The Renewable Energy Target (RET) is a government policy in Australia that aims to increase the proportion of renewable energy in the country’s electricity generation. It requires liable entities, such as electricity retailers, to purchase and surrender a certain number of STCs each year. By doing so, they demonstrate their compliance with the RET and contribute to the growth of renewable energy.
The value of an STC is not fixed and can vary depending on market demand and supply. The price is determined through a market-based mechanism, where registered agents can buy and sell STCs. The price of STCs is typically higher when there is high demand and limited supply, and vice versa.
The installation of eligible renewable energy systems, such as Solar panels, Solar water heaters, or heat pump systems, can generate STCs. The number of STCs generated is calculated based on the amount of renewable energy that the system is expected to produce over its lifetime. Factors such as the system’s size, location, and the amount of electricity it is estimated to generate determine the number of STCs.
Once the STCs are generated, they can be sold to registered agents, who are obligated to purchase a certain number of STCs to meet their RET obligations. The sale of STCs provides financial incentives for individuals or businesses to invest in renewable energy systems, as it helps offset the upfront costs of installation.
In summary, STCs are tradable certificates generated when eligible renewable energy systems are installed. They can be sold to registered agents, who use them to fulfill their obligations under the Renewable Energy Target. The value of STCs fluctuates based on market demand and supply.
