STCs are a market-based incentive designed to encourage the installation of small-scale renewable energy systems, such as Solar panels. The number of STCs that can be created for a system is determined by the system’s capacity, the location, and the amount of electricity it is expected to generate over its lifetime.
The creation of STCs is regulated by the Clean Energy Regulator (CER) in Australia. The CER sets a multiplier called the “deeming period” to calculate the number of STCs that can be created for each megawatt-hour (MWh) of electricity generated by the system. For example, if the deeming period is 15 years and the system is expected to generate 1 MWh of electricity per year, then 15 STCs can be created for that system.
Once the STCs are created, they can be sold in the market to electricity retailers or other entities that have an obligation to meet the Renewable Energy Target. These entities purchase the STCs to offset their obligation and demonstrate their compliance with the RET scheme. The price of STCs is determined by supply and demand in the market, and it can fluctuate over time.
The revenue generated from selling the STCs can help offset the upfront cost of installing a Solar power system. The installer or system owner can either sell the STCs themselves or engage a broker or agent to sell them on their behalf. The process of selling STCs involves registering the certificates with the CER, transferring them to the buyer, and receiving payment.
STCs have been an effective mechanism in promoting the adoption of small-scale renewable energy systems in Australia. They provide a financial incentive for individuals and businesses to invest in Solar power and reduce their reliance on fossil fuels.