STCs are a form of government incentive designed to promote the adoption of renewable energy systems, particularly Solar power. By installing an eligible Solar power system, homeowners and small businesses can generate STCs, which can then be sold to electricity retailers.
Under the SRES, electricity retailers are legally obligated to purchase a certain number of STCs each year. This creates a demand for these certificates in the market. The value of STCs is determined by factors such as the size of the Solar power system, its location, and the overall market demand for STCs.
The process of generating and selling STCs involves several steps. First, the Solar power system must meet certain eligibility criteria set by the government. Once the system is installed and operational, the homeowner or small business can create STCs based on the amount of renewable energy generated by the system.
The number of STCs generated is calculated using a formula that takes into account factors such as the system’s capacity and the amount of Solar radiation in the installation location. These STCs can then be registered and assigned a unique identification number.
Once registered, the STCs can be sold to electricity retailers or other market participants. The price of STCs is determined through supply and demand dynamics in the market. As the demand for STCs increases, their value may rise, providing an additional financial incentive for homeowners and small businesses to invest in Solar power systems.
Overall, STCs provide a means for homeowners and small businesses to offset the cost of installing Solar power systems by selling the certificates generated. This helps to make renewable energy systems more affordable and encourages the uptake of Solar power in Australia.