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The influence of STC values on the overall price of a solar system

Home solar power system purchases are subsidised by a government incentive scheme referred to as the Solar Credits program, which is based on Small-scale Technology Certificates (STCs) that accompany the sale of solar power equipment. STCs were formerly known as Renewable Energy Certificates (RECs). The value of these certificates is market driven, meaning it can fluctuate wildly according to supply and demand market conditions.

The demand for STCs is created by companies such as electricity retailers who are required by law to buy and surrender a set number of STCs per year in order to meet renewable energy targets. The quantity of STCs required to be pruchased and surrendered depends on the volume of carbon the company emits into the atmosphere during it s course of business.

The Solar Credits program works on an STC multiplier basis, originally set to 5x for systems installed by 30 June 2011, which will decrease to 3x on July 1. When the multiplier reduction was announced, it resulted in a rush on systems; which in turn meant an influx of STC's flooding the market and creating a surplus. This surplus  has contributed to driving down STC value from $37 to as low as $18 per certificate. This results in the solar credits offset discount applied to the value of a solar system to be reduced, resulting in an increase in the net installed cost.

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