Every business solar system earns certificates. Which kind depends on its size.
Australia subsidises renewable energy through tradeable certificates, and solar creates them the moment it is switched on.
Small systems create STCs, large systems create LGCs, and the line between them just moved. Get the difference right and you can turn a certificate scheme into real money off your install.
Here is how STCs and LGCs work for a business in 2026, what each is worth, and which one your system uses.
At a glance
Quick answer: STCs (Small-scale Technology Certificates) are an upfront discount created when a smaller solar system is installed, and LGCs (Large-scale Generation Certificates) are certificates a large system earns over time as it generates. Historically the cut-off was 100 kW. From 1 October 2026 systems up to 1 MW can use STCs instead, which most businesses prefer because the money comes off day one.
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What STCs are
Small-scale Technology Certificates come from the Small-scale Renewable Energy Scheme (SRES). When you install an eligible system, it creates a set number of STCs upfront, based on the system size, your STC zone, and the years of generation deemed to 2030.
You do not sell them yourself. Your installer takes the certificates and gives you a discount on the invoice worth the same amount, so an STC rebate shows up as money off the price, not a payment you chase later. For most small-to-medium business systems that discount is worth 15% to 25% of the cost.
What LGCs are
Large-scale Generation Certificates come from the Large-scale Renewable Energy Target (LRET). Instead of one upfront lump, a large system creates one LGC for every megawatt-hour it actually generates, year after year.
Those certificates are sold on a market that moves with supply and demand, so LGCs are ongoing revenue rather than an upfront discount. That suits a very large generator, but it means slower payback, price uncertainty, and more paperwork than the small-scale route.
STCs vs LGCs: the real difference
The mechanics differ, but the difference that matters to a business is timing.
| STCs | LGCs | |
|---|---|---|
Scheme | SRES (small-scale) | LRET (large-scale) |
Most popular When you get the value | Upfront, at install | Over time, as it generates |
Form | Discount on the invoice | Certificates you sell (1 per MWh) |
Price certainty | Known at install | Moves with the market |
Admin | Installer handles it | Ongoing creation + sale |
Best for | Homes + most business systems | Very large generators |
For a business weighing cashflow, an upfront discount almost always beats slow certificate revenue. That is why the threshold change below matters so much.
The 1 MW threshold change (from 1 October 2026)
On 5 August 2026 the federal government announced that STC eligibility will expand from 100 kW to 1 MW, expected to take effect 1 October 2026. It means a rooftop system up to 1 MW can take the upfront STC discount instead of relying on LGC revenue.
The government estimates it cuts the upfront cost of eligible systems by around 20%, and the five-year deeming rate is expected to hold to 31 December 2030. Systems already accredited under the LRET keep creating LGCs, so nothing changes for existing large installs.
If your business was looking at a 150 kW to 1 MW system, the difference between the LGC route and the new STC route can be tens of thousands of dollars upfront. Ask your installer to model both against your install date.
Which one your business uses
In practice it comes down to size and timing:
Under 100 kW: STCs, an upfront discount. This covers most small business rooftops.
100 kW to 1 MW: LGCs until 30 September 2026, then STCs become available from 1 October 2026. If you can time it, the STC route is usually the better deal.
Over 1 MW: LGCs, ongoing certificate revenue. This is utility-scale territory.
The cleanest way to know your number is to get a commercial quote that models the certificates for your exact system size, postcode and install date. The check at the top of this guide connects you with a vetted commercial installer who does exactly that.
Frequently asked questions
STCs are Small-scale Technology Certificates, created upfront when a smaller solar system is installed and taken as a discount on the invoice. LGCs are Large-scale Generation Certificates, created over time as a large system generates, one per megawatt-hour, and sold on a market. STCs give immediate value; LGCs pay out slowly.
An LGC represents one megawatt-hour of renewable generation and is sold on a market where the price moves with supply and demand. Because the value comes over years of generation rather than upfront, LGCs suit very large systems where ongoing certificate revenue outweighs the cashflow benefit of an upfront STC discount.
Systems under 100 kW use STCs. Systems over 100 kW have used LGCs, but from 1 October 2026 systems up to 1 MW can use STCs instead. Above 1 MW it is LGCs. Most businesses prefer the STC route because the discount is upfront, so timing an install after 1 October 2026 can matter for mid-size systems.
On 5 August 2026 the federal government announced STC eligibility will expand from 100 kW to 1 MW, expected to take effect 1 October 2026. It lets commercial systems up to 1 MW claim the upfront STC discount instead of LGCs, cutting the upfront cost of eligible systems by around 20%.
It can, but for STCs almost no business does. The installer assigns the STCs and applies the discount to the invoice, which is simpler than trading certificates. LGCs are created and sold over the life of a large system, which involves ongoing registration and market sale, usually handled through an agent.
