The "Green" Crash: Why Renewable Certificate Prices are Tanking and What It Means for You

If you’ve been paying extra for a "GreenPower" add-on or feeling a bit smug about your 100% renewable energy plan, you need to read this.

The market for renewable energy certificates in Australia is currently in freefall. Prices are dropping like a stone, and the floor is nowhere in sight.

While this might sound like industry jargon reserved for energy traders, it has two major implications for you:

Future renewable projects are suddenly looking a lot riskier to build.
Your energy retailer is now paying peanuts for the green credentials they are selling you at a premium.

Here is the Bill Hero breakdown of the LGC crash.

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First, a Quick Primer: What is an LGC?

To understand the crash, you have to understand the currency.

In Australia, whenever a solar or wind farm generates a megawatt-hour (MWh) of electricity, it receives two outputs: the electricity itself, which it sells into the grid, and a 'birth certificate' known as a Large-scale Generation Certificate (LGC).

That LGC is the legal proof that the MWh of energy is 'green'. If a dirty coal power station wants to offset its emissions, or a corporation wants to claim it is "100% renewable," it must buy these certificates and surrender them.

For the last few years, these certificates have been gold. They traded as high as $85 in 2018 and sat comfortably between $45 and $60 for most of the last three years.

For a solar farm, selling electricity covers the costs, but selling LGCs was the cream on top—pure profit that made building the farm worthwhile.

The Crash

That cream has turned sour. In late 2024, the spot price for LGCs began to slide. By early 2025, that slide turned into a cliff. Prices have plummeted from their $50 comfort zone $20–$30 range, with futures markets predicting they could hit $10 or lower.

That is a value destruction of over 50% in a remarkably short window.

Why is demand drying up?

Usually, when prices drop, it’s because supply is too high. Yes, we have seen a record number of renewables connect to the grid recently. But the real story here is about demand.

Large businesses have realised that simply buying "unbundled" certificates (paper offsets) while still buying dirty power from the grid is starting to look like greenwashing. It’s the energy equivalent of taking a private jet to a climate conference and planting a tree to make up for it.

The demand for these certificates comes from two places:

The Government: The Renewable Energy Target(RET) requires retailers to purchase a specified amount. But that target was effectively met years ago.
Corporate Virtue (Voluntary Demand): This was the big one. Companies such as Telstra, Coles, and Woolworths have been buying millions of LGCs to meet their ESG targets.

The crash is happening because Corporate Australia has changed its strategy.

Large businesses have realised that simply buying "unbundled" certificates (paper offsets) while still buying dirty power from the grid is starting to look like greenwashing. It’s the energy equivalent of taking a private jet to a climate conference and planting a tree to make up for it.

Instead, these companies are shifting to Power Purchase Agreements (PPAs). They are now increasingly signing long-term contracts to directly purchase the electricity from new wind and solar farms.

As the big money shifts to direct contracts, demand for loose certificates on the spot market is evaporating.

The Investment Nightmare

If you care about the energy transition, this price crash is actually bad news.

Developers of wind and solar farms rely on "merchant revenue"—the money they make selling into the open market. When they model the financials of a new solar farm, they factor in the price of electricity plus the price of the LGCs.

If LGCs drop from $50 to $10, that solar farm suddenly makes 30% less revenue.

This creates a massive hole in the investment case for new renewables. Unless wholesale electricity prices rise (which nobody wants) or the government steps in with different subsidies (such as the Capacity Investment Scheme), we might see private investment in new renewables slam on the brakes.

The Consumer Angle: Are you being ripped off?

Now, let’s talk about your bill.

Many Australians voluntarily pay a premium for "GreenPower" or sign up for "100% Carbon Neutral" plans. Retailers charge you extra for this—often adding 5 to 8 cents per kWh to your rate.

They justify this surcharge by saying they have to go out into the market and buy these expensive LGCs to match your usage.

But LGCs aren't expensive anymore.

If the input cost for green energy has dropped by 50%, has your GreenPower surcharge dropped by 50%?

We took a look at the current market offers, and surprise, surprise: GreenPower premiums remain stubbornly high.

Retailers are currently buying green certificates at bargain-basement prices while continuing to charge you premium vintage rates.

It is a classic margin-padding exercise, and continues the 'buy low, sell high' strategy energy retailers have long been using to extract premium prices from green-conscious energy consumers.

What should you do?

The LGC crash proves that the market is shifting. The era of "paper greenness" is ending, and the era of real, structural change is beginning.

However, you shouldn't be paying legacy prices for a commodity that has lost half its value.

Check your GreenPower surcharge: If you are paying more than 4c/kWh extra for green energy, you're overpaying relative to the current wholesale cost of certificates.
Don't rely on loyalty: Retailers rarely pass on savings like this to existing customers. They bank on you setting and forgetting.
Compare your plan: Use Bill Hero to automatically monitor your bills. We verify if you're on the best rate for your usage patterns.

The cost of being green just got cheaper for your retailer. Make sure it gets cheaper for you, too.