The CERs latest Quarterly Carbon Market Report has a lot of us talking. Ecovantage CEO, Aaron Jenkins, says the data tells a powerful “tale of two certificate markets” as it highlights the massive impact that clear policy and direct market signals can have on a sector, and the stark reality of what happens when they’re missing.

While Australia celebrates record-breaking solar statistics, a critical engine of the nation’s energy transition continues to silently stall. The latest Clean Energy Regulator (CER) Quarterly Carbon Market Report highlights an unprecedented surge in distributed energy resources, largely thanks to the success in applying Small-scale Technology Certificates (STCs) to home batteries. In the first quarter alone, small-scale solar installations hit a remarkable 791 MW. This surge was fueled by a residential and small-business boom, as consumers moved quickly to capitalise on the high STC values generated by integrated PV and battery systems. Combine this strong solar uptake with over 400,000 new households integrating battery storage to buffer the evening peaks, and the rooftop revolution looks unstoppable – something to be truly proud of as a country and energy sector.

If we step just past the residential boundary into the medium-sized Commercial and Industrial (C&I) sector – specifically solar arrays greater than 100 kW and less than 5 MW – the story flips completely.

This vital mid-scale sector is in a dire position, left adrift in a regulatory vacuum with no meaningful policy support and no political or industry body willing to speak up and support it.

The consequences of this long-term policy neglect are now turning up in real-world data. Data provided to the CER by Ecovantage – a major Large-scale Renewable Energy Target (LRET) aggregator accounting for more than 10% of power stations registered over the past three years – reveals a significant decline in the C&I sector. Year-to-date figures show a drop exceeding 75% in new power station registrations compared to periods when Large-scale Generation Certificate (LGC) prices remained above $20. This collapse in momentum is a direct symptom of the LGC collapse seen over the last 12-18 months, where a lack of significant LGC value pricing has eroded confidence and project business models, diminishing industry investment.

The Two Markets.

To understand why commercial-scale solar has ground to a halt while residential solar thrives, one only needs to look at the structural design of the respective certificate markets and how they handle oversupply.

The Small-scale Renewable Energy Scheme (SRES) operates with a robust regulatory safety net. Under the SRES, STCs benefit from a legislated clearing house mechanism. This means that if the open market becomes oversupplied, the clearing house effectively acts as a backstop, allowing creators to sell excess STCs at a valuable, fixed market rate of $40 per certificate. This legislation provides financial confidence to companies supporting homeowners or small businesses installing solar under 100 kW. It functions as a powerful market signal that keeps deployment high and acts to protect the industry from sudden market shocks.

Contrast this with the struggling LGC market, which governs projects larger than 100 kW, and possesses no such safety net.

Because the LRET was met years ago, the market now suffers from a chronic, structural oversupply.

The CER recently confirmed that record-breaking renewable generation has dramatically inflated this surplus, completely overshadowing the fact that voluntary corporate surrenders reached a record Q1 high of 4.1 million certificates.

This oversupply compounds year after year. While an STC-eligible system only creates certificates once at the time of installation, LGC systems generate new certificates every single year they operate. Consequently, the market must absorb a growing mountain of LGCs from both newly built projects and the accumulated capacity of every system installed over the past decade. Connect this cumulative surplus with the lack of a clearing house and you begin to see why one certificate market has achieved historic success, while the other faces a structural collapse.

The scale of this collapse is stark when looking at the actual number of projects coming online, rather than the nominal capacity additions typically highlighted in the CER’s quarterly carbon market reports. While total megawatt volume can mask a downturn via a few massive utility-scale projects, the CER’s live REC registry tells the real story: the year-to-date number of newly accredited power stations for 2026 has plummeted to just 47.

Assuming registrations are linear over each year, this represents a staggering 75% drop compared to the full-year registrations of 2024 and 2025, which saw 385 and 416 power stations enter the registry, respectively.

This missing 75% is the facility-level C&I solar sector – the mid-market commercial rooftops – which have effectively vanished from the pipeline.

When businesses cannot predict the value of the environmental certificates their assets will generate, they simply stop investing. This is precisely what both Ecovantage and CER data reflects: a massive retreat by corporate Australia from facility-level renewable generation and a pivot to cheap “click and collect” Scope 2 offsets.

The Productivity Cost of Inaction.

This failure in market support and messaging is occurring at arguably the worst possible moment. Australian businesses are battling sustained inflationary pressures and looking for tangible ways to improve productivity.

Facility level commercial solar is one of the most efficient economic levers available; it generates power exactly when factories, shopping centres, and office parks operate, taking immense pressure off the broader grid during peak daytime hours whilst decarbonising facilities in real time.

Leaving this sector without support directly undermines national productivity goals and makes the nation’s 82% renewables goal unnecessarily challenging.

What do we need to fix this now dire situation when the Australian business community is without support at a time that the nation is seeking ways to improve productivity? We have already seen the answer in STCs with clear and direct policy, and market signals that use existing and understood certificate mechanisms. It isn’t too late for the government to act, but it will be soon.