Re: Important Update that May Increase the Price of Installing Solar by around 30% (up to $67,000)
Due to market forces and political turbulence, the small scale solar rebate has been called into question. In relation to this, Todae Solar has summarised the likely impact on the rebate for organisations looking to reduce their energy costs by installing solar energy.
The rebate scheme (known as the SRES) provides an up-front rebate to purchasers of solar systems of 100 kW and under, by issuing small-scale technology certificates (STC’s) in proportion to generation.
STC’s have a capped price of $40/certificate and have traded consistently around $37-$38 over the last few years.
On Thursday 23rd August, the STC price dropped to below $34, having depreciated by around 9% in just three weeks.
This decrease is partially due to an increase in supply compared to demand. The STC is designed so that demand is mandated to match the supply, but as this has to be calculated in advance, the modelling is not always accurate. When there are more installations than anticipated, prices tend to drop.
This is not the first time the STC market has crashed – only last year the price of STC’s fell to $29 for around two months.
Based on last year’s spot STC pricing, if you fail to act now you may be looking at a reduction in the price of STC’s by a further 15% – for a 100 kW system this amounts to a price increase of up to $9,000.
Todae Solar highly recommends that if you are interested in installing solar you should act now to ensure you receive the best possible rebate price.
This observation from Giles Parkinson of Renew Economy, became ever more certain following the appointment of Australia’s new Prime Minister, Scott Morrison.
Dispute over the future of energy policy has been causing turmoil, even after Malcolm Turnbull agreed to scrap the SRES and earlier last week, to drop the emissions element of the NEG altogether. Given Turnbull’s stance was not deemed strong enough, this could signal even bigger announcements in the weeks to come, as echoed by John Grimes, “it was Scott Morrison who managed and endorsed the ACCC report, which recommends the axing of the Small-scale Renewable Energy Scheme (SRES) by (or before) 2021” and the government under Turnbull “has not ruled out immediately scrapping the scheme”.
What could change? Legislative changes to reverse the scheme would take time, so the most likely abrupt change would be ministerial (which can happen quickly and most notably without opposition potentially), and could take two forms:
The amount a solar system rebate is awarded is currently calculated to 2030. This means if you install a system in 2019, you receive 12 years of STC’s. If this period is decreased (potentially up to zero), the value of STC’s will significantly reduce or even be zero.
The clearing house is an alternative to the STC open market and guarantees a maximum price of $40 per unit for system owners. The clearing house price can be reduced anywhere down to $0, which can theoretically happen at any moment, meaning the cost of installing your solar system will potentially instantly increase by around 30%.
Market forces are signalling the beginning of a potential crash in the price of STC’s, and political instability could essentially see the end of the rebate scheme altogether, potentially increasing the cost of installing your solar system by around 30%, which amounts to up to $67,000.
Todae Solar recommends you initiate your enquiry as soon as possible if you are planning to proceed with solar under 100 kW.