STCs work as a financial incentive for individuals or businesses to invest in small-scale renewable energy systems. The government issues these certificates to eligible system owners based on the expected electricity generation of the system over its lifetime. The more electricity the system is expected to generate, the more STCs it will receive.
The number of STCs awarded also depends on the system size and location. Systems located in areas with higher Solar resource availability will receive more STCs. Additionally, larger systems will generate more electricity and, therefore, receive more STCs.
Once individuals or businesses receive their STCs, they have the option to trade or sell them to electricity retailers or brokers. These entities are required by law to purchase a certain number of STCs each year to meet their renewable energy targets. By selling their STCs, system owners can recover some of the costs associated with installing the renewable energy system.
The value of STCs can fluctuate based on market demand and supply. If the market is oversupplied with STCs, their value may decrease. Conversely, if the market is undersupplied, the value may increase.
Overall, STCs provide a financial incentive for individuals and businesses to adopt renewable energy systems, such as Solar PV. They help offset the upfront costs of installation and encourage the growth of the renewable energy sector.