STCs are a form of currency that represent the amount of renewable energy generated by the Solar panel system. They can be traded on the open market or sold to electricity retailers, who are obligated to acquire a certain number of STCs to meet the Renewable Energy Target (RET) set by the Australian government.
The value of STCs is not fixed and can fluctuate based on supply and demand dynamics in the market. Generally, as the number of STCs increases, their value decreases, and vice versa.
The installation of Solar panel systems is incentivized through the creation of STCs. Homeowners and businesses can assign their STCs to registered agents, who will then sell them on their behalf. The value of the STCs is typically deducted from the upfront cost of installing the Solar panel system, reducing the financial burden for the system owner.
The number of STCs that can be claimed for a Solar panel system is calculated using the Small-scale Renewable Energy Scheme (SRES) formula. This formula takes into account the geographical location of the system, the amount of electricity it is expected to generate over its lifetime, and the date of installation. The more electricity the system is expected to generate, the more STCs it is eligible for.
It is important to note that the SRES is a government scheme specific to Australia. Other countries may have their own incentive programs and mechanisms for promoting the installation of renewable energy systems.