STCs are a form of government incentive aimed at promoting the adoption of small-scale renewable energy systems, such as Solar panels. The scheme operates in Australia and is administered by the Clean Energy Regulator.
When a homeowner or small business installs a Solar panel system with a capacity of 100 kilowatts or less, they can claim STCs based on the expected electricity generation of the system over its lifetime. The number of STCs received is determined using a formula that takes into account factors such as the system’s location, size, and expected output.
Once the STCs are issued, they can be traded on the open market. The value of STCs can fluctuate based on supply and demand dynamics. The purpose of this trading system is to help reduce the upfront cost of installing Solar panel systems by allowing individuals or businesses to sell their STCs to larger energy retailers or other market participants who have an obligation to meet renewable energy targets.
By trading their STCs, homeowners and small businesses can receive a financial benefit that offsets a portion of the cost of their Solar panel system. This makes it more affordable for them to invest in renewable energy technology and encourages the uptake of Solar power.
It’s important to note that the STC scheme is subject to periodic reviews and changes by the government, so the specifics of how STCs are calculated and traded may vary over time.