STCs are a form of government incentive in Australia aimed at promoting the adoption of small-scale renewable energy systems. The scheme is administered by the Clean Energy Regulator.
When homeowners or small businesses install eligible renewable energy systems, such as Solar photovoltaic (PV) panels, small wind turbines, or small-scale hydro systems, they are entitled to create STCs based on the expected electricity generation of the system over its lifetime. The number of STCs generated depends on factors such as the system’s capacity, location, and the amount of electricity it is expected to generate.
These STCs can then be traded and sold on the STC market to registered agents, who are typically electricity retailers or other entities with obligations under the Renewable Energy Target. The price of STCs is determined by supply and demand dynamics in the market.
The value of STCs can be used to reduce the upfront cost of installing a renewable energy system. Homeowners and small businesses can choose to assign the creation and sale of their STCs to an eligible agent, who will provide them with a financial benefit in return. This benefit can be in the form of a discount on the purchase price of the system or a direct payment.
The number of STCs that can be created for a particular system is subject to deeming periods, which are set by the government. These deeming periods determine the number of STCs based on the system’s installation date. Over time, as the deeming period progresses, the number of STCs that can be created for a system decreases.
STCs provide a financial incentive for individuals and businesses to invest in small-scale renewable energy systems, making them more affordable and helping to reduce greenhouse gas emissions.