Federal incentives & rebates for solar power

The federal government provides incentives for solar systems both small and large under the Renewable Energy Target (RET). These incentives are sometime incorrectly referred to as ‘rebates’; in reality they are not rebates, as they are not claimed back after an initial expenditure.

The RET incentivises small-scale and large-scale solar projects differently, with separate segments known as the Large-Scale Renewable Energy Target (LRET) and the Small-Scale Renewable Energy Scheme (SRES). In this article we discuss how incentives operate under each of these programs.

Incentives for small-scale solar (Residential & commercial under 100kW)

The SRES was developed to assist households, small business and community groups with the cost of installing a solar PV system. The SRES works by issuing Small-scale Technology Certificates (STCs) to homes & businesses that install systems under 100 kilowatts (kW) in capacity. STCs are based on the expected output of the solar system over a set period (although most systems can be expected to have a functional lifespan of up to 30 years). One STC is the equivalent of 1 megawatt-hour (MWh) of renewable energy. The set period (‘deeming period’) was 15 years until the end of 2016, and is reduced by one year each year thereafter until 2030.

STCs, which can be described as a sort of renewable energy currency, can be bought, traded, and sold, and their value fluctuates with supply and demand. The current STC price sits at around $38, but has fallen as low as $16 and has been as high as $42.

As STCs are created based on the expected output of the system they can be created as soon as the system is installed, the system does not need to produce any power before its STCs are created. Under the expectation that they will produce more power, systems installed in sunnier locations are eligible to for a larger number of STCs, while less sunny locations create fewer.

The key thing for solar system shoppers to know is that installers assume responsibility for STCs, applying the incentive in the form of a ‘discount’ directly to the price of your system. This means that all you have to do is compare out-of-pocket prices like-for-like instead of worrying about how much you’ll be able to claim back as a ‘rebate’.

You can calculate how many STCs a solar system in your location would produce with the Clean Energy Regulator’s STC Calculator.

The Large-scale Renewable Energy Target (LRET): Solar power systems >100kW

Under the RET, in addition to STCs, power utilities are also required to surrender a set number of Large-scale Generation Certificates (LGCs). LGCs can only be generated by commercial and utility-scale renewable energy generation systems (such as solar power systems) over 100kW in capacity that have undergone an accreditation process to produce them.

An important difference between STCs and LGCs is that LGCs are produced on an ongoing basis after the system is accredited, installed, and producing power. Large-scale generators therefore provide an ongoing revenue stream for their operators. As with STCs an LGC is a tradable unit that acts as a currency for renewable energy, and prices therefore fluctuate with supply and demand.

Read more about the creation of LGCs.

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