an additional 2.7 million LGCs. Cancellations against voluntary targets in 2021 is expected to exceed 5.5 million LGCs, including 2.2 million LGCs that have been cancelled by the ACT government towards their 100% renewable energy target.
The LGC balance after the 2021 assessment year is likely to be at the upper end of the 2.3 to 5.3 million range (see Table 2.1). This relatively tight balance suggests that shortfall will be taken in the 2021 assessment year to allow sufficient LGC liquidity. There is still $1 billion in consolidated revenue representing over 17 million LGCs that can be redeemed under the 3-year rule.21
Table 2.1 Estimated LGC supply and demand balance in 2021 assessment year
| Type of supply/demand | Supply | Demand |
|---|
| LGCs available from previous assessment yearsa | +6.1 million | -
|
|---|
| 2021 LGC supply (available for 2021 surrender) | +37 to 40 million | -
|
|---|
| Legislated demand for 2021b | -
| -32.6 million |
|---|
| Shortfall charge refundsc | -
| -2.7 million |
|---|
| ACT Government scheme | -
| -2.2 million |
|---|
| Other Voluntary cancellationsc | -
| -3.3 million |
|---|
| Estimated total balance for 2021 assessment year |
+2.3 to 5.3 million |
|---|
Notes:
- Number reflects LGCs created before 2021 but still registered as available in the REC Registry as at 15 February 2021.
- Number assumes no shortfall is taken for the 2021 assessment year.
- These values are estimates for 2021 and could vary significantly based on commercial decisions.
Footnotes
20 The Renewable Power Percentage (RPP) is set each year in regulation under the Renewable Energy (Electricity) Act 2001. For 2021 the RPP is 18.54%.
21 Entities with a LGC shortfall of more than 10 per cent of their liability for a year incur a shortfall charge. Under certain circumstances, these entities can subsequently surrender additional certificates and obtain a refund of the shortfall charges previously paid, less an administrative fee.