Environmentals Tag

03 Feb LGC prices slide

Yesterday we considered the possibility of large-scale generation certificate (LGCs) prices reducing due to the federal review. Prices have slid $4/certificate this week. In recent news reports, ERM founder, Trevor St Baker said the government would need to adjust the renewable energy target (RET) to 20,000 gigawatt hours to fall in line with infrastructure expectations. "There is no way we are going to make the 33,000 target. It's impossible to get there.” Mr St Baker said. We concur, and have for quite some time.  Fundamentally, in a politically stable environment, we can only see LGC prices trending to and sitting at the full tax adjusted penalty of around $93/LGC. There aren’t enough certificates...

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25 Jan Confusion following the release of ERMS LGC Fulfilment Plan

Today the Australian Financial Review (AFR) has released a misleading news article which states that ERM Power has chosen to pay the penalty price of $65/LGC instead of paying the current market price of $90/LGC. This article has been released following an ERM Power announcement to the ASX yesterday. Even at $90/LGC it is more efficient for ERM Power to purchase LGCs then pay ‘penalty price’. ERM are utilising the flexibility of the scheme to surrender LGCs in future years where they can off-set earnings. ERM Power has a number of tax losses which they want to bring forward by paying ‘penalty price’ (which is not tax deductible) now and using the...

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