Small-scale Technology Certificate (STC) for Australian Solar System

What is an STC (Small-scale Technology Certificate)

When you install solar power, solar water heating and other renewable energy technologies you are helping to reduce greenhouse gas emissions. This entitles you to create environmental credits called Small-scale Technology Certificates or STCs for short. These credits are a commodity and tradeable like shares on the Australian Stock Exchange. Like other commodities the price of STCs is not fixed and varies with supply and demand. 1 STC equals 1MWh of generation from a renewable source and is part of the Mandatory Renewable Energy Target which is an industry development mechanism created by government in 2001.

How the new Renewable Energy Target works

• The government has implemented a target of 20% renewable energy sourced electricity by 2020
• The current RET requires 9500 GWh of renewable energy to be delivered by energy companies
• The 20/20 target requires 45000 GWh
• 1MWh of energy equals 1 REC, so 45,000,000 RECs will be generated to meet the 2020 target
• To meet the target, energy companies must surrender RECs into their holding account at the end of every calendar year at an amount representative to 20% of their market share
• If energy companies don't put sufficient RECs into the holding account, the company is fined at a rate much higher than the REC value

STCs and the Solar Credits scheme

The Australian government recently launched the Solar Credits scheme for grid connect and off grid wind and solar power systems.

The Solar Credits program is based on the Small-scale Technology Certificate system, but with a certificate multiplier incentive offering up to 5x the usual number of STCs issued for solar power systems up to 1.5kW.

Depending on where you live and if you choose to cash in your STCs, this can represent a saving of up to $7,200 through JT Solar! The amount will vary between providers not only based on where you live, but according to STC market value; which fluctuates. 

The new program replaces the previous rebate and is available to just about every Australian household, business and community group. By increasing the number of STCs issued with qualifying components and systems, the Australian government hopes to achieve a goal of 45,000 gigawatt-hours (GWh) of electricity via renewable means such as solar, wind and geothermal by the year 2020; although has been no adjustment to the target to represent the "phantom" certificates created.

The environmental implications

There's been a great deal of criticism that the Small-scale Technology Certificate system does not provide substantial reduction in greenhouse gas emissions, that all it does is to allow companies to pay to pollute.

The "phantom" additional multiplier STCs issue aside (which only applies to the Solar Credits scheme); when you install solar and sell your STCs (or use their value as a point of sale discount), you are essentially selling the right to own the renewable energy (carbon dioxide emission reduction) delivered from that technology to an energy company who will buy those STCs in order to meet their obligation.

However, it's very important to bear in mind you are supporting the country to meet the mandated Government targets and helping to support the Australian solar industry. This not only means more green jobs, but increased uptake of solar power drives costs of supply and installation down so that solar can become more competitive with traditional fossil technologies. In a nutshell, more solar generated electricity = less coal fired power generation required.

If you choose to retain your STCs by paying full retail price, congratulations - you are in the "ultra-green" zone as you are supporting Australia to go above and beyond the 2020 target!

Australia's Small-scale Technology Certificate system, particularly the Solar Credits multiplier, is far from perfect; but it's a start and is a basis upon which to work from and improve. Without it, solar power would continue to stay out of reach of many; see our industry stagnate and new development severely impeded.

Despite the limitations of the RET and of the STC system, a decision to install solar now:

• sustains a fledgling industry for its significant role in Australia’s future sustainability
• creates sustainable consumers by effecting behavioural change through awareness
• empowers communities to be part of the solution the global climate crisis
• leads mainstream uptake of environmental technologies, driving affordability and future capacity

Buy and sell STCs through JT Solar

JT Solar is currently in the process of setting up a full carbon trading service, so whether you're looking to buy STCs or sell STCs provided with equipment you've purchased elsewhere, we can help! Contact us for further details on 1300 544 131.