How Do the STC Solar Financial Incentives Work?

Australia has many favorable conditions for solar power, which have helped the country become a global leader in renewable energy. Australia deployed 7 gigawatts (GW) of wind and solar power in 2020, and nearly 2.7 GW were in the rooftop solar market. The abundance of sunshine makes solar panels more productive, and high electricity tariffs make their production more valuable – each kWh from solar panels is one kWh subtracted from your power bill.

The Clean Energy Regulator has played an important role in the Australian renewable energy industry, with two main incentive programs. The Large-Scale Renewable Energy Target focuses on larger projects, while the Small-Scale Renewable Energy Scheme benefits smaller installations – including solar PV systems up to 100 kW. The SRES can be summarised as follows:

The total electricity production of your solar power system is estimated, considering the time period between its installation year and the end of 2030.
For every 1,000 kWh of estimated production, you get one Small-Scale Technology Certificate or STC.
Electricity retailers and other organisations that purchase large amounts of energy have a legal requirement to support renewables – this includes purchasing STCs annually.
The market price of STC is constantly changing based on supply and demand, but it has recently stayed at around $38-39.

As an example, a solar power system that produces 100,000 kWh between its installation year and 2030 gets 100 STCs. If they are sold at $39 each, this project gets an upfront incentive of $3,900 to help cover its installation costs (note these are just example figures to show you how the calculation works).

The Clean Energy Regulator has developed an STC calculator, where you can estimate your incentive when going solar. You simply need to input your postcode the planned solar capacity in kilowatts, and the expected installation date. The calculator will determine the STCs for the project, and you can multiply that number by $39 to estimate the financial incentive.

State and Territory Incentives for Solar Power in Australia

Since the STC incentive comes from the federal government, it is available for solar installations located anywhere in Australia. However, several states and territories have also developed local incentive programs, which can be added to STC rebates. The following are the main incentive programs from state and territory governments in 2021:

Solar Victoria offers solar panel incentives for homes and small businesses, and homes can also get solar water heater and battery incentives.

The home solar incentive is $1,400 as of July 2021, and it can be combined with an interest-free loan of the same amount.
The business incentive is available for solar power systems up to 30 kW. The rebate is $3,500 for the first 5,000 installations approved, and will then be reduced to $1,750.

South Australia’s Home Battery Scheme focuses on adding energy storage to solar power systems. The incentive is $300 per kWh for energy concession holders and $200 per kWh for other homes. In both cases, the maximum incentive is $3,000.

In New South Wales, the Empowering Homes program offers interest-free loans of up to $14,000 for new solar power systems with batteries and up to $9,000 for adding batteries to existing solar installations. The state also has the Solar for Low Income program, which installs 3-kW solar systems at zero cost for eligible homes.

In the Australian Capital Territory, the Next Gen Battery Storage program offers a rebate of $825 per kilowatt of battery output. The incentive covers up to 30 kW in residential systems and up to 50 kW in business-owned systems. The ACT Solar for Low Income is different from the program of the same name in NSW – it covers 50% of the cost of solar power systems, up to $2,500 per installation.

The Home and Business Battery Scheme provides $6,000 grants for solar panel + battery systems in the Northern Territory. The benefit is not only available for homes and businesses, but also for non-profit and community organisations. To be eligible for the incentive, the installation must have a battery capacity of at least 7 kWh.

Calculating Solar Incentives in Australia: A Brief Example

To demonstrate how STCs and other solar rebate programs make home solar power more affordable, we will calculate the total incentive for three system sizes in three locations:

6.6 kW, 8 kW and 10 kW
Brisbane (QLD), Sydney(NSW) and Melbourne (VIC)

Larger installations get more STCs, since the incentive depends on the estimated kWh production between the installation year and 2030. Solar panel systems also get more STCs in sunnier locations, since the kWh output per panel is increased.

Australia is divided into four zones for STC calculation purposes, where Zone 1 gets the most sunshine and Zone 4 gets the least. The number of STCs per kilowatt of solar capacity changes depending on the zone:

Zone 1 = 1.622 STC per kW
Zone 2 = 1.536 STC per kW
Zone 3 = 1.382 STC per kW
Zone 4 = 1.185 STC per kW

Brisbane and Sydney are both in Zone 3, which means the STC incentive per kW of solar capacity is the same. However, the incentive is decreased in Melbourne, being located in Zone 4. The following table summarizes the STCs for the three system sizes in the three locations, and the corresponding cash incentive at $38 per STC.

System Size (kW)	6.6 kW	8 kW	10 kW
Brisbane STC – Zone 3	91	110	138
Brisbane Incentive	$3,458	$4,180	$5,244
Sydney STC – Zone 3	91	110	138
Sydney Incentive	$3,458	$4,180	$5,244
Melbourne STC – Zone 3	78	94	118
Melbourne Incentive	$2,964 from STCs +$1,400 Solar Victoria $4,364 Total	$3,572 from STCs +$1,400 Solar Victoria $4,972 Total	$4,484 from STCs +$1,400 Solar Victoria $5,884 Total

Since Melbourne is located in Zone 4, the STC incentive is smaller than in Brisbane and Sydney. However, after adding the $1,400 from the Solar Victoria program, the total incentive is actually higher in Melbourne.

In this example, the solar installations in Melbourne would also be eligible for an interest-free loan of $1,400. The installations in Sydney would be eligible for interest-free loans of up to $14,000 from the Empowering Homes program if they include a solar battery.

In conclusion, incentive programs are one of the driving forces behind the growth of solar power in Australia. STCs can be claimed anywhere in the country, you get more of them in sunnier locations, and each STC reduces your upfront cost by around $38. The outlook is even better when your state or territory also offers incentives, since they can be combined with the STC rebate.

However, not all solar power systems are eligible for incentive programs. To get the STC incentive, you must use solar products in the Clean Energy Council approved list, and you must hire CEC Accredited Installers. A simple way to meet both requirements at once is working with a CEC Approved Solar Retailer like Arkana Energy.

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*information is accurate at the time of writing. Published 9 August 2021.