The cost of installing rooftop solar looks set to rise by as much as 10 per cent for households and small business this week, after a sudden drop in the price of small scale renewable energy certificates caught much of the market by surprise.
STC prices fell by one-third on Wednesday, from around $40 – where they have hovered for more than two years now – to as low as $26, triggering panic among PV installers expecting to get a $40 (per kW) rebate for systems they have sold.
The sudden fall in prices stems in the failure of market forecasters and regulators to adequately factor in rooftop solar’s recent boom in Australia, which has seen record amounts of solar PV installed on homes and businesses since late last year, in step with soaring power prices.
“The fall in prices has happened because the supply of STCs is substantially outstripping power retailers’ obligations for this year as set by the Clean Energy Regulator,” said Green Energy Markets analyst Tristan Edis on Wednesday.
“While the market was clearly going to have an oversupply of STCs overall for 2017, we’ve only managed to reach the point where there was plenty of STCs to go round for every retailer after we got past the last quarterly surrender period in July,” Edis said. “This has then allowed the price to drop very quickly.”
And while one effect of this price drop will be to increase the cost of a rooftop solar system by around 10 per cent, of greater concern is the potential impact on solar installers – already feeling the pinch of wafer-thin profit margins.
“This will make many (solar installers) close their door today, with quotes signed and jobs to install in coming weeks worth millions of dollars,” one industry player told RenewEconomy in an email on Thursday.
“If this collapse was to occur in the sugar or fuel industry it would be all over the front page of every paper in the country.”
Top image via Green Energy Markets.
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