How does STC trading work? A Solar Installers and Retailers Guide to STCs

The Federal Government created the Small-scale Technology Certificate (STC) trading market in 2001 to encourage consumers and small businesses to install renewable energy systems. It does this by setting a requirement for big polluters to buy a certain percentage of energy each year from renewable energy sources.

There’s no denying that these STCs have been a critical part of the solar boom in the last decade. By creating an upfront discount, they’ve decreased the cost of installation by an average of $500-$600 per kW. However, the additional paperwork could be challenging when you first start selling on your own. You just want to get back to doing what you do best, designing and installing rooftop solar PV systems. So to help you simplify your business administration, we’ve created this guide to help solar installers on how to manage your STCs.

In this article, we cover:

• how the small-scale renewable energy scheme works
• how to calculate STCs
• STC eligibility requirements
• STC legal paperwork
• How to become a REC agent
• Historical STC prices
• and how to answer Common STC questions from consumers.

How the Small-scale Renewable Energy Scheme works

The Small-scale Renewable Energy Scheme, or SRES, is the name of the STC market.

1. The Federal Government creates Renewable Energy Certificates. STCs are awarded to solar projects below 100kW.
2. The government awards your customers (the homeowners) STCs, when they purchase solar PV systems from you, .
3. Your customer signs the rights to the STCs to you (optional).
4. The STCs are registered and sold on the market. This is typically done via a specialist STC broker. The total value of the STCs allow you to offset the upfront cost of the solar system.
5. The STCs are then sold to fossil fuel generators and other large polluters.

How to calculate STCs

The formula used to calculate the number of STCs each solar system should be awarded is quite simple. First, multiply the DC capacity of your customer’s solar panels, the years left in the SRES on date of install, and the rating given to your customer’s STC region. After that, round down the result as the CER does not award partial STCs.

For example: 5 (kW) x 13 (years) x 1.382 (zone 3) = 82.92 = 82 STCs

Assuming your STCs can be traded for $35 each, this is a saving of $2,870.00.

NOTE: The number of years in the deeming period decreases over time was designed to incentivise consumers to get solar sooner, rather than later.

Zone multipliers

• Zone 1 – 1.622 multiplier
• Zone 2 – 1.536 multiplier
• Zone 3 – 1.382 multiplier
• Zone 4 – 1.185 multiplier

STC eligibility requirements

The eligibility requirements cover five facets, and they are:

• you and your company’s qualifications
• the solar project’s size
• the solar project’s adherence to safety and quality standards;
• the certificate creation date
• and protecting your customer after the install.

You and your company’s qualifications.

The solar system must be designed and installed by CEC accredited technicians to be eligible for STCs.

Working on Grid-connect or Stand-Alone systems requires separate accreditations. Depending on your business needs and where you choose to take your career you can get accreditations for both design and installation. You must hold an unrestricted electrical license to apply for any Install accreditations.

The solar design and installation.

The output capacity of STC projects is limited to 100kW. This refers to the solar panel ‘rated’ output, and not the inverter. Over this size, LGCs are the relevant Renewable Energy Certificate.

The only solar panels and inverters which can be installed under the SRES are those approved for use by the Clean Energy Council at time of STC creation. If a product has been de-listed between installation and attempted creation of STCs, the system is no longer eligible.

The design and installation follow the relevant CEC guideline:

• Grid-Connected Solar PV Systems: Install and Supervise Guidelines for Accredited Installers
• Grid-Connected Solar PV Systems: No Battery Storage, Design Guidelines for Accredited Installers
• 30-100kW Grid-Connected Solar PV Systems: No Battery Storage, Design Guidelines for Accredited Installers

Your installation complies with the service and installation rules for your state

• ACT: ActewAGL Service and Installation Rules
• NSW: NSW Trade and Investment: Energy Supply Industry Service and Installation Rules
• NT: PowerWater Power Network Policy Installation Rules and Power Networks Service Rules
• SA: SA Power Networks Service and Installation Rules
• TAS: Tas Networks Service and Installation Rules
• QLD: Queensland Electricity Connection & Metering Manual
• VIC: Victorian Service and Installation Rules
• WA: WA Department of Commerce Electrical Requirements

Your installation complies with the electricity safety Acts for your state.

The design and installation follow the Australian Standards.

• AS/NZS 3000:2018, Wiring rules
• AS 4777.2:2016, Grid connection of energy systems via inverters
• AS/NZS 5033:2014, Installation and safety requirements for photovoltaic arrays
• AS/NZS 1768:2007, Lightning protection
• AS/NZS 1170.2:2007, Structural design actions, Part 2: Wind actions
• AS/NZS 4509.1:2009, Stand-alone power systems, Part 1: Safety and installation (for off-grid systems)
• AS 4086.2:1997, Secondary batteries for use with stand-alone power systems, Part 2: Installation and maintenance. (for battery systems)
• AS 5139:2019, Electrical Installations—Safety of battery systems for use with power conversion equipment (for battery systems)

Certificate creation date.

The STC certificates can be created no later than 12 months post-install.

Post-install.

The STC assignment form is completed and submitted to the party who registers the STCs. This is either you or your chosen trader. Then, certificates of compliance are given to the customer with a copy retained by yourself.

These include:

• a certificate to confirm the system meets all relevant Australian Standards, and all local, state or territory requirements
• an on-site verification statement by the system owner that the accredited installer or supervisor has attended the system installation
• an on-site verification statement by installers
• a certificate to confirm your company has at least $5 million public liability insurance
• a certificate of electrical safety
• and an engineering certificate from your solar panel mounting bracket supplier stating that the array frame is certified to AS1170.2 for their location.

Replacement System STC Eligibility

If you are replacing an entire system, the new system is eligible for STCs. If you are replacing panels, the system is not eligible for STCs for the new panels. The reason: at least one major component (i.e.; panel or inverter) has been used previously to claim small-scale technology certificates for the same project.

Solar Panel Validation Initiative

To prevent fraud, industry players and manufacturers have coordinated to create solar panels validation apps under the Solar Panel Validation Initiative. This program is designed to discourage unscrupulous manufacturers and suppliers from selling fake solar panels.

This task is an optional extra that speeds up the CER’s mandatory pre-sale STC audit. Without solar panel validation, it could take up to 4 weeks. With solar panel validation, auditing is typically around 48 hours.

• SolarScope
• Formbay
• BridgeSelect

Participating in the STC market

The easiest way is to have STC traders sell AND register your STCs for you. Alternately, you can register and have the traders sell for you, or even do all the registering and selling yourself. If you’re interested to know how to do it all yourself, we explain the necessary steps in the How to become a REC agent section below.

Traders register and sell your unregistered STCs

This is the most common choice of small to mid-size installers and retailers. It saves time and creates a more predictable cash-flow.

Traders will buy your unregistered STCs same-day for a typical cost of $1 per STC. This looks like a $1 lower unregistered STC price and gives you faster access to cash. This price usually ranges from $32 to $38 per STC, depending on market conditions.

That price will always be a little lower than the current STC spot price. For their business to operate, they need to have some margin when they aggregate and sell the STCs themselves - a small price to pay for convenience and cash-flow.

Registered STCs

Large retailers often favour this option as the two-day to four-week registration timeline won’t impact cash-flow at your scale. Having access to large quantities of STCs also allows you to trade at the 5,000 minimum market parcel size at the spot price.

You register your STCs yourself and traders sell them

To register STCs yourself, you have to become a REC agent first. This application process can take many months.

Additionally, because the CER audits and validates all STCs before they can be sold, it adds a couple of days to your process time.

After you create your first 250 STCs in the REC registry, which are free, each extra certificate costs 47 cents to create. That is offset by traders offering you an average of $1 more for your registered STC.

Once you have negotiated a price with the traders, you transfer ownership through the REC registry.

Registering and selling the STCs yourself

After you create the STCs on the REC Registry, you have two options. You can then place them on the STC Clearing House or contact the big polluters to sell them directly.

On the Clearing House, you’ll get a guaranteed price of $40 (excl. GST). Your STCs will get added to the back of the queue as sales are processed on a first in first served basis. When they are sold, you’ll get an email, and the money should arrive in your account within three working days.

It can take weeks and months for STCs to be bought from the Clearing House because it’s the highest price. Unless the spot price is around and over $40, there is no financial incentive for the big polluters to buy from there.

STC legal paperwork

Either way, to create and sell STCs, the following paperwork is required. They must be ready to give to the Clean Energy Regulator during the audit process if requested. I have attached links to the Clean Energy Regulator’s templates which they strongly encourage you to personalise for your company.

• The STC assignment form
• The on-site verification statement by the system owner
• The on-site verification statement by the accredited designer and installer
• Written statements that say you (included in the STC assignment form template): are accredited by the Clean Energy Council; have installed a system that meets the Australian Standards; have at least $5 million in public liability insurance; have installed the system according to local and state rules, and have completed the installation

List of STC traders

Traders offer a variety of options to help you with STCs registration and selling. These include online and paper (scanned) submissions, built-in solar panel validation, payment for selling your STCs to them same-day, within three business days, and even payment after the audit. Some have online apps, but all of them have their own STC assignment form template.

I’ve listed the specialist STC traders below to help you save time working out which one is right for you.

• Trade in Green
• Green Energy Trading
• STC Trade
• RET Australia
• Formbay
• Sol Distribution
• Greenbank
• REConnect
• One Stop Warehouse
• Powerark Solar
• Habitat Energy Systems
• Emerging Energy
• REC Traders
• REC Services

How to become a REC agent

To register your STCs yourself, you’ll need to become a REC agent.

First, create an account on the Clean Energy Regulator Portal. After that, the Clean Energy Regulator asks that you complete SRES Smart, which aims to check that you know your obligations under the scheme as an installer.

You’ll need to pass every test with a score of at least 80% within five attempts.

Then you make an online application through the REC Registry. It may take up to 6 weeks for the CER to assess your application and get back to you.

If your application has been successful, you then ‘Upgrade’ your account in the settings to get access to the STC Clearing House.
As a REC Agent, you can now register STCs.

Historical STC prices

If you’re interested in some historical STC prices, Demand Manager has a good overview of the last 12 months.

The easiest way to explain STCs to your customers

“The Solar PV system creates STCs. These belong to the owner of the solar system, you. So that you don’t need to deal with the whole STC creation and selling process, you transfer the rights to the STCs to me for a discount on the system price and I sell them for you.

Four factors determine the size of the STC financial incentive.

1. the kW size of the solar system
2. years till 2030 - the end of the SRES STC scheme
3. the postcode you live in (your STC zone)
4. the per STC price”

Common questions customers ask

Does it top out?

Yes. As a program for small-scale solar renewable energy installs, the maximum output capacity is 100kW. For renewable projects above 100kW, large-scale generation certificates (LGCs) are awarded.

Are off-grid solar PV projects included?

Yes, it also covers off-grid.

Are there income requirements?

No, the STC solar incentive program is not means-tested.

Who is the STC program for?

It’s for any solar PV project no matter the type of owner - homes, small businesses, schools, community groups.

What about batteries?

The STC solar incentive is not intended to cover energy storage because it doesn’t directly create additional solar energy production.

What about caravans, boats, houseboats, motor homes, and RVs?

It can apply to portable housing as long as it’s your primary place of residence.

Is this a rebate?

Despite how it appears, the STC ‘rebate’ is actually not a rebate. The STCs are a federal government incentive structure.

What is the STC rebate?

STCs are Australian Federal government issued certificates designed to reward the installation of small-scale renewable power generators. The number of STCs that are generated depend on the total kW size of the solar system, the number of years remaining in the deeming period and the multiplier factor that depends on the location of install."

How are STCs calculated?

For example: 5 (kW) x 13 (years) x 1.382 (zone 3) = 82.92 = 82 STCs

Do you have to be on the grid to earn STC’s?

No, you don’t need to be connected to the grid to generate STCs