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STCs Explained

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STCs: Your Key to Unlocking Solar Savings in Australia

Ariel view of a solar farm with the letters "STC" in the middle
STCs: Everybody loves them, but why?

Thinking about switching to solar but feeling lost in the jargon? Let’s shed light on one key term: Small-scale Technology Certificates (STCs). They’re not buried treasure, but they could hold the key to significant savings on your solar journey.

What Exactly are STCs?

STCs are essentially government-issued rewards for choosing clean energy. When you install a small-scale solar system (up to 100kW) in Australia, you automatically earn STCs based on the size and efficiency of your setup. Think of them as green badges of honor, but with a financial bonus!

These aren’t just feel-good tokens. STC owners can sell them on a dedicated market, currently fetching around $35-$40 each. Picture them as sunshine currency! And here’s the exciting part: most solar installers, including Lightning Energy, will buy these STCs directly from you, effectively reducing your installation cost by their value. It’s like a hidden discount built into your roof, and we happily pass it on.

There’s a reason to consider solar sooner rather than later, though. Each year, as Australia approaches its 2030 renewable energy target, the value of STCs gradually decreases. So, the sooner you join the solar revolution, the more you can maximize your savings. Don’t miss out on this sunshine bonus!

Who Buys the STCs?

There are two main types of buyers in the STC market:

  • Renewable Energy Target (RET) liable entities: These are organizations like electricity retailers, gas retailers, and large energy users. Under the RET scheme, they’re obligated to meet certain renewable energy targets. They can fulfill these obligations by either generating renewable energy themselves or by purchasing STCs from the market. STCs represent clean energy generated by small-scale solar systems, hence their value to large entities trying to reach their targets.
  • Investors: Some investors see STCs as a valuable commodity worth trading on the market. They can buy them at a lower price and sell them later for a profit if the market price goes up. This market activity helps maintain a healthy flow of STCs and can even benefit solar system owners by potentially driving up the price they receive for their certificates.
    Why do they have to buy STCs?

The obligation to buy STCs stems from the Australian government’s Renewable Energy Target (RET) policy. This policy aims to increase the share of renewable energy in Australia’s electricity mix by 42.5% by 2030.

Here’s why RET liable entities have to buy STCs:

  • Compliance: Purchasing STCs is one way for these entities to comply with their RET obligations. By purchasing and surrendering STCs, they demonstrate their contribution to the development of renewable energy in Australia.
  • Financial incentives: While buying STCs incurs a cost, it can be cheaper than investing in their own renewable energy generation infrastructure. Additionally, some retailers have started offering “green tariffs” that include the cost of STCs in the electricity bill, allowing them to pass that cost onto their customers while still meeting their RET obligations.
    In summary, the market for STCs is driven by both compliance obligations and potential investment opportunities. By understanding the motivations of buyers, we can better appreciate the role of STCs in Australia’s transition to a cleaner energy future.

The Nitty Gritty

Here’s a clear breakdown of STCs’ magic:

  • Automatic generation: You earn STCs automatically when you install a solar system.
  • Tangible Value: Each STC is worth real money, currently hovering $30 as the market value fluctuates, like the stock market.
  • Reduced Installation Costs: Sell your STCs to your installer and watch your bill shrink!
  • Time-sensitive benefits: The value of STCs decreases every year, until the 2030 Renewable Energy Target year.

So, ditch the treasure maps and look up at the sun. That’s where the real Aussie gold shines, waiting to be harnessed. Embrace the power of STCs, join the solar revolution, and let’s light up Australia, one rooftop at a time!

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Written By:

Luke Cove
Managing Director
Lightning Energy

luke cove - Founder of lightning solar

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