The Australian federal governments offer the owners of rooftop solar systems an incentive that’s often referred to as a rebate. It’s not actually a rebate as you don’t have to apply for it; in fact, the incentive is the Small-scale Technology Certificates (STCs) which you can use against the initial cost of installing your system.
STCs fluctuate in value
The value of the STCs fluctuates according to supply and demand. The lowest value the STCs have had is $16 and they’ve never risen any more than to $40, which seems to be their unofficial cap.
Federal government body the Clean Energy Regulator sets the market size for STCs each year after deciding how many small-scale renewable energy systems they anticipate being installed in the coming year.
When the market looks like it’s in line with CER projections, supply meets demand, which stabilises prices. Prices have remained stable for the last few years, with STCs staying around $37 each. This value works out as around $3,500 for a 5kW system – a subsidy of around a third.
The CER doesn’t always get it right, though and it underestimated the number of STC on the market for 2017. The two main reasons were a glut of STCs at the start of 2017 after a big spike in installation at the end of 2016 and a lot of new interest in solar after news that feed-in tariffs and grid electricity prices were set to rise.
This means more STCs than is needed so their value drops. Right now, an STC is worth around $30, which means that the out-of-pocket cost of a new system will increase.
Price rises on the way?
Australia has some of the lowest prices for PV systems, largely due to the STC incentive. Once an installation company takes on your commission, it can create STCs and sell them on to traders. Installers tend to calculate their prices based on what they expect to get for their STCs, so when the value is high, you get a bigger subsidy.
So, because the value of STCs is set to drop, these subsidies may well decrease. Installation companies have two choices – they can maintain their existing subsidised prices and absorb the losses (which may put them out of business) or they can increase their prices and risk losing customers.
Chances are, most companies will have to raise their prices a bit; some, sadly, may have to cease trading.
Some good last-minute deals
You can expect to see some last-minute bargains on offer ahead of the STC drop, as companies rush to get some business in at the old prices. If you’ve been thinking about going solar for a while, this could be the last chance you get to take advantage of the high-value STCs for a few years! Not all companies will put up their prices at the same time, or by the same amount, but those increases are in the post, that’s for sure.