• • LGCs hit a new low of $12.50.
  • VEEC market volatility following Activity 44 announcement continued into this week.
  • ESC spot closed the week at a firm $22.20.
  • PRC creation rose to 1.88 million with spot prices and volatility up.
  • Steady week for the ACCU market as the generic spot remained stable at $32.70.
  • STC market steady as battery uptake grows.
  • New federal battery scheme supercharges installations.
  • Activity 44 major changes now in place.
  • Energy demand continues to increase in Australia.

New federal battery scheme supercharges installations.

Within the first 3 weeks of the new Federal Cheaper Home Battery Program (CHBP) kicking off, more than 13,000 battery STC applications have been lodged, totalling over 2.4 million STCs.

From a revenue perspective, this equates to an approximate $96 million in potential rebates at a clearing house rate of $40.00. While it’s still early days, the number of battery system applications has, on some days, been even higher than the number of standalone solar systems.

NSW has been leading the way so far, with CER data showing around 40% of the installations since 1 July were in New South Wales, 20% in Queensland, 17% in South Australia and 12% in Victoria.

Victoria VEU Update Activity 44 – major changes now in place.

The major changes to Activity 44 implemented by the Department of Energy, Environment and Climate Action (DEECA) are now in place, with the key changes summarised as below. These changes come following integrity concerns with some claims being installed under the program. With an already restricted VEEC supply, this change outstrips a primary certificate supply from the program – resulting in another climb in the VEEC price following the announcement.

• • Only Heat Pump Water Heaters with an insulated storage volume greater than 700 litres (L) are eligible.
  • For multi-tank systems, the average insulated storage volume must be greater than 700 L.

VEEC Calculations

• • Products with >700L insulated storage and >10 kW thermal capacity remain unchanged.
  • Products meeting new minimums but with <10 kW thermal capacity will now be subject to a scaling load factor (max 1).

Minimum Co-payment

• • Increased from $200 to $1,000.

Eligibility Criteria

• • Now reference average values for insulated storage and thermal capacity of each registered product.

Energy demand continues to increase in Australia.

After a period of subdued demand following 2008 due to increased appliance efficiency and industry contraction, underlying electricity demand in Australia has now surpassed previous highs, and is forecast to potentially double by 2050. Electrification of cooking, transport, and industrial processes is a key factor. However, the demand from data centres, especially those for AI, is predicted to have an even greater impact as they are more power-intensive, requiring round-the-clock supply for operation and cooling services. It is estimated there are already 200 data centres in Australia, and these already account for approximately 5% of energy from the grid.

With data centres set to grow rapidly in the coming years, the corresponding surge in energy demand poses potential challenges for Australia’s electricity system, especially with coal power phasing out. While data centre operators are exploring more efficient cooling methods, they will also need new, sustainable power sources. AEMO has acknowledged the challenge of forecasting future data centre energy demand and is carefully monitoring their impact on the grid.

Weekly Market Update | 21 – 25 July 2025.

Large-Scale Generation Certificates (LGCs)

This week LGCs reached a new low of $12.50 on the spot market, with softening forward markets to follow. This follows a continued downward trend as the certificate surplus continues to grow at a faster rate than the voluntary demand.

Each year the LRET compliance threshold is approximately 33 million LGCs. In 2024, the voluntary demand was just shy of 9.5 million LGCs, create a total market demand of approximately 42.5 million against the total annual creation of 51 million LGCs.

While the remaining surplus from 2024 and prior is only 14 million, a total of 28 million certificates were created in the first half of this year which would place the total estimated creation above 54 million for the year. Many are forecasting voluntary demand to grow rapidly over the coming years to 2030, however the growth to date has been far more modest than many had anticipated.

Victorian Energy Efficiency Certificates (VEECs)

The VEEC market saw a 7-day peak last Friday trading at $101 in the spot, followed by a stabilisation down to $96.50 by Thursday afternoon. A level of activity was seen in the longer term forward markets, with the end of 2026 agreeing at $95.50. The near-term forward markets picked up activity toward the end of the week with multiple strips closing at $97.00.

The lift in market volatility following the Activity 44 major change announcement has continued into this week for an average of 2.61%.

Energy Saving Certificates (ESCs)

Cementing a strong positive 30 day trend in the ESC spot, the market closed the week at a firm $22.20, $0.20 up from the week’s opening. A total of 75k ESCs were registered over the past 7 days, bringing the month-to-date total up to 167k. While the market continues to nurse a large oversupply from high activity in 2024, the weekly creation in recent times has been below target, which, if continued, will slowly continue to degrade this surplus.

Peak Reduction Certificates (PRCs)

A total of 711k PRCs were created over the past 7 days, bringing the total month to date creation to 1.88 million. The primary volume was sourced from the now suspended BESS1 activity as jobs continue to be processed. The 2024 vintage PRC deadline is approaching on 30 September, which will be a deadline for a large volume of BESS1 certificates. With the BESS1 activity suspended, the only active method under the program is now air conditioning installations.

The spot price climbed this week by $0.20 to $3.15 with an average weekly volatility of 2.09%. This represents a weekly change of 6.78%, which is not uncharacteristic of the market.

Australian Carbon Credit Units (ACCUs)

In a steady week for the ACCU market the generic spot remained stable at $32.70 and the HIR spot declined by $0.05. This represents a cumulative weekly volatility of 0.10% and a 30 day change of -4.40%.

Small-Scale Technology Certificates (STCs)

The STC market remained relatively inactive this week with the clearing house remaining in a deficit of 4.3 million. A total of 2.24 million battery STCs have been created since 1 July, with 836k of these having been registered as of Friday morning. To reference the sheer scale of uptake, a total of 9.4 million solar STCs have been created year to date – representing an average of approximately 1.34 million STCs per month. The federal government is currently purchasing the ‘equivalent volume’ of created battery STCs via the clearing house at intervals. However, the timing of these intervals remains unclear which could impact the ability to trade via the clearing house in future if it was to enter a surplus without a purchase interval.

Certificates spot prices & graphs available at Market Update >

At Ecovantage, we consistently analyse market activity, policy changes, consultation releases, and creation rates in conjunction with wider landscape activity. This allows us to keep our clients at the forefront of all relevant changes, and to leverage the advantage that this presents. Thank you for your continued support, and please reach out if you have any general or project-specific questions.