STCs: how the 'solar rebate' actually works

Not a rebate

What everyone calls the 'solar rebate' is actually a tradeable certificate scheme. Small-scale Technology Certificates - STCs - are created when an eligible solar system is installed. Each certificate represents a notional megawatt-hour of renewable generation the system is expected to produce over its deeming period.

You're entitled to those certificates. In practice, virtually every installer takes assignment of them and passes the value through as an upfront discount, because selling certificates yourself is administratively painful for no benefit.

How the number is calculated

Three inputs. Your system size in kilowatts. Your postcode, which determines your STC zone - Australia is divided into zones by solar resource, and sunnier zones generate more certificates per kilowatt. And the deeming period, which shrinks each year until the scheme ends in 2030.

That last point is why solar gets slightly more expensive every January even if nothing else changes: the deeming period drops by a year, so the same system generates fewer certificates.

What they're worth

STCs trade on a market, so the value moves. It has historically sat in the high-$30s per certificate. Your quote should show the number of certificates and the value applied - if a quote just says 'rebate included' without showing the arithmetic, ask for it.

A typical residential system generates enough certificates for the discount to be a substantial fraction of the total price. This is not a rounding error and you're entitled to see how it was calculated.

The commercial threshold

STCs apply to systems up to 100 kW. Above that, systems generate Large-scale Generation Certificates (LGCs) instead, which work differently - they're created based on actual metered generation over time, rather than deemed upfront, which turns them into an ongoing revenue stream rather than a discount.

The 100 kW threshold is therefore a genuine design consideration for commercial projects sitting near it.