What Are Solar STC’s?
Solar energy constituted approximately 9.9% of the total energy production in Australia in 2020.
The country is regarded as the leader in solar PV development with the highest solar capacity per capita for residential systems. Thanks in part to the government STC program.
The sunny Australian weather and its vast spaces are perfect for the large-scale installation of solar power systems. However, buying and installing solar power systems requires a significant investment.
In this regard, the Australian government has provided incentives under the Solar Credit Program to encourage the installation of solar power systems. STCs or Small-scale Technology Certificates are incentives provided to small-scale energy generators. The most common example is the residential facilities.
Continue reading this article to find out all there is to know about Australian STCs and the incentives offered under the Solar Credit Program that you’re eligible for.
What are they?
The STCs are part of an initiative by the Federal Government – the Australian Small Scale Technology Certificates program. Simply put, an STC is like a discount coupon given to you against the cost of installing a solar power system at your home.
As suggested earlier, the high up-front cost of purchasing and installing a solar power system can discourage many people from investing in them. However, the provisioning of rebates and incentives can prompt the buyers and assist them in quick pay-offs.
As a result, the option to invest in solar PV systems has become more desirable for locals and has enhanced our country’s overall solar production capacity.
How do they work?
The Small-scale Technology Certificates represent the positive impact of solar energy on the environment. Since they have a monetary value, you can trade the STCs in the open market.
Once the solar energy system is installed and approved at your residence, you will acquire STCs calculated on the expected output of the solar system for its life up to 15 years.
The law requires electricity retailers to purchase a defined annual quota of the STCs, implying that you can sell them in the open market in exchange for cash.
Moreover, the government behests the enterprises belonging to the fossil fuel industry to buy STCs from the solar power installation companies. So, the installers sell these certificates to business enterprises vying to reduce their environmental impact.
The sale of the STCs enables the installing companies to acquire partial funds for installing the solar PV system. In turn, they offer lower system prices to the homeowners, thereby making solar power systems more affordable.
Wait, isn’t it a rebate?
The incentive program is also sometimes referred to as solar rebates. However, these are not rebates in the conventional sense.
When providers install a solar system, they generate STCs for either themselves or the client. The STCs can then be redeemed for a specific dollar value, which is deducted from the overall cost of the solar power system.
It can be presumed that the reduction in the price is not directly coming from the government. It is not provisioning for any form of financial compensation to the homeowners.
When you get a solar power system installed from an accredited solar installing company, it facilitates discounting the STC value for you in your solar quote by taking over the hassle of registering and selling STCs from you and doing it on your behalf.
Therefore, as a homeowner, the STCs enable you to enjoy solar energy at a lower rate without having to worry about the tenacious tasks of registering and selling the STCs.
What is the worth of STCs?
As simple mathematics would dictate, the higher the price of STC, the more considerable the subsidy you get against your solar energy system costs.
The amount you can get against the STCs is dependent on three main factors:
- Location of residence in Australia
- Current value of the STC, which is contingent on market conditions
- Deeming period, which decreases every year
STC value and the market conditions
The market conditions for the STC depend on the overall demand and supply patterns, whereby a higher demand will lead to an increase in the value of the STC and vice versa. As per law, the upper cap on the STC value has been fixed at $40. During the past year, the value has fluctuated between $37.25 and $39.5.
STC value and zoning
Another factor that impacts the value of the fluctuating STC is the location.
There are four zones in Australia, depending on the amount of renewable energy that a solar panel can produce in the particular area.
The zones are categorized according to postcode.
If you want to find out which zone you belong to, you can find more information here. Different zones have different ratings. Once you know which zone you are residing in you’ll be able to calculate the amount you will get back from the STCs, here are the rating values you may refer to.
- Zone 1 – 1.622
- Zone 2 – 1.536
- Zone 3 – 1.382
- Zone 4 – 1.185
Once you’re familiar with which zone your residence lies in, there are two different ways to calculate the STCs you’re eligible for.
The easiest way to calculate the incentive payments you will receive is to use this STC calculator provisioned by the government.
Alternatively, here is a simple formula you can use:
Size of the solar system (in kW) x Zone Rating of the postcode x Deeming Period (in years) = Number of STCs – you must round down for the result instead of to the nearest decimal.
STC and the deeming period
As per standard rules, when you purchase a renewable energy system, you will generate 1 STC for every megawatt-hour energy your solar power system will produce until 2031.
Until 2030, the STCs are provided upfront for the system’s expected power generation from its installation up to 2030. That’s because the government will phase out the entire scheme at the end of 2030.
The deeming period is thus set according to the scheme and will decrease every year. Therefore, the amount of STC you get will decline as the deeming period comes finishes. Consequently, the amount of discount you get will also continue to lessen.
For instance, a system installed in Dec 2020 would provide more STCs than a system installed in January 2021 and therefore have a significant cost difference. So if you plan to install a solar power system, the time is now! The more you delay, the more you will lose from the solar rebate.
How much can you save with an STC rebate?
Once you know which zone you are in, you can use the relevant rating, along with the size of your system and the installation date (for the redeeming period), and find out how many STCs are you eligible for. You can multiply the number by the market dollar value of the STC and find out the amount you are entitled to.
For instance, let’s pretend you fit the following data:
- You reside in New South Wales, which is in Zone 2
- You installed a 6.6 kW system in 2020 (the standard size of a residential solar power system)
Here’s how much you would get;
With a 6.6 kWh system, you are eligible for approx. 101 stars (6.6 x 1.536 (zone rating) x 10 (deeming years) = 101.38).
You can multiply the zone rating with the overall market value of STC.
The current value of the STC is $ 39.
So the math ends up as 101.38 x $39 = $3,953.82.
Rounded down, the final result is $3953.
You can find out the dollar value of STC from your system installer as well.
You can deduct this amount from the overall cost of the system. For example, if the system installation costs you $10,000, you will reduce your net expense to $6,047 once you deduct the total STC incentive value from the total initial cost. This is why people also refer to the STC incentive as a solar rebate.
It is noteworthy that STCs received come from the installation date and not the date of sale. This is an essential consideration because eventually, it will impact the number of STCs and the discount you receive.
Am I eligible for STCs?
You may agree that the STC incentive makes solar power systems more affordable and desirable. If you want to install one at your home, you must meet specific eligibility criteria.
You must get the solar installation from an installer accredited by the Clean Energy Council.
Moreover, solar panels and inverters present in the solar power system must be on the CEC- approved list.
The solar power system must also meet Australian and local state standards.
Solar incentives in Australian states and territories
The STC program is available throughout Australia. You can also combine it with state-based incentives. We have briefly listed down a few incentives offered in the current year.
The Victoria Solar Incentive Program fits with the STC Incentive plan by the state government. In addition to solar panels, it also caters to solar battery systems and solar hot water systems.
Until July 2021, the incentive offered on the solar panels was around $1,850. The incentives are reviewed and modified regularly. You can find more information about the Victorian Solar Incentives here.
New South Wales
NSW offers two state-based incentives. The first is termed Empowering Homes Program and provides interest-free loans for home solar systems with energy storage. If installers add batteries to the system, the loan may amount to up to $9,000. However, if both system components are new, the loan could be as high as $14,000.
The second program caters to deploying 3-kW solar power systems in 3,000 homes at zero cost. It is termed the Solar for Low Income Program.
Australian Capital Territory
The capital also offers two incentive programs for solar energy systems. One is similar to the NSW’s Solar for Low Income Program; however, eligible homes get a subsidy covering 50% of solar costs, up to $2,500 per system.
The second is the Next Gen battery Storage that intends to install 5,000 batteries in residences and small businesses across the state.
The NT has facilitated the roll-out of a territory-wide scheme designed to provide loans worth $6,000. These loans are intended to help homeowners install a new system with storage batteries or add batteries to an existing system.
SA offers two incentive programs. The first is the City of Adelaide Sustainability Incentives Scheme, which provides rebates of up to $5,000 to residential house owners and landlords for building upgrades. The benefits are available for concession card holders and tenanted households.
The other is the Home Battery Scheme, designed to help homeowners purchase energy storage systems.
Install a solar system today
The state-based incentive plans in unity with the government STC plan can enable you to lower your expenses by quite a margin.
As we have suggested in the earlier sections, if you are interested in installing a solar power system at your house, it is better to do it at the earliest and get a quote from a trusted residential solar energy system installer like Nectr.
You will get a comprehensive insight into the federal government’s feed-in tariffs and STC incentive program and how the plan will positively impact your budget.
When you have the system installed at your residence, you may also choose to claim the value of STCs yourself. However, you will have to pay the total price of the solar power system upfront, then get yourself registered with the government market exchange, and then wait for your turn.
However, if you choose to assign your credits to a registered seller, you will be offered a point of sale discount. You will also have to deal with the hassle of trying to sell the STC on your own after government registration.
Contact us today to find out exactly how much you can save.
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