The Large-scale Generation Certificate (LGC) market has been on a steady slide in recent months, bringing both opportunities and challenges for market participants. For corporates and energy users, this volatility is more than just a market movement—it’s a signal that the old ways of thinking about renewable procurement may no longer serve in the environment we’re entering.

Figure 1 – Source: CER June Quarter Carbon Markets Report

The Changing Landscape

At the heart of this shift is the evolving policy and regulatory environment. The upcoming Renewable Electricity Guarantee of Origin (REGO) scheme has the potential to reshape the voluntary markets for renewable certificates. While the details are still emerging, many organisations are already questioning how their existing strategies will fare once the new framework is in place.

The key uncertainty lies in voluntary demand. If corporates choose to defer action while awaiting REGO clarity, we could see reduced demand for LGCs in the short to medium term. This would keep downward pressure on prices and add complexity for buyers with existing procurement programs.

Figure 2 – Source: CER June Quarter Carbon Markets Report

Strategy Over Speculation

In times like these, it’s tempting to chase the market—to try to time certificate purchases or enter into long-term power purchase agreements (PPAs) purely on price signals. But a set-and-forget approach to a 10–15-year PPA might not cut it in today’s environment.

Instead, organisations need a strategy that looks to balance the need be both flexible and conservative:

• Flexible enough to adapt to medium-term policy and regulatory shifts (such as REGO) without locking into structures that may soon be outdated.
• Conservative enough to avoid overexposure to short-term volatility in the underlying commodity (certificate) markets.

This balance is not easy, but managing it is fundamental to commercial and operational success.

A Formal Approach to Procurement

The organisations that will navigate this period most successfully will be those with a clearly defined, formal renewable procurement strategy. Such a strategy:

• Articulates the company’s goals (cost savings, carbon reduction, brand alignment, compliance).
• Identifies the procurement instruments that can deliver these goals (LGCs, PPAs, on-site renewables, derivatives).
• Includes risk management frameworks to deal with volatility in both power and certificate markets.
• Builds in review points to adjust as policy and market conditions evolve.

Just as importantly, organisations must commit to ongoing monitoring. The certificate market is no longer one where you can sign a deal, set it aside, and trust it will deliver the intended outcomes for a decade.

Looking Ahead

The recent drop in LGC prices signals significant changes ahead for renewable procurement in Australia as REGO and similar schemes emerge. The RET was intended to increase the grid’s share of renewables, not to support large-scale voluntary procurement or offsetting—and it has achieved its original goal effectively.

Corporate buyers should resist the temptation to sit on the side-lines or wait for certainty. Instead, they should adopt strategies that give them optionality, protect them from downside risks, and keep them aligned with their long-term sustainability commitments.

In a market that is rapidly evolving, clarity of purpose and discipline in execution will matter more than ever.