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Australian Certificate Markets – November Update

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Executive Summary by Hamish McGovern, Group Managing Director  

ACCU/SMC Market and Safeguard Mechanism  

The Safeguard Mechanism remains the key driver of ACCUAn ACCU is a unit issued to a person by the Clean Energy Regulator (Regulator) by making an entry for the unit in an account kept by the person in the electronic [Australian National Registry of Emissions Units] registry. Each ACCU issued represents one tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. An ACCU can only be issued to a person if the person has a Registry account. and SMC prices, and November is a pivotal month in its annual cycle: 

Key 2024–25 Safeguard metrics (CER report, released 27 November): 

Market balance & project activity: 

LGCLarge-scale Generation Certificate under the Australian Renewable Energy Target. More Market – Oversupply Deepens, New GO Scheme Launches 

The LGC market continues to soften under substantial oversupply relative to the RETThe Renewable Energy Target is an Australian Government scheme designed to encourage the additional generation of electricity from sustainable and renewable sources. The Renewable Energy Target works by allowing both large-scale power stations and the owners of small-scale systems to create large-scale generation certificates (LGCs) and small-scale technology certificates (STCs) for every megawatt hour of powe​r they generate. Certificates are then purchased by electricity retailers (who supply electricity to householders and businesses) and submitted to the Clean Energy Regulator to meet the retailers' legal obligations under the Renewable Energy Target. More, with voluntary demand still growing but not fast enough to absorb the surplus. The CER’s Q3 2025 report highlighted: 

In November, the CER also launched the Guarantee of Origin (GO)A Guarantee of Origin (GO) is a European energy certificate that verifies electricity has been generated from a specific renewable source. GOs are used to track and substantiate renewable electricity claims and are the European equivalent of Renewable Energy Certificates (RECs). They can be traded independently of electricity and are widely used by RE100 companies to meet renewable energy targets. certificate framework – covering REGO (Renewable Electricity) and RGGO (Renewable Gas) – designed for voluntary surrender and positioned as the next step beyond the LGC scheme. 

VEECVictorian Energy Efficiency Certificate Market – Volatile Trading Amid New Solar Activity 

The VEEC market has been highly volatile and difficult to read. Prices departed a steady $96 through September, with the introduction of Activity 47 (Deemed Solar PVSolar Photovoltaic) triggering a significant decline. Retailers are interpreting the target falling from 7.3 million VEECs in 2025 to 4.4 million in 2026 and 4.6 million in 2027 as signalling significantly more liquidity ahead. 

Key November developments: 

ESCAn energy savings certificate (ESC) is a tradeable certificate created under Division 7 of Part 9 of the Electricity Supply Act 1995. Each ESC represents one notional megawatt hour (MWh) of energy. Market – Lighting Phase-Out and Persistent Oversupply 

New ESSThe NSW Energy Savings Scheme (ESS) provides financial incentives to install, improve or replace energy savings equipment and appliances in NSW households and businesses. The ESS was established in 2009. Financial incentives are in the form of tradeable certificates, called energy savings certificates (ESCs). Generally, householders and businesses who fund energy savings activities transfer the right to create ESCs to Accredited Certificate Providers (ACPs) in return for a discount on the cost of the energy savings activity.  The MWh savings from the project determines the number of ESCs that can be created. The ESS works by allowing ACPs to create and register ESCs for energy savings that are supported with appropriate evidence. ESCs are then purchased each year by mainly electricity retailers operating in NSW to meet their share of a legislated annual energy savings target. Rule changes for NSW commenced on 12 September 2025, with staged dates that wind down lighting and SONA ESC creation. SONA installations and ESC registration close on 30 November 2025, Commercial Lighting closes to new installations and ESC registration on 31 March 2026. This will see lighting – historically the major ESC volume driver – phased out over six months.   

The scheme remains in substantial oversupply, though it’s still not yet clear what will replace lighting as the main source of ESCs. ESC spot prices have generally traded in the $24-$25 for several months, before softening slightly to finish the month at $23.00 as creation volumes stayed higher than anticipated through November.  Prices soften further in the first week of Dec to $22.65. 

STC Market – Remains in Tight Supply 

The Cheaper Home Batteries Program (CHBP) is now driving a large share of STC creation, but battery STCsSmall-scale Technology Certificate under the Australian Renewable Energy Target. More are effectively quarantined from the main SRESSmall-Scale Renewable Energy Scheme market, as the Australian Government buys an equivalent volume of STCs through the STC Clearing House at $40 and cancels them. This support, combined with tight supply from solar, is keeping prices pinned near the cap. 

For more information, call or email h.mcgovern@northmoregordon.com

*(subject to change)

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Who wrote the Northmore Gordon Australian Certificate Markets – November Update?

The article was written by Craig Morgan, with the Executive Summary authored by Hamish McGovern, Group Managing Director of Northmore Gordon.

How did the ACCU price move over October and November?

The ACCU price climbed through October to around $38.65, before easing over November to about $35.90 as obligations, expected SMC issuances, and existing holdings became clearer.

What are the key reporting and compliance deadlines under the Safeguard Mechanism?

Safeguard facilities emitting 100 kt CO2-e or more per year must submit preliminary 2024–25 data by 31 October, and have until 31 March to meet their Safeguard obligations.

What emissions reduction rate must Safeguard facilities achieve, and what happens if they don't?

Facilities must reduce emissions by 4.9% per annum under baselines; those that haven't reduced emissions by this required amount must surrender SMCs or ACCUs, creating demand for both units.

What were the key 2024–25 Safeguard metrics reported by the CER?

According to the CER report released 27 November, 207 facilities were covered under the Safeguard Mechanism, aggregate emissions fell 2.4% from 135.9 Mt to 132.7 Mt CO2-e, and eligible SMC issuance declined from 8.3 million to 7 million.

What did the CER announce on 3 December regarding ERF contracts?

The CER released the permanent mechanism allowing Emissions Reduction Fund (ERF) contracts to be exited with 25% delivery and a 60% discount on the exit payment.

How did voluntary demand for ACCUs change in Q3 CY2025 compared to Q3 CY2024?

Voluntary demand in Q3 CY2025 was 45% higher than in Q3 CY2024, highlighting growing corporate interest, while ACCU project registrations softened to 150 projects in Q3 CY2025, down from 180 in Q3 CY2024.

What is happening in the LGC market according to the November update?

The LGC market continues to soften under substantial oversupply relative to the Renewable Energy Target (RET). A record 15.7 million LGCs were registered in Q3 2025, and over November the LGC price fell further from $10, trading intraday as low as $6.50 before recovering to around $7.25 by month-end.

What is the projected LGC supply and demand balance for CY2025?

Cumulative LGC supply and holdings are on track to exceed 70 million by the end of CY2025, compared with total demand just above 50 million, reinforcing the oversupply story.

What new certificate framework did the CER launch in November?

In November, the CER launched the Guarantee of Origin (GO) certificate framework – covering REGO (Renewable Electricity) and RGGO (Renewable Gas) – designed for voluntary surrender and positioned as the next step beyond the LGC scheme.

What caused volatility in the VEEC market in November?

The introduction of Activity 47 (Deemed Solar PV), which made VEECs available for 30–200 kW C&I solar systems, triggered significant volatility; the spot VEEC price fell to start the month at $75.00, rose to $86.00, then dropped to $83.00 by month-end, later falling to $80.50 in the first week of December.

How is the VEEC target changing between 2025 and 2027?

The VEEC target is falling from 7.3 million VEECs in 2025 to 4.4 million in 2026 and 4.6 million in 2027, which retailers are interpreting as signalling significantly more liquidity ahead.

What rule changes are affecting the NSW ESC market?

New Energy Savings Scheme (ESS) rule changes commenced 12 September 2025, with staged dates winding down lighting and SONA ESC creation: SONA installations and ESC registration closed 30 November 2025, and Commercial Lighting closes to new installations and ESC registration on 31 March 2026, phasing out lighting—historically the major ESC volume driver—over six months.

How did ESC prices move during November and early December?

ESC spot prices had generally traded in the $24–$25 range for several months before softening to finish November at $23.00, then softening further in the first week of December to $22.65.

What is driving STC creation and why does the market remain in tight supply?

The Cheaper Home Batteries Program (CHBP) is driving a large share of STC creation, but battery STCs are effectively quarantined from the main SRES market because the Australian Government buys an equivalent volume through the STC Clearing House at $40 and cancels them; this support, combined with tight supply from solar, keeps prices pinned near the cap.

How many battery systems does the CER expect to be installed by the end of 2025?

The CER expects around 175,000 battery systems installed by end-2025, totalling approximately 3.9 GWh of storage—more than the five largest utility-scale batteries currently operating in the NEM.

How has small-scale solar capacity trended in 2025?

Equipment retailers have focused heavily on batteries, so small-scale solar installations softened, with total 2025 small-scale solar capacity expected to be under 3 GW, down 13% on the previous year.

Who can be contacted for more information on the Australian certificate markets update?

For more information, readers can contact h.mcgovern@northmoregordon.com, referring to Hamish McGovern, Group Managing Director of Northmore Gordon.

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