If you decide to purchase solar in 2020, you will be eligible for a solar financial incentive commonly referred to as a “rebate”. This a federal government scheme that “refunds” you a certain price for your solar panels. If you installed a 6.6kW system, this would equal around $3500.
If you see a system advertised, it has most likely already had the financial incentive applied to the price.
With all the fear-based marketing, you might be thinking the financial incentive is ending and you need to buy a system this week.
While the financial incentive drops each year, solar panel prices have historically followed to avoid a loss in sales. The current rate at which it drops each year is 1/15th until 2031. In 2031, the rebate is forecasted to end.
While the subsidy isn’t going away any time soon, the value can change depending on the time of year and demand for solar.
The solar financial incentive rebate is officially called Small-scale Technology Certificates or STCs. The price of these STC’s fluctuates much as the stock market does.
The maximum price is $40 but there is no minimum. So, the price can be zero depending on the day. However, the lowest it has gone is $17 many years ago. This is a smaller subsidy but still saves you money.
The STC’s are not actually paid for by the government and the government has said that this should not be called a financial incentive. But, people have associated the STC’s with the government and it soon got the name, “solar rebate”.
From the Clean Energy Regulator website:
“Under the Small-scale Renewable Energy Scheme, the reduction in the cost of your solar panel is not a rebate. You will not qualify for any Government-based financial recompense at the completion of any process relating to STCs.”
As you can see from the Clean Energy Regulator, the government is very clear that you will not receive any money from them when you install solar.
The government is running the program but the money comes from private companies who buy the STC’s.
But how does it work?
The idea behind the scheme is to get big fuel companies to cough up money and “go green”.
When you buy residential solar, the government creates bits of paper called STC’s or Small Scale Technology Certificates.
These STC’s are bought by the energy companies to reduce their carbon footprint. These STC’s give them the “right” to your panels. Don’t worry though, the panels are yours. It’s just a way for the dirty energy companies to say they are helping the environment. The alternative for these guys is to build renewable energy sources such as wind farms or solar farms.
Under the Paris agreement, Australia needs to meet a certain percentage of renewables by 2031. This obligation has been passed onto the large energy companies creating the most pollution.
These energy companies will buy your STC’s to help contribute to renewable energy.
Because these companies have a yearly quota, if you install a large system at the end of the year, it may be hard to get a good price for your STC’s. This is because the companies may have already bought their years’ worth of STC’s and no longer need anymore.
If there is a sudden burst of people buying solar this month, the price may drop because the energy companies don’t need to buy your STC’s yet.
It’s like playing the stock market. Thankfully, it’s relatively stable and the solar installers will bear this risk in most cases.
They will quote you a system with the price of the STC’s already deducted. This means you get a fixed price and they sell the STC’s for a profit or loss.
Each year the value of STC’s drop as we get closer to our renewable energy target. This doesn’t mean you’re going to lose out though. The subsidy is still generous and solar panels will continue to drop in price to ensure demand is met.
However, not all systems and installers are eligible for the subsidy.
- The installer must be approved by the Clean Energy Council
- Your system is less than 100kW
- The panels and inverter must be approved by the Clean Energy Council
In conclusion, the subsidy is paid for by the dirty energy providers – not the taxpayers. The value of the STC can fluctuate but is relatively stable and is here for many more years. Although many solar companies like to spin this to add fear to their marketing, the subsidy is still strong and now is still the best time to get solar.
Just remember, the solar installer will claim the STC’s for you. If you choose to claim them yourself, expect to pay an extra few thousand dollars for your system. We haven’t had anyone choose this yet.