STCs are a form of currency that represent the environmental benefits of generating renewable energy. When a homeowner or business installs a Solar system, they are entitled to a certain number of STCs based on the amount of electricity the system is expected to generate over its lifetime and the location of the installation.
The number of STCs a Solar system is eligible for is calculated using the Small-scale Renewable Energy Scheme’s methodology. This takes into account factors such as the size of the system, the location’s Solar resource, and the expected electricity generation.
Once the Solar system is installed and approved, the homeowner or business owner can create the equivalent number of STCs. These certificates can then be sold or traded on the open market to entities that have a legal obligation to offset their greenhouse gas emissions. These entities, known as liable entities, are typically large electricity retailers or other companies with significant carbon emissions.
The price of STCs fluctuates based on market demand and supply. As the demand for renewable energy increases, the value of STCs may rise, providing additional financial incentives for homeowners and businesses to invest in Solar systems.
By selling STCs, homeowners and businesses can recover a portion of the upfront cost of their Solar system installation. This financial incentive helps make renewable energy more affordable and encourages the uptake of Solar power across Australia.