Large-scale Generation Certificates (LGCs) are created every time an accredited renewable energy generation system over 100 kilowatts (kW) produces 1 megawatt-hour (MWh) of electricity. Power utilities are required under the Large-scale Renewable Energy Target (LRET) segment of the federal government’s Renewable Energy Target (RET) to surrender a set amount of LGCs every year or face penalties. In order to do so, they can either create LGCs themselves by installing and running renewable energy generation systems, or they can purchase them from 3rd parties with their own renewable energy sources. This article is an overview of what is involved in creating LGCs.
Australia’s Renewable Energy Target: Paving the way for the growth of renewable energy
The RET is a mechanism set up by the federal government to promote the growth of renewable energy in Australia. The RET’s LRET section is designed specifically to facilitate the introduction of more large-scale renewable energy capacity onto the electricity grid by creating demand for it. The LRET sets the conditions for electricity utilities to surrender LGCs, as well as the quota. Because these are required to purchase enough to meet their quota or face sharp fines, LGCs effectively provide an ongoing revenue stream for operators of large-scale renewable energy systems until 2030, when the RET is legislated to conclude.
Who would create LGCs and why?
There are 2 types of entities that might have an interest in creating LGCs. One is ‘liable’ electricity generators, who are subject to LGC surrender conditions and consider LGC creation more economically efficient than purchasing them, and the other is 3rd parties who wish to create LGCs to sell them to the liable parties. These 3rd party project developers generate revenue not only from the power that they produce on a per-kilowatt-hour basis (if they have secured a power purchase agreement), but also from the sale of LGCs.
Solar photovoltaics (PV) is one of the ‘eligible’ renewable generation forms under the RET legislation. What conditions must be met for a commercial-scale or utility-scale solar PV plant to create LGCs?
Power station accreditation for creation of LGCs
In order to begin producing LGCs, a generation system must first be accredited to do so. The main criterion for eligibility is that the generation system in question produces power via a renewable technology (e.g. wind, hydro, or solar) and does not produce power using fossil fuels or wast products from fossil fuels.
The steps for accreditation are as follows:
1. Become a Registered Person in the online REC registry
2. Apply for accreditation
3. Pay the application fees
4. Application assessment
5. Notification of application outcome
You can read more about these on the Clean Energy Regulator’s website: “How to apply for Accreditation“.
Once a generation station is accredited and producing power, it can begin submitting LGCs for certification. LGCs are assessed by the Clean Energy Regulator for certification on a monthly, quarterly, or yearly basis (generation for periods of less than a month are not accepted). LGCs are created directly in the Renewable Energy Certificate (REC) Registry, which is accessible online.
The Clean Energy Regulator website contains detailed instructions of the LGC creation, from pre-requisites for creation through to the process for creation and completing registration.
You can read more about this on the Clean Energy Regulator’s website: “How to create LGCs“.
Connecting large-scale solar to the grid: Other costs and potential hurdles
LGCs can only be produced by generation systems whose capacity is greater than 100kW. Although larger projects do benefit from economies of scale in terms of component and labour costs, connecting systems of this size to the electricity grid is significantly more complex than connecting smaller residential systems to grid. This complexity can lead to additional costs, and the variables involved make it difficult to produce indicative quotes about the cost of systems.
Besides whether or not a power purchase agreement (PPA) has been arranged between the project owner/operator and other stakeholders, one major factor that will impact on the cost of commercial and utility-scale solar power projects is network connection charges. The cost of connecting the system to the grid will depend on what the network operator company deems relevant to connection. These could include he state of the electricity network infrastructure in the area where the proposed system is to be connected (e.g. are wires already overloaded above acceptable voltage levels?), as well as other factors that cannot be immediately discerned through analysis of power bills or from aerial photographs.
© 2012 Solar Choice Pty Ltd