Federal Solar Credits incentive to drop from 1 July 2012

The incentive for the Federal Government’s Solar Credits rebate program is set to drop from 1 July 2012. The impact of the impending reduction will have the biggest impact on those who are planning to install solar PV systems around 1.5kW in capacity. Under the 3x multiplier that is currently in place, those who install their systems before the deadline will receive additional STCs (a type of REC) for the first 1.5kW of installed capacity of their system, providing an effective up-front subsidy to their solar systems.

(Update 2 May 2012: REC Multiplier likely to be prematurely reduced from 3x to 1x.)

How much will the Federal Solar Credits rebate drop?

According to the Department of Climate Change and Energy Efficiency, the Solar Credit multiplier, which multiplies the number of STCs issued for the first 1.5kW of a solar power system, is to drop from 3x to 2x after the 1 July 2012 deadline. The annual reductions are a planned part of the Government’s incentive scheme for small-scale solar power under the eRET, which was designed so that subsidies would be strategically wound back as solar PV systems become more affordable.

Last year’s premature reduction, the new Carbon Price may mean greater drop this year

However, if last year’s reduction is indicative of what is to come, there is a possibility that the STC multiplier may be reduced to 1x–meaning that, although the standard (non-multiplied) STC rebate will still be applicable, no ‘bonus’ for new solar PV system owners. There is also speculation that the Federal Government, having passed its Carbon Price legislation (scheduled to enter into effect in July as well, and intended to indirectly buoy renewable energy industries), will withdraw some support for the eRET.

Update 27 Feb 2012: Australian Solar Energy Society (AuSES) Chief Executive John Grimes has stated that the Federal Government has given no indication that an unscheduled, premature reduction in the REC/STC multiplier will occur. 

What does the Solar Credit rebate reduction mean in monetary terms?

REC Zones

What do Solar Credits amount to in terms of the savings on the cost of a solar power system? This depends firstly on in which ‘REC Zone‘ your property is located. Some areas of Australia tend to have more sunshine than others, as a result of latitude and climatic factors. REC zones take these differences into account, and provide a greater subsidy for systems that can be expected to attain a higher energy yield over the course of their functional lifespans, which are officially ‘deemed’ at 15 years (but ordinarily expected to be 30+).

(You can check which REC zone you are in and the according number of STCs you may be eligible for with the ORER STC Calculator.)

RECs are a tradable commodity, and as such the REC price is prone to fluctuation. For the last few months (the latter half of 2011), the price has hovered at approximately $28, but has since its introduction seen fluctuations from as low as $16 to over $40. Depending on where the REC price sits when you install your system, your Solar Credit rebate will vary. (Some solar installers will also guarantee a higher REC price in order to entice customers with lower up-front system costs, taking the liability of price fluctuations on for themselves.)

Multiplier vs no multiplier scenarios: The difference in Solar System prices

The STC allotments for a 1.5kW system and the applicable ‘Solar Rebate’ for each Zone, under different REC multiplier scenarios are detailed in the chart below. (Prices are based on an assumed REC price of $30–actual rebates may be higher or lower.)

3x multiplier 2x multiplier 1x (no multiplier)
REC/STC Zone 1 109 ($3270) 72 ($2160) 36 ($1080)
REC/STC Zone 2 103 ($3090) 69 ($2070) 34 ($1020)
REC/STC Zone 3 93 ($2790) 62 ($1860) 31 ($930)
REC/STC Zone 4 79 ($2370) 53 ($1590) 26 ($780)

The savings on solar PV systems available under the 3x multiplier are significant. For example, at the moment, the price of a 1.5kW solar PV system in a REC Zone 3 area of NSW can be as low as $2000. In the absence of Solar Credit support (i.e. no REC multiplier), the same system would cost as much as $5000. Solar system prices currently sit at an all-time low, due primarily to a global glut of supply of components, and are not expected to sink much further. These factors, in combination with the projected electricity price rises across the country, mean that for Australians considering having a system installed as an investment, now is arguably the best time to do so.

For updates on the state of affairs with the Solar Credits Scheme, follow us on Twitter.

© 2011 Solar Choice Pty Ltd

James Martin II


  1. It’s not hard to put all this in laymans terms.

    Subsidies consist of
    A:Solar credits
    B:Some multiplier
    C:Feed in tarifs

    A,B and C = x ammount of $’s In Location x,y,z

    A will be 50% from July 2012…. 25% from July 2013
    B will be 80% from july 2012

    ……ectetera, ecetera

    I.e. Laymans terms….

    1. Hi Josh,

      If it was a simple as you’ve outlined we would have put the information in that format, as we mentioned in our feedback to the previous comment requesting ‘layman’s terms’ we work out the Federal Solar Rebate automatically for our customers when they request a Solar Quote Comparison. As we provide this service as part of our quote comparison this article is purely for general information for those looking to see what goes into working out their rebate.

      In addition to this the ‘multiplier’ and REC rate changes on a regular basis (for the REC this is daily) which means the article would be out of date as soon as we’d written it.

      If you’re looking to go solar and want information on the cost, including what Federal Rebate you would be entitled to, we’d advise filling in our Solar Quote Comparison. You’ll get a quote of up to 7 installers who operate in your local area and be allocated your own personal Solar Broker who will be able to talk you though the quote and help you work out what’s the best option for you.

      We look forward helping you go solar

  2. How about writing this in laymans terms EG:- currently from every $100.00 I get $ back.
    AS of the July 1 i will get $ back from every $100.00

    1. Hi Mark,

      Thanks for your feedback. Unfortunately, this sort of simplification isn’t possible due to all the factors that go into Solar Credit Incentives. What we’ve tried to do in this article is give our customers information about what may be available to them and what factors affect them. When you complete our Solar Quote Comparison we automatically calculate this figure based on the information you’ve given us to help you work out what the best solar deal is for you.

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