STCs were introduced in Australia as a part of the Renewable Energy Target (RET) scheme. The purpose of the scheme is to incentivize the adoption of renewable energy and reduce greenhouse gas emissions. The creation and trading of STCs help to offset the upfront cost of installing renewable energy systems, making them more financially viable for consumers.
The number of STCs generated is calculated based on the amount of renewable energy the system is expected to produce over its lifetime. This calculation takes into account factors such as the size of the system, the location, and the amount of sunlight available. Larger systems and areas with less sunlight generate more STCs.
Once the STCs are generated, they can be sold to electricity retailers or other entities that have a legal requirement to purchase a certain number of certificates each year. Electricity retailers are obligated by law to meet their Renewable Energy Target by surrendering a specific number of certificates, which they can obtain by purchasing them from individuals or companies that have generated excess STCs.
The value of STCs can fluctuate due to market demand and supply. The value is determined by market factors and can be affected by factors such as changes in government policies or financial incentives. Typically, the value of STCs provides a significant discount on the cost of installing Solar panels, making it more affordable for consumers.
Overall, STCs play a crucial role in promoting the adoption of renewable energy systems, particularly Solar panels, by reducing the financial barrier for consumers. By generating and trading STCs, individuals and businesses can offset the cost of installing renewable energy systems, contributing to the growth of the renewable energy industry and the reduction of carbon emissions.