STCs are a policy mechanism in Australia that aims to promote the installation of small-scale renewable energy systems, such as Solar panels. The government sets a target for the number of STCs that need to be created each year, and these certificates are then traded on the market.
The number of STCs generated is determined by the size of the Solar power system and its location. The larger the system and the more sunlight it receives, the more STCs it will generate. This means that systems in sunnier areas will generate more STCs than those in less sunny locations.
The value of STCs is not fixed and can fluctuate depending on market conditions, such as supply and demand. The more demand there is for STCs, the higher their value will be. This means that the value of STCs can vary over time.
The main benefit of STCs is that they can significantly reduce the upfront cost of installing Solar panels. When a Solar power system is installed, the installer will create the corresponding number of STCs. These certificates can then be sold or traded to electricity retailers, who are required to buy a certain number of STCs each year to meet their obligations.
The value of the STCs that are sold or traded can be used to offset the cost of installing the Solar panels. For example, if the value of the STCs is $1,000 and the cost of installing the Solar panels is $5,000, the homeowner would only need to pay $4,000 out of pocket.
Overall, STCs provide a financial incentive for installing Solar panels by reducing the upfront cost. This helps to make Solar power more affordable and encourages the uptake of renewable energy systems.