STCs are a mechanism implemented by the Australian Government to incentivize the adoption of renewable energy systems by households and businesses. When a Solar panel, Solar water heater, or heat pump is installed, the owner is eligible to create STCs based on the estimated amount of electricity the system can generate or displace over its lifetime.
The number of STCs received is determined by the government’s Small-scale Renewable Energy Scheme (SRES), which assigns a certain number of STCs per megawatt-hour (MWh) of electricity generation or displacement. This number is based on factors such as the location, size, and efficiency of the system.
Once the STCs are created, they can be sold on the open market to electricity retailers, who are obligated by law to purchase a certain number of STCs each year. The price of STCs is determined by supply and demand, and it fluctuates over time. By selling their STCs, system owners can offset a portion of the upfront cost of their renewable energy system.
The process of creating and selling STCs is typically facilitated by registered agents who specialize in managing the paperwork and transactions involved. These agents ensure that the system meets the eligibility criteria, calculate the number of STCs, and facilitate the sale of the certificates on behalf of the system owner.
STCs have been instrumental in driving the uptake of Solar panels, Solar water heaters, and heat pumps in Australia. By providing a financial incentive, they make renewable energy systems more affordable and attractive to consumers, helping to reduce greenhouse gas emissions and reliance on fossil fuels.