Commercial LGC Financing Options

 

The Renewable Energy Target

A Federal Government policy designed to ensure at least 33,000GWh of Australia's electricity comes from renewable sources by 2020, The Renewable Energy Target is split into two parts, The Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). Both schemes create financial government incentives to individuals and businesses to invest in renewable energy generation.

Solar PV Systems up to 100kW are eligible for the SRES, and systems above 100kW are eligible for the LRET.

 

LRET Explained

The LRET creates Large-Scale Generation Certificates or LGCs. 1 LGC is created for every megawatt-hour of electricity your solar PV system generates annually and are created on an ongoing basis. LGCs can be purchased, sold and traded on an open market, and their value fluctuates according to supply and demand.

For example, a 150kW system would produce an average solar output of 240,000kWh, or 240MWh annually. This means the system would produce 240 LGCs per year.

LGCs currently trade for around $80, which means at the current value, a 150kW system would receive around $19,200 per year in revenue from the sale of LGCs. This is in addition to the savings your solar system produces.

 

Creating & Selling LGCs

LGCs can be created in the REC registry where, once validated, they can be made available for purchase. LGCs are sold through the open LGC market, where the price will vary according to demand. 

While this is the traditional method of creating and selling LGCs, Infinite Energy offers two additional, industry leading options which remove the price risk associated with the long-term LGC market price.

 

LGC Rebates Upfront

Instead of creating your LGCs on a year by year basis, Infinite Energy will pay your expected LGC revenue upfront. Infinite Energy will then take on the administration of creating and selling the LGCs.

Receiving the LGC revenue upfront enables the capital cost of larger projects to be significantly reduced. This is perfect for projects that require a specific budget to be met.

Under this option, Infinite Energy takes on the risk associated with the long-term LGC market price and provides your business with a fixed upfront discount. Because of the risk involved, the LGC value Infinite Energy offers is not as high as the current spot or market price.

 

Hedging LGCs

Infinite Energy can also offer LGCs in the traditional annual model, but hedge and guarantee the spot price for the first 5 to 10 years. Hedging LGCs is well suited for businesses who are risk adverse.

This option provides your business with price certainty and removes any risk associated with fluctuations in the long-term market price for LGCs. As with the upfront option, Infinite Energy takes on the LGC price risk so the value offered when hedging LGCs is likely to be less than the current spot price.

 

The Right Option For Your Business

The best method for creating and selling LGCs for your business will depend on your specific situation, finances and solar system.

Our expert energy consultants have completed hundreds of commercial solar projects across Australia, and are happy to provide no obligation advice.