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Clean Energy Regulator and the STC Binding Target

Just recently the Clean Energy Regulator has released the binding target for STCs at a rate of 7.01%.

This is approximately 2% lower than the non-binding estimate that was released last year as a guide for industry. This is a significant reduction in the number of Small Scale Technology Certificates (STC’s) that liable entities (Polluters) will be required to purchase and surrender and is likely to result in a significant oversupply of STCs during the 2nd half of 2017.

There is enough evidence to suggest that Renewable Energy Certificate (REC) prices may ease as early as July this year. Depending on other factors such as day trading, forward hedges and other REC trading scenarios, there is a possibility of a significant price reduction during the 2nd half of this year but it is difficult to predict when or if this will actually happen.

If and when this does happen STC’s will then be traded on an open “spot” market and this is when price volatility is likely to commence.

What does all of this mean for you as the home owner?
The scenario outlined above suggests that there is a strong likelihood of the STC rebate which presently sits at $38 per Certificate is likely to drop soon.

Here’s an example to put things into context:
A 5kW system installed at a Bassendean property with 6.4 kW worth of panels installed on the roof (The number of STC’s the system owner is entitled to is calculated on the kW on the roof Not on the rating of the inverter).

The STC rebate for this installation will be 123 (STC’s) X $38 = $4674. This can be looked at as a discount on your total installation cost, usually offered as a Point Of Sale Discount by the installer (with the proviso that the home owner agrees to have the calculated STC’s paid to the installer).

Now, if the price of an STC was to drop by 50% the actual discount available to the home owner would only be $ 2337. So, the home owner is up for a higher installation cost.

If you are considering a solar system installation in the near future, then you should consider getting in sooner rather than later to take advantage of the maximum discount available to you as a result of the current high STC trading price.