Navigating LGC market trends – prices at all-time lows and the transition to a voluntary scheme post 2030

In this blog, the first in a three-part series focused on developments in the LGC market, we provide an overview of the role LGCs play in supporting the clean energy transition and for corporates pursuing sustainability strategies.  We take a closer look at price trends and examine the policy developments that are shaping LGC supply and market dynamics into the future.

LGCs – the key lever driving investment in renewable energy

LGCs have been a powerful instrument in Australia’s transition to clean energy. They are tradable certificates created under Australia’s Renewable Energy Target (RET) scheme designed to incentivise large-scale renewable energy generation. For every megawatt-hour (MWh) of eligible renewable electricity generated, an accredited power station can create one LGC, which can then be sold to businesses looking to meet sustainability commitments. 

As such LGCs:

• Provide financial incentives for renewable energy developments.
• Enable businesses to offset electricity-related emissions (Scope 2).
• Support compliance with mandated government schemes (e.g., RET) and voluntary sustainability targets (e.g., RE100, Climate Active certification).
• Enable buyers to trace the generation and fuel source of the renewable energy they’ve purchased. This is particularly valuable with the introduction of mandatory climate-related financial disclosures under the Australian Sustainability Reporting Standard (ASRS). LGCs support reporting on Scope 2 emissions and demonstrate progress toward achieving sustainability targets.

Businesses, often via energy retailers such as SmartestEnergy, purchase LGCs through spot markets, forward contracts, or Power Purchase Agreements (PPAs) to align with their renewable energy goals. The procurement approach depends on factors such as their risk tolerance, budget cycles and the pathway and timing of the initiatives chosen to achieve their sustainability goals.

The highs and lows of LGC prices

LGC prices have experienced significant volatility over the years due to shifts in policy, supply-demand dynamics and corporate procurement trends. Over 2017-2019 LGC prices peaked above $80 per certificate due to supply shortages and strong corporate demand.  2020-2022 saw greater renewable energy supply which contributed to LGC price declines, with LGCs trading around $30–$40. Further volatility was seen in 2023-2024 due to policy changes and global developments. 

Over 2025, as seen in the chart below, LGC prices have been steadily declining and more recently traded below $10  per certificate. At these prices, buyers are taking a renewed interest in considering LGCs as a cost effective and reliable strategy to decrease scope 2 emissions for their business.

 

Source: Spot prices | Demand Manager

The dramatic fall in LGC prices is particularly significant at a time when other emissions reduction certification instruments are priced at higher levels (even when adjusted for MWh to CO2 basis).  For example, at the time of this article Australian Carbon Credit Units (ACCUs) are selling on the wholesale market at around $40, while state-based schemes such as NSW’s Energy Savings Certificates (ESCs) are trading around $25, and Victoria’s Energy Efficiency Certificates (VEECs) are trading around $75 per certificate. 

LGCs will gradually transition to Renewable Electricity Guarantee of Origin (REGO) certificates. What can we expect?

Australia’s Renewable Energy Target (RET) will conclude in 2030 and with it, no new LGCs will be issued. In its place, and as part of the Australian Government’s long-term emissions reduction strategy, the Renewable Electricity Guarantee of Origin (REGO) scheme has been legislated to track and verify the emissions associated with renewable electricity, hydrogen and other low-emission commodities. 

However, rather than replacing the existing LGC framework, REGOs will coexist with LGCs during a transitional period through to 2030. As of 3 November 2025, REGOs can be registered by accredited renewable electricity generators. Once created, REGOs may be accessed to support voluntary sustainability goals or compliance under various climate related schemes. 

Key points:

• LGCs remain the only certificates eligible for compliance under the Renewable Energy Target (RET), which runs until 2030.
• REGOs may be used alongside or instead of LGCs by organisations participating in voluntary schemes or reporting against corporate sustainability goals.
• Accredited generators can choose to issue either LGCs or REGOs for eligible generation — the certificates are mutually exclusive for any given unit of energy.

The LGC market has long been the primary mechanism for certifying renewable electricity in Australia, especially for mandatory retailer obligations and voluntary corporate claims. With the REGO scheme now in effect and likely to be gradually scaling up, businesses will need to assess how both instruments fit into their procurement, compliance and sustainability strategies in the years ahead.

Australia’s renewable energy certification framework is evolving. With LGCs and REGOs operating in parallel, businesses may need to reassess their energy procurement and reporting strategies based on market conditions and voluntary commitments. SmartestEnergy can help.

What’s next? 

In our next blog, we’ll explore LGC procurement strategies: Spot market vs. Power Purchase Agreements (PPAs), helping businesses navigate the best approach for their sustainability goals.

Disclaimer: The information enclosed is general information only; it cannot be relied upon as legal or financial advice. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person or entity.