Volume weighted average market price for a renewable energy certificate (REC) / large-scale generation certificate (LGC)

The Regulator is required under Regulation 22ZH to estimate and publish the volume weighted average market price for a Renewable Energy Certificate (REC)/Large-scale generation certificate (LGC) for the following year, by 31 October of the current year. The Office of the Renewable Energy Regulator was amalgamated into the Clean Energy Regulator on 2 April 2012.

The Regulator has estimated the volume weighted average market price for a REC/LGC for the 2012 year as $35.24.

In order to make this estimate, the Office of the Renewable Energy Regulator sourced market data from Next Generation Energy Solutions (Nextgen). As a broker of environmental products, Nextgen collect data associated with the REC and large-scale generation certificate (LGC) trades that they facilitate or are facilitated by other brokers and confirmed by two independent sources as true. Nextgen currently publish indicative spot REC prices on their website (www.nges.com.au).

This year's calculation included data from RECs and LGCs, as the scheme began separately trading LGCs on 1 January 2011. The price per REC/LGC and volume of RECs/LGCs as provided by Nextgen for each spot market trade of the relevant certificate in the period from 1 October 2010 to 30 September 2011 was used to calculate a volume weighted REC price as follows:

Where, for each trade i:

• P is the price per REC/LGC
• Q is the volume of RECs/LGCs

Data from spot market trades was used as the basis for the estimate because this data represents objective and arms-length transactions which are representative of the market value of a REC/LGC.

The former Office of the Renewable Energy Regulator has estimated the volume weighted average market price for a Renewable Energy Certificate (REC) for the 2011 year as $38.39. The Office of the Renewable Energy Regulator was amalgamated into the Clean Energy Regulator on 2 April 2012.

In order to make this estimate, the former Office of the Renewable Energy Regulator sourced market data from Next Generation Energy Solutions (Nextgen). As a broker of environmental products, Nextgen collect data associated with the REC trades that they facilitate, and currently publish indicative spot REC prices on their website (www.nges.com.au). The Office of the Renewable Energy Regulator additionally sought to obtain data from other REC brokers and market analysts, but found no other suitable sources with the ability to provide the type and detail of data required.

The price per REC and volume of RECs as provided by Nextgen for each spot market trade in the period 1 October 2009 to 30 September 2010 was used to calculate a volume weighted REC price as follows:

Where, for each trade i:

• P is the price per REC
• Q is the volume of RECs

Data from spot market trades was used as the basis for the estimate because this data represents objective and arms-length transactions which are representative of the market value of a REC.