Fall in value of STCs means a smaller “rebate” for customers
You may hear in the media (or from suppliers that you have got solar quotes from) that they are going to increase the price of solar, due to a fall in the market value of STCs. This is a genuine issue that solar suppliers are facing and will have to increase prices to ensure they don’t run at a loss (and go out of business). Read on to find out what it all means.
How can a rebate go down so suddenly?
Many suppliers (and customers) refer to the sale of Small Scale Technology Certificates (STCs) as a ‘solar rebate’ but it is not strictly speaking a rebate. When a solar PV system is installed there are STCs attributed to that system, which can be traded by suppliers and installers as a way of proving that they have created renewable energy infrastructure. The cost of STCs has remained stable for the past three years due to stability in the solar market. However the marked increase in solar installations in the past year has led to an oversupply of STCs in the market – reducing the price. The increase in solar uptake is due in some part to the overall cost of systems coming down but also to do with electricity prices going up, so more people are keen to generate their own energy for free. This means that solar suppliers have been purchasing STCs (from householders) for more than they are currently valued at. Suppliers can’t continue to offer the same price for them at the point of sale and will therefore be forced to charge more for installing solar PV systems.
Why do suppliers buy the STCs?
In most instances suppliers buy the STCs from their customers at the point of sale, thereby offering a reduction on the installation cost of the system (like a rebate). This means the system cost goes down for the household and the supplier can then trade the STCs. Some customers retain their STCs in the hope of trading them themselves but this is done in the energy market and most householders simply want to get their solar for the best possible price, without having to worry about trading STCs to improve their out of pocket costs.
So is this the same as the feed in tariff/ credit I get on my bill?
No – the ‘rebate’ that is being referred to is the discount on purchase price offered when your supplier trades the STCs on your behalf. The amount you are paid for energy that you don’t use and send back the grid (for someone else to use) is still in place and in most states has gone up or stabilised. This is called a Solar Feed in Tariff (FiT).
So will STCs become worthless as more and more people install solar?
STCs should stabilise in value again once the market catches up to predicted sales. Even since the drop last week the price has recovered slightly however we expect some unpredictability in the value for the next few months, which will mean that suppliers need to buy them for a realistic amount in order to cover their own costs.
How much of a discount did they account for and how much more will a solar system cost due to the drop in value of STCs?
The value of STCs was calculated based on the system size and location. The rebate for STCs when they were at the maximum value of $40 each meant a discount of around $700 per kW of installed power. So roughly a $2,100 discount on a 3kW system (depending on where the system is installed). At the value of $26 per STC, which they fell to last Thursday (although are back at $30 at the time of writing this), the rebate would be more like $455 per kW, so $1,365 off a 3kW system. As you can see this is a significant decrease in the rebate that will have to be accounted for in solar quotes. This means that most suppliers will now have to reissue quotes to allow them to cover for this loss. Although most quotes would acknowledge that the STC rebate was based on a stable market nobody likes having to adjust quotes and point out the small print!
So what now – do we wait or do we rush to buy?
Many suppliers (including Positive Charge’s partner supplier) will try their best to honour issued quotes and will contact you directly to let you know how the STCs value may affect your quote. So if you are fairly sure that solar is right for you then we encourage you to take up the offer and install sooner rather than later. If you’re not sure whether or not to install then feel free to call the energy experts at Positive Charge on 1300 23 68 55, to talk through your situation and get advice. If you have a reason to delay an installation – for example you are renovating or having a roof replaced – then don’t panic buy. Solar is a great investment and even if the rebate has gone down we are confident that you can get a system that will give you savings and pay for itself within a few years. When you’re ready to get quotes contact Positive Charge and discuss your needs.
Source: Green Energy Markets