STCs are essentially financial incentives for the installation of small-scale renewable energy systems. They are created based on the estimated amount of electricity that the system will generate over a certain period, usually 15 years. The number of STCs created for a system is determined by a formula set by the Clean Energy Regulator.
Once the STCs are created, they can be sold to electricity retailers, who use them to meet their legal obligations under the Small-scale Renewable Energy Scheme. The number of STCs retailers are required to purchase is called their “liability” and is based on the amount of electricity they sell to customers.
The value of STCs is not fixed and can fluctuate depending on market demand. The price of STCs is determined by supply and demand dynamics in the market. If there is high demand for STCs and limited supply, the price will increase. Conversely, if there is low demand and an oversupply of STCs, the price will decrease.
Various factors can influence the demand for STCs, such as changes in government policy, incentives, and subsidies for renewable energy, as well as the overall market conditions for renewable energy. The value of STCs can also vary depending on the location of the system. Some areas may have higher demand for renewable energy, leading to higher STC prices.
Overall, STCs provide a financial benefit to individuals and businesses who invest in small-scale renewable energy systems, as they can sell the certificates and potentially recover part of the cost of installation. Additionally, the creation and sale of STCs contribute to the growth of renewable energy in Australia by incentivizing the adoption of small-scale systems.