STCs are a form of government incentive designed to encourage the adoption of small-scale renewable energy systems, such as Solar panels, by homeowners. The scheme operates in Australia and is overseen by the Clean Energy Regulator.
The number of STCs that can be created for a Solar energy system is determined by its expected electricity generation over a 15-year period. This is based on factors such as the size of the system, the efficiency of the panels, and the location’s Solar resource. The more electricity the system is expected to generate, the more STCs can be created.
Once the Solar energy system is installed and operational, the homeowner can create the STCs and register them with the Clean Energy Regulator. These certificates can then be sold to energy retailers, who are required by law to buy a certain number of them each year. The energy retailers use the STCs to meet their legal obligations under the SRES.
The value of STCs can fluctuate depending on market conditions and factors such as supply and demand. The price is determined through a market-based mechanism known as the Small-scale Technology Percentage (STP). The STP sets the number of STCs that energy retailers are required to buy each year, and this can influence the price of the certificates.
The value of STCs can also be influenced by factors such as changes in government policies, Solar market trends, and the location of the system. For example, systems located in areas with more sunlight and higher electricity prices may generate more valuable STCs.
Overall, STCs provide a financial incentive for homeowners to install small-scale renewable energy systems, making them more affordable and encouraging the transition to cleaner energy sources.