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)?
RECs, sometimes called Green Energy Certificates, are tradable units that represent 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.
- 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.
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:
- 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.
For 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.
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:
- 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.
- 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.
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.
Future Trends: RECs and Australia’s Clean Energy Future
RECs are evolving alongside Australia’s broader energy landscape. Here are some trends to watch in 2025 and beyond:
- 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.
With the government’s ongoing support and the private sector’s growing appetite for clean energy, RECs will remain a vital lever in Australia’s climate action plan.
