When your solar installer quotes you a price, they’ll mention something about “the government rebate” or “STC discount.” Most people nod along and don’t ask questions. But understanding how STCs work gives you genuine negotiating power and helps you spot installers who are pocketing more of the rebate than they should.

What STCs are

Small-scale Technology Certificates are tradeable certificates created when you install an eligible renewable energy system — solar panels, solar hot water, or small wind systems. Each certificate represents one megawatt-hour (MWh) of renewable energy your system is expected to produce.

The federal government mandates that large electricity retailers and industrial energy users must buy a certain number of certificates each year. This creates demand. Solar system owners create the supply. The trading between supply and demand establishes a market price, which currently sits around $38-40 per certificate.

How many STCs your system creates

The number of certificates depends on three things:

System size: A bigger system produces more energy, creating more certificates.

Location: Australia is divided into solar zones based on average irradiance. Brisbane (Zone 1) gets more sun than Melbourne (Zone 3), so the same system creates more certificates in Brisbane.

Deeming period: This is the big one. STCs are calculated based on how many years remain until 2030 (the end of the scheme’s current deeming period). A system installed in 2026 gets four years of deemed production. A system installed in 2025 got five years. Each year you wait, you get fewer certificates.

For a 6.6kW system installed in Brisbane in 2026, you’d create approximately 75-80 STCs. At $39 each, that’s about $2,925-3,120 in value.

How the discount reaches you

You don’t actually sell certificates yourself (though you legally can). Instead, your installer assigns the STCs to themselves as part of the deal and gives you an upfront discount on your system price. They then sell the certificates on the open market through the REC Registry.

This is where it gets interesting. The installer might assign your STCs at $39 each but only give you $35 per certificate in discount, keeping the $4 difference. That’s normal — they’re providing a service and taking market risk. But some installers are less transparent about this.

Pro tip: Ask your installer to itemise the STC value in your quote. A good installer will show you the number of STCs, the value they’re assigning per certificate, and the total discount applied. If they won’t break it down, get another quote.

The “point of sale” vs “open market” choice

You technically have two options:

Point of sale discount (what 99% of people do): Your installer handles everything. You get an immediate discount, typically $2,500-3,500 for a standard residential system. Simple, fast, no hassle.

Sell them yourself on the open market: You create the certificates, register them with the Clean Energy Regulator, and sell them on the REC Registry. You might get a slightly higher price per certificate, but it takes weeks or months to process, you need to deal with the paperwork, and prices can fluctuate while you wait.

For residential systems, the point-of-sale discount is almost always the better choice. The extra few hundred dollars you might get selling yourself isn’t worth the hassle and risk.

The year-on-year decline

Here’s the part most people miss: the STC incentive is designed to phase out. Each year, the deeming period shortens by one year, reducing the number of certificates your system creates.

In rough terms, a 6.6kW system in Brisbane created:

• 2023: 105 STCs ($4,100)
• 2024: 95 STCs ($3,700)
• 2025: 85 STCs ($3,300)
• 2026: 75 STCs ($2,925)
• 2027: 65 STCs ($2,535)

By 2030, the deeming period hits zero and no new STCs are created (unless the scheme is extended). Every year you wait, you’re leaving money on the table.

What happens to the STC price?

Certificate prices are market-driven, but the government sets a ceiling called the clearing house price (currently $65.45). In practice, prices have traded between $35-40 for the past couple of years and are unlikely to spike dramatically.

If anything, prices could soften as the deeming period shortens and fewer certificates are created, reducing both supply and the incentive for buyers. But this is speculation — the market has been remarkably stable.

The bottom line

STCs are the single largest financial incentive for going solar in Australia, and they’re shrinking every year. Understanding how they work helps you get a fair deal from your installer and gives you another reason not to procrastinate on your solar decision.

The mechanics are boring, I know. But boring mechanics put nearly $3,000 back in your pocket. Worth understanding.