Capitalising on Large Generation Certificates (LGCs): Amplifying Returns from Solar PV Investments in Australia 

As business pivots towards more sustainable operations, and energy prices soar, solar PV has emerged as one of the best capital investments a business can make

As business pivots towards more sustainable operations, and energy prices soar, solar PV has emerged as one of the best capital investments a business can make. In Australia Solar PV systems larger than 100kW generate not only energy for the business but also Large Generation Certificates (LGCs). These are Renewable Energy Certificates (REC) that are verified by the Australian Government Clean Energy Regulator (CER). Each LGC represents one megawatt-hour (MWh) of renewable energy generated by the Solar PV system, typically registered quarterly or annually. 

LGCs are Environmental Attribute Certificates (EAC). Here are some of the benefits:  

  1. They are a tradable asset that can be sold as an additional revenue stream for the solar system asset owner. 
    a) LGCs can be bought, sold on the spot, forward and option contracts or warehoused for future use. 
  1. They can be used to boast renewable energy or emission reduction goals. 
    a) Retiring (surrendering) LGCs registered from a behind-the-meter system show how much renewable energy the business used that year; or 
    b) LGCs can also be purchased & retired to increase the amount of renewable energy a business is using without additional physical assets (buy & retire). 
  1. LGCs can be “stapled” with energy by an energy retailer to provide Greenpower. 
  1. The primary demand comes from the 33 million LGCs purchased by Energy Retailers to meet their obligations under the Australian Renewable Energy Target each year through to 2030. 

Northmore Gordon can provide early registration of a solar system with the CER for LGCs; don’t wait till the system is commissioned, by that stage businesses are missing out on LGCs, so you can’t retrospectively register. 

Diversified Revenue: Boosting Cash Flow and Return on Investment 

Most commercial solar farms and early adopters of solar PV exploit the financial potential of LGCs to bolster their income.  The Renewable Energy Target and associated LGCs (and STCs) were designed to incentivise and drive investment in renewable energy.   

Commercial Solar farms sell both energy and LGCs to double their income stream and hence achieve a higher return on investment with both depreciating assets and income streams from LGCs and energy.  Many businesses with Behind-The-Meter (BTM) solar systems benefit from lower-cost energy and sell their LGCs to achieve a faster payback on the investment in the solar system. Given the price volatility of LGC investors make use of derivatives (options and forward contracts) to protect their investment. 

It is critical to recognise that the LGC represents the renewable component of the energy generated, and once you sell the LGC you can no longer claim that energy is renewable. This is important for businesses with decarbonisation goals. 

Corporate Sustainability Goals: Strengthening Brand Image and Stakeholder Relations 

Many businesses have signed up to various targets or programs taking action to address climate change.  Such targets include Renewable Energy 100% (RE100), Science Based Targets Initiative (SBTi), Climate Active Carbon Neutral, CDP, Greenpower, or simply voluntary targets for renewable energy or emissions reductions.   

LGCs are an internationally recognised Renewable Energy Certificate (REC) that can be used by all these programs to prove the use of renewable energy.   International businesses are using LGCs in Australia and locally sourced RECs in each country they have businesses to effectively buy renewable energy for all their sites. 

Companies with even greater aspirations are buying LGCs and RECs to enable them to state categorically that their products or equipment around the world is being run using only renewable energy. 

The rate of voluntary surrender against the programs is growing rapidly; in 2022 almost 8 million LGCs were voluntarily retired. 

Voluntary LGC surrender (~8M in 2022 vs 33M RET obligation) – Source CER 

Maximising Investment Value: Seizing the LGC Opportunity 

Northmore Gordon is accredited by the Clean Energy Regulator to register Solar PV or Wind and Hydro systems (power stations) allowing us to create LGCs for both behind-the-meter (BTM) systems for business, and grid-connected solar farms for investors.  NG has been trading certificates for more than a decade and can provide contracts to reduce volatility, shore up investment plans, or provide LGCs and other certificates to meet renewable energy targets or emissions reduction goals.  Going a step further NG has the know-how to provide businesses with complete Net Zero Roadmaps, Carbon Neutral accreditations, and carbon reduction pathways.   

Take advantage of the LGC-driven growth potential today and ensure a brighter and more sustainable return on investment. 

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