Renewables certificate prices hit new low in response to demand that “just isn’t there”

Renewable energy certificate prices – the currency that has underpinned the growth of wind and solar in Australia over the past decade – have hit a new low, with the market price of LGCs (large-scale generation certificates) falling below $6 per megawatt-hour (MWh) for the first time.

The price of LGCs were trading at around $50/MWh two years ago, and were at $70/MWh immediately after the invasion of Ukraine and then the election of Labor in 2022.

By the start of 2025, the price had dropped to around $21/MWh. At the end of 2025, however, they had plunged to a low of $6/MWh and were forecast by some – most notably the futures markets – to potentially halve again in coming months.

According to Core Markets, the latest spot trades were ranging from $A5.35 down to $4.90. Forward trades in LGCs have dipped to $4.15, according to Demand Manager.

Green Energy Markets director Tristan Edis says the plunging LGC price reflects a massive excess of supply that, in turn, is being driven by the evaporation of voluntary demand from big corporate buyers.

“Voluntary demand just isn’t there,” Edis says. Green Energy Markets is forecasting the LGC market’s annual oversupply to reach around 15 million at the end of 2026.

Voluntary demand has traditionally come from huge organisations, like Woolworths, that supported the market as they sought to boost their environmental credential by buying credits for green electricity in place of buying the power directly.

That market has all but dried up, market observers say, even as increasing numbers of corporations lay claim to being 100 per cent renewable.

Meanwhile, federal Labor’s Capacity Investment Scheme is also depressing demand, having eliminated lingering hopes that the original renewable energy target would be extended, adding value and tenor to the certificates that had underpinned new projects.

In an analysis on LinkedIn published last month, Ecovantage CEO Aaron Jenkins says that with LGC prices falling so low, corporations seeking to fulfil their ESG commitments could soon come flooding back to the market, snapping up cheap certificates as “the deal of a lifetime.”

But he warns that this is not necessarily a good thing.

“Cheap certificates may be good news for corporate sustainability teams, but they do little to stimulate real growth,” Jenkins writes.

“None of this is an argument against voluntary purchasing. On the contrary, it is encouraging to see businesses stepping up when policy ambition has lagged. However, voluntary demand should be complementing a strong policy signal, not compensating for its absence.

“If Australia is serious about accelerating the energy transition, the LRET targets must be brought back into alignment with national emissions goals and market conditions. Without that reset, LGCs risk becoming little more than a cheap accounting instrument, disconnected from the physical reality of renewable energy deployment.”

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