STCs are a form of government incentive provided in Australia to encourage the adoption of small-scale renewable energy systems. By offering financial benefits, the scheme aims to reduce greenhouse gas emissions and promote the use of clean energy sources.
The amount of STCs a household or business is eligible to receive is determined by the size of the renewable energy system installed and its geographical location. The larger the system and the more sunlight-rich the location, the higher the number of STCs awarded.
Once the renewable energy system is installed and operational, the STCs can be sold to registered agents in exchange for a financial payment. These agents then use the certificates to meet their obligations under the Renewable Energy Target (RET) scheme. The RET requires liable entities, such as electricity retailers, to purchase and surrender a certain number of certificates each year.
Alternatively, instead of selling the STCs, individuals and businesses can choose to retain them and use them to reduce the upfront cost of the renewable energy system. The value of the STCs can be deducted from the purchase price, effectively providing a discount.
The price of STCs in the market fluctuates due to supply and demand dynamics. It is influenced by factors such as the cost of renewable energy systems, the number of STCs available, and the demand from liable entities. The value of STCs is typically higher in areas where there is a higher demand for renewable energy and lower in regions with less interest in clean energy technologies.
Overall, STCs play a crucial role in making renewable energy systems more affordable and accessible to households and businesses, thereby supporting the transition to a sustainable and low-carbon future.