STCs: Your Government Incentive

STCs

STCs (Small-scale Technology Certificates) are a government-approved electronic form of currency. They provide a financial incentive to reduce the upfront cost of installing ‘small-scale’ (< 100kW) renewable energy systems, such as your solar system.

STCs were introduced under the Small-Scale Renewable Energy Scheme, established by the government in 2011 to facilitate Australia’s Renewable Energy Target. They are traded in the Australian Energy Market.

 

Number of STCs per System

The final number of STCs a renewable energy system is eligible for depends upon:

  • Geographical Location (Zone) of Installation
  • Installation Date (Deeming Period)
  • Amount of electricity (MWh) either generated (solar/wind/hydro) or displaced (solar/heat pump hot water) by the system

Zone

Australia is divided into various zones based on how much renewable energy can be generated by a solar panel in a given area over the course of a year. Areas with higher energy generation are eligible for a greater number of STCs than areas with lower energy-generation potential.

Deeming Period

The ‘Deeming Period’ is effectively the designated ‘lifetime’ of a renewable energy system in Australia. At the commencement of the Small-Scale Renewable Energy Scheme, the deeming period was originally set at 15 years.  From January 2017, the number of claimable years has begun to decline, and will be reduced by 1 each year until 2030, when the Scheme will end.

Solar PV Deeming Period (In Years)

Before 2016

 15

2016

15

2017

14
2018

13

2019

12

2020

11

2021

10

2022

9

2023

8

2024

7

2025

6

2026

5

2027

4

2028

3

2029

2
2030

1

 

With time, the number of STCs that can be created for a system will gradually decrease until STCs are phased out at the end of 2030.

Electricity Generated/ Displaced

As a general rule of thumb, 1 STC is the equivalent of 1 Megawatt hour of generated or displaced electricity.

To confirm the number of STCs that can be created for your system, you can refer to the Clean Energy Regulator’s STC Caluclator: https://www.rec-registry.gov.au/rec-registry/app/calculators/sgu-stc-calculator

 

Dollar Value of STCs

The final dollar value of STCs is determined by a fluctuating market value.

Under the Small-scale Renewable Energy Scheme, ‘Renewable Energy Target Liable Entities’ (electricity retailers) are legally obliged to buy and surrender a set amount of STCs on a quarterly basis each year.

The amount of STCs Liable Entities are obliged to acquire is based on a percentage of projected STC creation for that year.

The dynamics of balancing a theoretical number of STCs generated by projected installations with the actual number of certificates created for real installations drive the supply-and-demand fluctuations that ultimately determine the final dollar value of your STCs at any given point in time.

As with any supply-and-demand commodity, the market value may vary considerably over the course of a year. This is the reason Mode reserves the right to vary STC prices until a contract is signed.

 

Trading STCs

When you purchase a renewable energy system, the STCs allocated to that system belong to you, the owner of the system.

Practically, there are two ways you can realise the dollar value of this government incentive:

  • Assign your STCs to the installer of your system in exchange for a reduction in the cost of the system (the simplest and most common option, due to the involved process of registering and trading certificates)
  • Create STCs yourself, then sell and transfer them in the Renewable Energy Certificate (REC) Registry in accordance with relevant rules and guidelines.

Please note that Mode quotes on the assumption that we will register and process your STCs as part of the standard service we provide to our customers.

If you wish to avail yourself of the second option, we refer you to the Clean Energy Regulator (www.cleanenergyregulator.gov.au/RET ) to obtain more information.