New Energy Solutions
Your Guide to Small-Scale Technology Certificates
As the world moves towards clean, new energy, governments have introduced a number of incentives in order to help facilitate this transition, the Australian government is no exception. One of the main schemes run by our federal government in support of renewable energy solutions is STCs. These financial incentives along with other federal and state government programs are extremely beneficial to Australian households looking to install solar or other renewable or clean energy components as they help to offset the initial costs.
That being said, these rebates can be confusing and difficult to understand. It’s important to have a handle on this concept as you enter the market in order to ensure you're getting the best deal and maximising your savings, after all, for many, savings is a huge appeal of solar power.
Key Takeaways:
Purpose of STCs: STCs are financial incentives designed to promote the adoption of renewable energy, particularly solar power, by reducing the initial installation costs for Australian households.
How STCs Work: Each STC is created for every megawatt hour of energy production capacity from a solar system. The total number of STCs a homeowner can claim depends on their system size, location, and a specified deeming period.
Claiming STCs: Homeowners can claim STCs by either assigning them to their solar installer for an upfront discount or trading them independently, though most prefer the simpler option through their installer.
Pricing Structure: The price of STCs is influenced by market dynamics and operates under a system where a fixed price of $40 was set, but actual trading prices may vary based on supply and demand.
Eligibility and Timeline: The STC scheme is accessible to many, requiring that systems be new and approved by the Clean Energy Council. However, the scheme is scheduled to end in 2030, and the value of STCs is expected to decline over time, incentivising quicker adoption.
What Are STCs?
You’ve probably heard the term STCs thrown around a great deal as you move through the world of solar. Despite the fact that solar retailers and governments push this idea frequently in order to encourage clean energy solutions, many consumers are still yet to fully grasp the concept of what STCs are and how they work. STC stands for Small-Scale Technology Certificates, previously known as Renewable Energy Certificates or RECs. Now before we dive into the price, how many you're entitled to and the eligibility requirements let's cover what they are, why they exist and how they work.
How Do STCs Work?
These certificates are created when a renewable energy system (such as your PV system) is installed, they can be used as a sort of discount or credit to offset the initial cost of installing solar power.
Why Do We Have STCs?
The federal government introduced STCs as a way of encouraging the uptake of clean energy solutions amongst our Australian communities. One of the big issues people have with installing solar is the initial cost, this incentive aims to address this by reducing the upfront purchase price of clean energy.
In essence the thought behind the scheme is making renewable energy solutions more accessible to Australian households, getting people off the fence and making solar a possibility for those who otherwise wouldn't be in the position to go down the renewables route.
How Many STCs Can I Get?
There is no immediate answer to that question, instead this is largely dependent on the amount of energy generated by the proposed PV system - meaning the larger the system the greater the rebate you’ll receive.
As a general rule for a solar/PV system one STC is created for every megawatt hour of production capacity of the system. There is a formula for calculating how many STCs you’re entitled to:
Solar System Size (kW) x Postcode Zone Rating x Deeming Period (Years) = Number of STCs (Rounded Down)
This formula, although seemingly fairly straightforward, can be somewhat complex due to the variable factors such as your area zone. While you are more than welcome to have a go at calculating your STCs yourself, your solar retailer like 1KOMMA5° will do this for you, factoring this into the proposed price, simplifying the process and ensuring you get an accurate result.
The STC Price
Understanding how STCs are priced can be somewhat of a process so we’ve simplified different factors affecting their value.
The system for trading and pricing these certificates is managed by the Small-Scale Renewable Energy Scheme (SRES). They are then bought by what are called ‘liable partes’, these parties are usually your electricity retailer, and these certificates must be surrendered at the end of each quarter.
The number of STCs required to be surrendered are a fixed amount.
The number of STCs created during the quarter is variable.
As a result of this interaction, the price paid for Small-Scale Technology Certificates varies, determined by supply and demand in the market.
A fixed price for STCs was legislated in 2010 by the Australian Federal Government, this legislation implemented a ‘Clearing House System’ where STCs are bought and sold for a fixed price of $40.
Despite the introduction of the Clearing House and fixed price, there is no requirement of the liable parties to purchase from the Clearing House System, hence making this unlikely unless there is a shortage of STCs in the market or the variable price exceeds $40.
Claiming STCs
There are two ways in which you can claim your STCs:
Assigning your STCs to a registered agent: this is usually your chosen solar company, who will then use these certificates to provide you with an upfront discount or cash payment.
Create & sell the STCs yourself: This can be done through the REC registry or the Clearing House.
Most customers choose to assign their certificates to their solar retailer as part of the installation process as this is faster and easier than independently trading their STCs. Your solar company will simplify the process, helping with paperwork and calculating the amount accurately, giving you one less thing to worry about.
Benefits of STCs
Due to the nature of Small-Scale Technology Certificates and the purpose behind them they can bring about considerable advantages for solar homes. STCs mean installing solar is an achievable goal for more people, greatly reducing not just the carbon footprint of individual households but as a nation as well. This incentive helps prepare us as a country for the transition into clean and sustainable energy sources. A reduction in our personal and national carbon footprint is a holistic benefit of this rebate, but on a more individual level, solar savings both long term, over the lifespan of the system and short-term with a reduction in upfront purchasing and installation costs is another attractive element.
The world is rapidly moving towards renewable energy, this change is unavoidable, moving away from fossil fuels is just something we need to accept as a country and within our communities. Getting left behind as the rest of the world makes this transition is just not an option and as such this rebate aims to cushion the switch for Australian homes.
Drawbacks of STCs
Like all good things, the Small-Scale Renewable Energy Scheme must come to an end, the end of this scheme is currently scheduled to be the year 2030. SInce its introduction the value of the STC rebate has been steadily decreasing, and will continue to do so until we reach the end date. This basically means that when it comes to the money you can save through STCs today is the best that it will get from this point onwards, the sooner you install the more money you’ll save.
Eligibility Requirements
The eligibility criteria for creating Small-Scale Technology Certificates is quite simple, due to this being a national rebate a lot of the more complex requirements relating to your specific area, specific products and system sizes seen in state or local government incentives don’t apply, or at least are more generalised allowing this scheme to become more widespread and accessible for Australians. The main eligibility criteria to consider are quite inclusive:
The PV system being installed must have a rating of no more than 100kW
The panels, inverter and other solar products must be new ensuring there are no previous rebate claims on these components.
All products installed must be approved by the CEC (Clean Energy Council)
Conclusion
STCs are an important element of the solar installation process and can really help in offsetting the initial costs of installation. Understanding the purpose of this rebate and how it works is vital to staying informed as to ensure you’re getting the best deal possible and of course deciding which solar set-up, if any at all, is right for you and your situation.
FAQ
Frequently Asked Questions about Installing Solar Power
There are great government rebates/incentives still in place for eligible households. Basically, the larger the panel array, the more STCs your solar system generates as it is based on the expected output of the system over time.
When you buy a solar system, the purchase price is normally reduced by the value of the STCs created by your system. You simply fill out a form on the day of installation to confirm that the system has been installed, and that’s it. There is no additional paperwork that you need to do.
Small-scale Technology Certificates (STCs)
Small-scale Technology Certificates (STC’s) – previously known as Renewable Energy Certificates or RECS – are created when a Renewable Energy System such as a Solar PV system is installed.
The number of STC’s depends on the predicted amount of energy generated and hence the larger the system the greater the rebate. In essence, one STC is created for every megawatt-hour of production capacity of the system.
This is further multiplied by the number of years the system is likely to generate energy (for home solar systems, this is usually 15 years, although the life of the solar panels themselves is considerably more than that).
This incentive program is being phased out until 2030, so each year the number of certificates your system is eligible for reduces.
STC Price
The system for trading and pricing STCs for small systems is managed by the Small-scale Renewable Energy Scheme (SRES).
STCs are bought by Liable Parties (usually electricity retailers) and must be surrendered at the end of each quarter. As the number of STCs that are required to be surrendered is a fixed amount each year, but the number of STCs created is variable, the price paid for STCs also varies and is determined by supply and demand.
The Federal Government legislated in 2010 a fixed price for STCs by implementing a Clearing House system where STCs can be bought and sold for $40. However, there is no requirement for Liable Parties to purchase from the Clearing House, so they are likely to only do so if there is a shortage of STCs or the market price exceeds $40. There is currently a surplus of STCs in the market which means the market price of STC’s below $40
The Feed In Tariff is only something you need to worry about if you don’t have battery storage.
The price your chosen energy retailer pays for any excess electricity generated from your solar panels is recorded as a credit on your power bill.
In NSW, solar power is fed into your home as it is generated and your household will use it first before you draw power from the grid.
This means that for every kWh of solar power used in the home you are directly saving money you’d spend on your power bill. This reduction in your power bill is the main financial benefit of solar power.
Everything else will be bought up at an agreed rate by your electricity retailer.
At the moment, most feed-in tariffs are between 5 and 10 cents per kWh, with many being about 7 cents. They bounce up and down a lot, for example in previous years they have been up over 20 cents per kWh. Typically, they are always at least 5 cents per kWh.
Once you sign up for a 1KOMMA5° Installation, we immediately submit your grid application to the relevant energy distributor. For systems up to 5kWs, this is a formality. For larger systems it can take a few days or more. Once we receive approval, your installation will be managed by our installation coordinator, who will welcome you to 1KOMMA5° and book an installation date for you. This is generally booked within around two weeks and installation dates are available Monday to Friday, weather permitting.
We endeavour to have your system installed within 2-4 weeks unless you request us to hold for whatever reason. Due to our strict safety policy, we do not install solar systems when it rains. In the event of inclement weather, we will rebook your installation as soon as possible. We always work with your requests as we strongly recommend that someone be home on the day of installation.
Green Loans can be an affordable way to pay for your solar power system and is only available for approved products. As a Clean Energy Council Accredited installer, all our systems qualify.
Green Loans can be used to finance 1KOMMA5° systems from $1,000 to $30,000 over a 2-7 year term. Once you have received a referral from 1KOMMA5°, online approval usually occurs within 1-2 business days. Green Loans have a competitive fixed interest rate that is as low as 7.99% p.a.* | Comparison rate 9.21% p.a.^ Establishment fee of $299 added to the loan amount. $2.70 per week account keeping fee included in repayments.
To be eligible to apply you must:
Be over 18 years old and an Australian resident or citizen
Own or be purchasing a home
Be employed, self-employed, a self-funded retiree; or is receiving the Government Age Pension
Have an Australian driver’s license or Passport
Provide two most recent payslips or 90 days of bank statements
There are a number of good, competitive Green Loan providers – ask us about the options available.
More Helpful Articles:
1KOMMA5° Blog
Need more information?
Head over to the 1KOMMA5° blog for more helpful tips and other important guides on everything solar, from inverters, panels and batteries to how to make the most of your investment for years to come.