What Is an STC?
Under the Small-scale Renewable Energy Scheme (SRES) of the federal government of Australia, Small-scale Technology Certificates (STCs) can be generated through installing and using renewable energy products. Each certificate is equal to the appliance / product saving 1 megawatt of energy over the deeming period. These certificates work as a financial incentive to small business owners and households to adapt to various energy-saving measurements, such as solar water heaters, solar panel system, and so on. The scheme is planned to scale down and end in 2030
What Is an STC worth?
STC value vary according to supply and demand, let us explain. Liable parties who create significant CO2 emissions such as Energy retailers are required to submit a nominated number of STC each quarter.
At the end of each quarter, liable entities must submit their STC or be fined for each STC not submitted. For every STC not submitted, the entity will be fined $65 AUD so it is in their best interest to source STC’s from those who generate them by installing renewable Energy products.
So why do prices vary? The answer is quite simple, liable entities who have not planned ahead may get near the end of the quarter and not ‘banked’ enough STC and will be liable for $65 per STC shortfall. These companies are likely to pay a higher price, up to a point, where it is commercially smarter to buy them than pay a fine. On the other hand, entities may have accumulated their quota early in the quarter and do not have the need to purchase STC hence supply is higher than demand and the price drops.
How Does The Small-Scale Renewable Energy Scheme (SRES) Work?
The SRES scheme is an ongoing agenda of the Australian government that is operating to provide upfront financial incentives to the households and small businesses all over the country, who choose to switch to a renewable energy source. Under this scheme, a CEC accredited agent can generate and sell STCs, which are a via to hold the large energy retailers accountable for their contribution to Green House Gas (GHG) emissions. Also, by selling STCs, these upfront financial incentives can be rewarded to the end-users, and in the process, accredited agents can generate profit while helping to set the scheme in action.
How Does The STC Trading Work?
Trading the certificates is quite an easy process. First - the number of certificates generated from an installed system (not more than 12 months after) is calculated, after which the STCs can be generated. Once the STCs are generated, they can be traded in the open market or in the clearing house. These two market places are different in nature. The clearing market offers a fixed price, whereas the open market does not. To trade the certificate, one must fulfil all of the requirements provided by the CEC and prepare all the necessary documents that can be requested by the CEC while they audit for the quarter.
It is generally accepted that homeowners are offered a price for the eligible STC at time of install and the installer will manage these through a trading house
How Are STCs Calculated?
STCs calculation depends on quite a lot of variables. Some of which are the size of the whole system installed, date of installation, zone, and so on. As per the size variable, the bigger the system size, the more energy it will be replacing from non-renewable sources to renewable sources. Therefore, it will generate more STCs.
The date of installation is another critical variable because, as mentioned before, the government plans to put an end to the scheme in the year 2030. As each year passes, the financial incentives, or the STCs creation permission rate, declines gradually but surely. This is called the deeming period. How many certificates can one generate is initially calculated by adding the estimation of how much MWh energy one can get from the renewable sources until 2030. A rough number of STC is stretched on that basis.
Another significant variable is zone. Australia is divided into four zones, number one being the best rated one and four being the least. The higher the ratings, the more STCs can be created in that zone despite the prices remaining the same. These zones aren’t created at random; instead, the amount of solar radiation a geographical location receives is the determinator of the zones.
Here’s is an STC calculator that can only give an estimation of how many STCs can a system approximately generate. It does not give the exact numbers, that can only be calculated with the help of an expert.
Who Can Claim STCs?
STCs can only be claimed if all of the requirements are fulfilled. In order to create STCs, one has to be an accredited agent by CEC. Also, to participate in this SRES scheme that generates STCs to provide upfront financial incentives, the solar PV system cannot be more 100KW in capacity.
Provided there is a fixed address where, STC can be created both on grid and off grid