Solar panel rebate for homeowners and business owners
In Australia, if you purchased a solar panel system for your home or business, there is a government regulated incentive in the form of solar rebate. Unlike the retail store rebate you are familiar with that takes weeks to process, STC rebate is applied at the point of sale. This reduces your upfront investment in solar straightaway. So, yes, solar rebate exists even today and it is for real.
STC stands for Small-scale Technology Certificate and applies for all residential and commercial systems smaller than 100 Kilowatts. A typical Australian household may need a 5 kilowatts system while majority of commercial solar installations are in 10-15 kilowatts range. The goal of STC is to help reduce the upfront cost of all eligible small-scale renewable energy systems such as wind, hydro as well as solar.
Only eligible systems qualify for solar panel rebate
If you hired a solar company to install solar panels in your house, it is highly unlikely that your system will not be eligible for solar rebate. That’s because almost all solar companies are well aware of the eligibility criteria and if they weren’t, they wouldn’t be in business still.
Regardless, this is a vital piece of information and one you should deeply care to know about. Because, sometimes, you never know.
Before I talk about the eligibility criteria, you should know about CEC. CEC stands for Clean Energy Council. According to CEC website, “The Clean Energy Council is the peak body for the clean energy industry in Australia.” If you want to know more about CEC, you can visit their website.
The eligibility criteria are pretty straightforward:
- According to office of Renewable Energy Regulator, the designer and installer of a solar PV array system are required to be CEC accredited personnel.
- Solar Panels and inverters used in your system have to be on the CEC approved components list for Australia.
- Design and installation has to meet CEC guidelines and comply with local, state, territory and federal requirements.
Here is the link to regulator’s website with the same information.
Basically, when it comes to solar, everything has to meet CEC guidelines. Ultimately, this is to protect you, the consumers.
So, if you were thinking about DIY solar system, make sure you meet all the guidelines to qualify for rebate.
What determines how much I receive for my solar rebate?
When you purchase solar power system, you will be assigned rebate certificates which you can instantly cash in. Bigger systems will receive more certificates. The number of certificates you will be assigned is determined not only by the size of your system but also where you live – geographic location.
We will discuss rebate in two steps:
– Number of rebate certificates, and
– The value of each rebate certificate.
Both will determine how much you receive in total for your solar system rebate.
Let’s start with how many certificates…
Number of rebate certificates
As I mentioned above, the number of certificates you receive will be determined by two factors:
- The size of the system you installed, and,
- Your location
Let’s say you installed a 5-kilowatt system in Melbourne and your friend, who lives in Perth, also installed the same 5-kilowatt system. Guess who will receive more certificates?
The reason location is important is because solar rebate certificates are assigned based on how much power is expected to be produced from that solar system in the next 15 years. Because your friend lives in a sunnier state, her system will generate more power, hence more certificates, compared to your system in Melbourne even though they are of same size.
For this reason, Australia is rated into four different zones. While Darwin is Zone 1, Melbourne is Zone 4. Here is the map of Zone 1 to Zone 4 and their respective zone rating.
Zone rating is used to determine the amount of solar irradiance each location receives. Higher zone rating implies more solar irradiance.
Now, going back to you and your friend, let’s find out exact number of certificates you both would receive for 5 Kilowatt system.
It is so simple, even a nine year old can do it.
Number of certificates = Size of solar system x Zone rating x 15 (years)
You will receive, 5 x 1.185 x 15 = 88.87 certificates in Melbourne.
Your friend will receive, 5 x 1.382 x 15 = 103.65 certificates in Perth.
Now for the final piece of the puzzle…
Value of each STC rebate certificate
This one is simple because it is pretty straightforward.
Price of each STC certificate is dictated by the solar market conditions. It fluctuates every day.
Think of it this way:
You are the “producer” of certificates because the only reason the new certificates are created is because you installed a new system.
When there are fewer “producers” the value of each certificate is high. But as soon as there are more producers, meaning bunch of people decide to get solar all at the same time, the value of certificate declines.
In real world, each STC can be worth as high as $40. But it can drop well below $30 as well. At the time of writing this, they are worth $38 a piece. This means the market condition is in consumer’s favor if you want to install solar today.
Also remember, the price per certificate (STC), no matter which state you live in, will be the same for any given day.
To summarize, let’s go back to our hypothetical case and see how much you and your friend would receive on a 5KW system at today’s rate.
You in Melbourne (5kW) = 88.87 x $38 = $3377.06
Your friend in Perth (5kW) = 103.65 x $38 = $3938.70
There you have it.
Each kilowatt of solar panels in Melbourne would receive $675 and in Perth, $787, based on today’s market condition.
Today, a 5kW system can cost anywhere between $5000-$10000 after rebate is applied. When a solar company quotes you for a system, that price already accounts for your solar rebate. So, whatever the quote is, that’s the money out of your pocket.
From the full price, solar rebate can drop the price of a system by 20-30%.
A very important thing is happening to solar rebate program – Phase out
As the price of the solar panels continue to fall, government has decided to phase out the rebate scheme as well over the next 15 years.
Starting in January 2017, the rebate scheme is set to wind down evenly for the next 15 years. That means the value of rebate will drop by 1/15th or 6.67% each year for the next 15 years. Year 2031 will be the first year without any solar rebate. See the chart above.
This will have impact in two ways. First, obviously you will receive smaller amount of rebates starting in 2017. Second, if you end up buying solar towards the end of the year, before the rebates drop, your certificate value may not be as high.
If the past is any indication, towards the end of the year, demand for solar panels is going to skyrocket. This is going to create many “producers” and their certificates will flood the market. Sadly, this will adversely affect the value of each certificate. What it means is if you buy solar panels the same time as others, you will end up paying more for the same system because the rebate will be less worth.
If you purchase solar power system today, discounts are as high as they have been. So the out-of-pocket cost will be less.
But what size system are you going to need? Before you request for any solar quote it is important to figure this out on your own. You can read more about it on my separate post titled How big solar power system do I need?
This wraps up all the information I have on solar rebate. I really hope I was able to address some your questions about the rebate program. In case if you have more questions, please don’t hesitate to leave comments below or contact me directly.