RET compliance primer: LGCs, STCs, and the shortfall charge

The Renewable Energy Target (RET) is Australia’s two-scheme renewable certificate framework:

Liable entities (mostly electricity retailers) must surrender LGCs to meet the annual LRET target and STCs to meet the annual small-scale percentage. The shortfall charge caps the price: AUD 65 per MWh (pre-tax) for LGCs; AUD 40 per STC.

LRET: accredited power stations

library(cer)
cer_snapshot("2026-04-24")

stations <- cer_lgc_power_stations(technology = "solar")
head(stations[, c("accredited_power_station", "state",
                   "capacity_mw", "accreditation_date")])

SRES: postcode installations

sres <- cer_sres_installations(measure = "installations")
head(sres[, 1:8])

Quick compliance check

A retailer with 10 TWh (= 10,000,000 MWh) of liable acquisitions and an LRET target of 18 per cent must surrender 1,800,000 LGCs. If they surrender 1,700,000 and no grandfathered arrangements apply, the shortfall is 100,000 LGCs, and the shortfall charge is AUD 6.5m (pre-tax).

liable_mwh <- 10e6
target_pct <- 0.18
lgcs_required <- liable_mwh * target_pct
lgcs_surrendered <- 1700000

shortfall_lgcs <- max(0, lgcs_required - lgcs_surrendered)
shortfall_aud <- shortfall_lgcs * 65   # pre-tax shortfall charge
shortfall_aud

Reconciling against QCMR headline

# Cumulative LGC issuances
cer_reconcile(
  value    = sum(stations$capacity_mw, na.rm = TRUE) * 1e3,  # rough
  quarter  = "2024-Q4",
  measure  = "lgc_cumulative_issuances_millions"
)

The rough check using capacity is a weak proxy; real reconciliation would use the published LGC issuance register. This vignette is illustrative of the reconciliation pattern.