The federal government provides incentives for solar systems both small and large under the Renewable Energy Target (RET).
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 terms of the DC Solar Panel capacity. The STCs are officially created once an accredited Solar Installer has commissioned the system.
How Are STCs Calculated?
STCs are based on the expected output of the solar system until 2030 when the rebate will cease. One STC is the equivalent of 1 megawatt-hour (MWh) of renewable energy. So to calculate your STCs you will need to calculate how many MWh is produced by your system each year until 2030. Important the number of years in the calculation changes on the 1st of January each year. Without fail many in the solar industry will use this date to create a false sense of urgency as the change of one year will only impact the purchase price by around 4-5%.
To check the current STC price and calculate how many STCs are currently available for your project you can use this online calculator.
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’.
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.
In recent years the market price for LGCs has crashed in line many Solar Farm projects being commissioned. Currently commercial and utility-scale projects are designed off the underlying cost of solar power rather than relying on LGCs to support the business case. You can check the future outlook for LGC prices here.