Renewable Energy Certificates (RECs) Australia 2025: How They Work & Why They Matter

Renewable Energy Certificates (RECs) Australia 2025: How They Work & Why They Matter

Australia’s shift towards a low-carbon future is accelerating, and Renewable Energy Certificates (RECs) are a central driver of this transformation. Whether you’re a homeowner installing rooftop solar or a business aiming to cut your carbon footprint, understanding how RECs work in 2025 is key to maximising your impact—and your savings.

What Are Renewable Energy Certificates (RECs)?

Renewable Energy Certificates (RECs), sometimes called Green Energy Certificates, are tradable units representing proof that 1 megawatt-hour (MWh) of electricity has been generated from a renewable source and fed into the grid. In Australia, the REC scheme is a cornerstone of the Renewable Energy Target (RET), designed to incentivise the production and use of clean energy.

Types of RECs

• Large-scale Generation Certificates (LGCs): Issued to accredited renewable power stations like wind farms and solar farms.

• Small-scale Technology Certificates (STCs): Awarded to households and businesses that install eligible small-scale systems, such as rooftop solar, solar water heaters, or small wind turbines.

These certificates can be sold to electricity retailers, who are required by law to surrender a set number each year. The system creates a market for green energy and helps lower the cost of installing renewables.

Important: In 2025, RECs continue to be a critical tool for meeting Australia’s goal of 50% renewable energy by 2030.

2025 Policy Updates: What’s Changed?

This year, the Albanese government has ramped up Australia’s renewable ambitions. The 2025 review of the RET has brought several notable changes to the REC landscape:

Key Changes

• Higher RET Targets: The target for renewable energy generation has increased, with the government aiming for 50% of Australia’s electricity to be renewable by 2030. This means more demand for RECs, particularly LGCs.

• Streamlined STC Eligibility: New rules make it easier for households and small businesses to claim STCs, including expanded eligibility for battery storage systems paired with solar panels.

• REC Pricing Volatility: With more large-scale projects coming online, LGC prices have experienced some volatility, but strong demand from retailers and voluntary buyers (such as corporates pursuing net-zero goals) is keeping the market robust.

2025 Update: The REC market has seen a 10% increase in trading volume due to new policy incentives, demonstrating a robust demand for renewable energy solutions.

How Can Households and Businesses Benefit?

RECs aren’t just a behind-the-scenes mechanism—they have tangible benefits for Australians making the switch to clean energy:

Benefits for Households

• Upfront Discounts: When you install an eligible solar or renewable system, your installer can offer a point-of-sale discount by selling your STCs on your behalf. In 2025, this can knock thousands off the upfront cost.

• Financial Incentives: Homeowners can enhance their return on investment with both reduced energy bills and the sale of excess STCs.

Benefits for Businesses

• Revenue Streams for Large Projects: If you operate a renewable power station, selling LGCs provides a significant revenue stream on top of electricity sales.

• Green Credentials: Businesses can purchase and retire RECs to claim carbon-neutral operations—an increasingly important factor for customers and investors.

Example: A small business in Brisbane installing a 50kW solar system in 2025 can expect to receive a healthy upfront discount thanks to STCs, while a major supermarket chain might purchase LGCs to match 100% of its energy use with renewables.

Key Definitions

Renewable Energy Target (RET)

The Renewable Energy Target (RET) is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.

Australian Energy Market Operator (AEMO)

The Australian Energy Market Operator (AEMO) is responsible for ensuring the efficient operation and development of Australia’s energy markets and systems.

Australian Competition and Consumer Commission (ACCC)

The ACCC is an independent authority responsible for promoting competition and fair trade in the marketplace to benefit consumers, businesses, and the community.

Risks and Considerations

While RECs provide numerous benefits, there are also risks and considerations to keep in mind:

Market Volatility

The REC market can be volatile, with prices fluctuating based on supply and demand dynamics. This can affect the financial returns for both certificate sellers and buyers.

Regulatory Changes

Government regulations can change, which might alter the value or availability of RECs. Staying informed about policy updates is crucial for stakeholders.

Technological Advancements

As technology evolves, the types of systems eligible for STCs might change, impacting those planning long-term investments.

Warning: Always consult with a financial advisor or renewable energy expert before making substantial investments in renewable energy systems to understand the potential risks and returns.

Expert Tips: Maximising Your REC Benefits

For Homeowners

1. Consult with Certified Installers: Choose a reputable installer who can guide you through the REC process and ensure you’re maximising your potential savings.

2. Consider Battery Storage: Pairing solar with battery storage can increase your eligibility for STCs and improve energy independence.

For Businesses

1. Engage in Corporate PPA: Businesses can enter into Power Purchase Agreements (PPAs) to secure long-term energy prices and REC benefits.

2. Leverage Green Branding: Use your REC purchases to enhance your brand’s green credentials, appealing to environmentally-conscious consumers.

Pro Tip: Regularly review your energy strategy and REC portfolio to adapt to market changes and policy updates effectively.

Future Trends: RECs and Australia’s Clean Energy Future

Battery Storage

The expanded eligibility for batteries under the STC scheme means more value for households investing in solar-plus-storage systems.

Corporate Demand

More companies are voluntarily buying and retiring RECs to meet net-zero targets, driving demand and supporting new renewable projects.

International Recognition

Australia’s REC system is aligning with global carbon markets, potentially opening up export opportunities for green energy certificates.

Example: Let’s say you’re a Melbourne homeowner installing a 6.6kW rooftop solar system in 2025. You’ll likely generate around 80 STCs, which your installer can sell for you, reducing your system cost by over $2,000 at current prices.

FAQ Section

What is the current price of an STC in 2025?

As of 2025, the price of an STC is approximately $40, but it can vary based on market conditions. Always check the latest market prices before selling your certificates.

How do I claim my STCs?

To claim STCs, you must install an eligible renewable energy system through a certified installer who will handle the certificate creation and sale on your behalf.

What changes have been made to the REC scheme in 2025?

In 2025, the REC scheme has expanded to include more battery storage systems and has streamlined the process for claiming certificates, making it easier for households and small businesses.

Can businesses benefit from RECs?

Yes, businesses can purchase and retire RECs to meet corporate sustainability goals, and renewable energy projects can generate significant revenue through LGC sales.

How do RECs contribute to Australia’s renewable energy targets?

RECs are a critical component of the Renewable Energy Target, driving investment in renewable energy projects and helping Australia reduce its carbon footprint.

Conclusion/Summary

Renewable Energy Certificates (RECs) continue to be a pivotal part of Australia’s strategy to transition to a low-carbon economy. With updated policies, higher targets, and expanding eligibility criteria in 2025, both individuals and businesses have more opportunities than ever to benefit from investing in renewable energy.

Important: By staying informed and engaging with certified professionals, you can maximise the financial and environmental benefits of RECs, contributing to a sustainable future for Australia.

Next Steps

1. Evaluate Your Energy Needs: Assess your current energy consumption and explore potential renewable energy solutions that could suit your home or business.

2. Consult with Experts: Engage with certified energy consultants to understand the best ways to leverage RECs for your specific situation.

3. Stay Updated: Keep abreast of policy changes and market trends to make informed decisions about your renewable energy investments.

By taking these steps, you can actively participate in Australia’s clean energy future while enjoying the economic benefits of RECs.