Home solar systems are very affordable in Australia, and prices drop further when you consider STC incentives or Small-scale Technology Certificates (STCs). As of 2021, the STCs earned make solar panels around 30-40% cheaper. However, the incentive is decreased slightly each year, and there is a 10% drop between 2021 and 2022.

To understand why the STC incentive is gradually reduced, first we will discuss how the program works. The official name of this program is the Small-scale Renewable Energy Scheme (SRES), which is part of the broader Renewable Energy Target. The SRES provides incentives not only for solar power and other renewables, but also for solar water heating and air-source heat pumps.

How to calculate the STC incentive for solar panels

The STC incentive rewards you for the estimated electricity output of solar panels over a deeming period. 

• This period starts on the year when you install solar panels, and the calculation considers the full year, regardless of the exact installation date.
• The deeming period ends on December 31, 2030.
• You get one STC for every 1,000 kilowatt-hours of estimated output during the deeming period. For example, a solar power system that is expected to produce 91,000 kWh during that time is awarded 91 STCs.

This means a solar system from January 2021 has the same deeming period as another system installed in December 2021 (10 years). However, the deeming period decreases to 9 years starting from January 2022. If you’re considering solar panels for your home or business, you can get a higher incentive if the installation is completed by December 2021.

Other than the deeming period, three factors are considered for the STC calculation:

• The size of your solar PV system: Larger systems produce more electricity over a given time, and they get more STCs. Just keep in mind there is a limit of 100 kW for this incentive, and you must apply for another program if your system is larger.
• The postcode where you will install the system: Solar panels are more productive in sunnier locations. If you install two identical systems in different postcodes, the one with more sunshine also gets more STCs.

The STC incentive will remain available until 2030, but it becomes smaller with each passing year. By installing your solar panels earlier, you can shorten their payback period and increase your return on investment.

Comparing STC incentives in 2021 and 2022

In the following table, we compare how incentives change in the five largest Australian cities between 2021 and 2022, using the official STC calculator from the Clean Energy Regulator. We have also included Darwin and Alice Springs (NT), two locations with more sunshine than the five largest cities. For an equal comparison, we consider a 6.6kW solar PV system in all cities and an STC price of $39.

As you can see, the incentive drops by 10% in all cases. This happens because the deeming period is decreased from 10 to 9 years. The incentive will not be reduced dramatically, but you can get more STCs by going solar before the end of 2021.

Is my home solar system eligible for STCs?

The Clean Energy Regulator wants to ensure that only high-quality solar systems get their incentives, which means there are several conditions to be eligible:

• Using solar panels and inverters that are included in the Clean Energy Council list of approved products.
• The solar power system must be set up by CEC Approved Designers and Installers.
• The system must meet Australian and New Zealand standards, along with any local requirements that apply.

To make sure your home solar system meets these requirements, the easiest solution is hiring a qualified provider like Instyle Solar – we’re a CEC Approved Solar Retailer!

Read more like this on our blog.

Next Steps…

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