A continuing drop in a government renewable energy ‘rebate’ could affect the future price of solar power system installations.
The trading value of Small-scale Technology Certificates (STCs) dropped from $37 to $25 in a few days over the past week.
STCs are issued under the Renewable Energy Target (RET) scheme and are traded in an open market. They are created following the installation of an eligible solar system, the number of certificates increasing with the amount of electricity a system produces.
They are in effect a rebate on the cost of installation of solar power, which solar installers then pass on to customers. The higher the price of the STCs, the higher the rebate.
STC price falls after holding steady for a year
The market price of STCs has been steady for the past year at just below $40.
However, the price fall this week, if it continues, means anyone interested in installing small-scale solar panels could be facing increased prices.
That’s because the system of STCs is driven by the Federal Government’s RET scheme, which is administered by the Clean Energy Regulator.
The RET dictates a percentage of electricity retailer’s sales for which the retailer must supply an STC. This is the renewable power percentage, and for 2017 it’s set at 14.22 per cent.
This drives the installation of solar, because solar power systems receive an STC for each megawatt-hour of electricity they are expected to generate over their 15-year lifetime.
Clean Energy Regulator sets retailer STC targets
However, retailers have been surpassing their 14.22 per cent STC targets for solar installation because of increased customer demand. This means the number of STCs has increased.
If there are too many STCs on the market – because of the increase in solar power installations – the value of the certificates is reduced.
The decrease in the market price of STCs means the rebate to customers will decrease, making installation more expensive.
Solar installers are keen to pass on the benefits of solar installation to customers now, as a precaution against any further drop in the value of STCs.
