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Manufacturers of solar power and solar hot water systems apply to the Clean Energy Regulator to have a particular system registered for STCs (small scale technology certificates). Each system is assessed to determine how much renewable energy it can be expected to produce. One STC is worth 1 megawatt hour (1000 kWh) over a fifteen year period, so a system awarded 30 STCs for example will be expected to harvest 30 megawatt hours of energy over fifteen years. The STCs are 'created' when a system is installed by appropriately accredited personnel (electricians/plumbers) and are usually credited against the customer's invoice at a given market value per STC.
The system supplier then trades the STCs on the market for the best price it can, usually slightly above what is offered to the customer. The difference then serves as an effective handling fee. Customers can choose to trade their own STCs, but must pay the supplier the gross amount of the system cost (without the STC credit) before claiming the STCs as a rebate.
The number of available STCs will reduce slightly at the end of each year (starting in 2016) over the next 15 years. It makes sense to buy your solar system well before the end of any calander year.
Learn more at the Clean Energy Regulator website