If you’re not a regular reader of the RenewEconomy news, you might be wondering what large scale generation certificates (LGCs) are. Large Scale Generation Certificates are issued for generation certificates created by eligible renewable energy power stations and sold by liable parties who own them. The RET requires large electricity retailers to source an increasing proportion of their electricity from eligible renewable sources or buy LGCs to offset their emissions elsewhere in their supply chain.
What are Large Scale Generation Certificates?
Large Scale Generation Certificates (LGCs) are a type of tradable environmental product that represents the greenhouse gas emissions from generating electricity from renewable sources. They can be sold to liable entities or used by them to meet their obligations under the Renewable Energy Target (RET). LGCs are created when an eligible generator produces electricity from a renewable source, such as solar or wind power. The operator must apply for accreditation with the Clean Energy Regulator (CER) before they can sell LGCs or use them to meet their own RET obligations. Once accredited, the generator will receive LGCs in proportion to its generation output over a year-long period which is referred to as a “generation period”. Each year there is a new set of rules governing how much electricity must come from renewable sources under the scheme–this is called “the target level”. The target level determines whether you need an LGC certificate or not when buying electricity from your retailer.
Where do they come from?
There are several types of generation certificates, but the most important one to understand is Large-scale Renewable Energy Target (LRET) certificates. These come from large-scale renewable energy projects such as wind farms and solar PV arrays, who sell their electricity into the grid and receive a payment for each megawatt hour produced.
How do they work?
Large-scale generation certificates (LGCs) and small-scale generation certificates (SGCs) are both forms of RECs. They represent the environmental benefit from the generation of electricity from renewable sources and can be traded on the NER or sold to customers through retailers. There are two main differences between LGCs and SGCs:
- The size of the project that generates them; and
- The way they work in each market
What are the impacts of large scale generation certificates?
Large scale generation certificates (LGCs) are an emissions trading scheme that aims to reduce emissions from electricity generation. They can be traded between generators and retailers, or between retailers themselves. The purpose of an LGC is to provide an incentive for generators who would otherwise not have built new renewable energy projects to do so. This has the effect of reducing overall greenhouse gas emissions profile by encouraging investment in renewable energy sources such as solar or wind power at the expense of fossil fuels like coal-fired power plants.
The large scale generation certificates are an important part of the renewable energy industry. They help fund projects that produce clean energy and reduce carbon emissions, but they also have some drawbacks. We hope this article has helped you understand how these certificates work and what their impacts are on our planet!