We hear a lot about STCs, Feed-In Tariffs and government rebates – but what exactly are STCs? According to the Solar Credits scheme, a qualifying solar PV system automatically comes with small-scale technology certificates (STCs—previously called RECs), which have a price. By allotting these STCs to a solar installation company, a point-of-sale rebate is provided, and this reduces the overall cost of a solar power system by thousands of dollars.
The number of STCs allotted to a solar system depends on its size, location and the amount of power generated over what is usually referred to as the “deeming period”. Currently, the deeming period is 15 years—and will expire at the end of the Renewable Energy Target in 2030.
The Beginning of the End
However, when the calendar turns to January 1, 2017, this period will reduce to 14 years; decreasing the number of STCs by about 6.5%. In every subsequent year, it will continue to drop.
Below is the formula for calculating STC’s:
System size (KW) x Postcode Zone Rating x Deeming Period (Years) = Number of STC’s
In the given illustration with a solar system consisting of 4kW of panels in Perth (falls within Zone 3 & has a Rating of 1.382), that system is currently entitled to 82 STCs. After January 1, 2017, this figure will reduce to 77 and will continue to drop in subsequent years.
The price of Small-scale Technology Certificates fluctuates based on existing market conditions. Presently, the spot price of one STC is estimated at $38. Supposing the STC price remains constant, the subsidy would actually drop by about $190 from January 1.
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Many industry experts are now saying it would be better to have that $190 in your pocket; or maybe invest in more solar storage batteries in order to maximize your system’s output.
As mentioned before, the supply and demand factors of the market determine the price of an STC. The present $38 price is an all-time high compared to figures for previous periods. In 2010, the STC price shot to just under $28.
Additionally, the reduced deeming period is also another reason why you should consider going solar now rather than later so you can take advantage of the reasonably high STC value.
Note: To receive STCs, a solar system must be eligible; this includes meeting the Australian and New Zealand standards and must be sourced or installed through a Clean Energy Council accredited designer and installer.