STCs are a way for the government to encourage the adoption of small-scale renewable energy systems, such as Solar panels, by offering financial incentives. The number of STCs a Solar system is eligible for is determined by several factors:
1. Location: Different areas in the country have different levels of Solar radiation and potential for renewable energy generation. STCs take this into account, with higher levels of certificates available for systems installed in areas with greater Solar potential.
2. Installation date: The government provides a certain number of STCs for each renewable energy system installed. However, the number of certificates available decreases over time to reflect the decreasing cost of Solar installations and the increasing market competitiveness of renewable energy.
3. Expected energy generation: The number of STCs a system is eligible for is also influenced by its expected energy generation over its lifetime. This calculation takes into account factors such as the size and efficiency of the Solar panels, as well as the average Solar radiation in the area.
Once a small-scale renewable energy system is eligible for STCs, the certificates can be created and registered. These certificates can then be sold or traded on a market known as the Small-scale Renewable Energy Scheme (SRES). The value of STCs is determined by supply and demand dynamics, with the price typically fluctuating over time.
By selling or trading their STCs, Solar system owners can offset the upfront cost of their installation. This helps make renewable energy systems more affordable and encourages their adoption, contributing to the reduction of greenhouse gas emissions and the transition to a cleaner and more sustainable energy future.