Government Incentives for Solar Panel Installations

How do the current Government incentives work if I want to install a solar power system? I’m always surprised at how often we get asked what the government incentives are for solar panel installations. The federal government scheme has been around for a few years now, and under current legislation the scheme will be available for eligible solar system buyers until 2030.

I will try to simplify the actual incentive scheme, exactly who’s eligible, and how to work out what sort of discount you should be entitled to if you are considering buying a solar power system.

How does the solar rebate scheme work?

The scheme is called the Small-scale Renewable Energy Scheme and the website states “Under the Renewable Energy Target, if you have installed an eligible small-scale renewable energy system within the past 12 months you may be eligible to create small-scale technology certificates.”

These tradable certificates (STC’s) are usually offered as an upfront discount on your solar system with your installer trading the certificates on your behalf.

How much is the rebate worth to me?

Firstly, it is very simple to work out how much you’re entitled to when buying a solar power system. To work out what solar rebate your proposed system will bring you can simply jump on the REC registry website HERE and run a few sums.

The STC price as of today (14 March 2019) the spot price is around $37, or $630 per kW installed. So, from here the math is simple:

If you want a 5kW solar power system then you would get $3,150 off the total cost of an installed system in subsidies (5 x $630).

The bigger the system the larger the rebate based on this equation:

Cost of an installed 30kW solar power system in 2019: $48,900 STC Subsidy: $18,900 Discounted Cost you actually pay: $30,000

If you are unsure what size solar power system your home or business may need you can find some pointers by reading through THIS explanation.

Will the incentives run out and are they reducing each year?

This question usually arises because you have either read or been told if you don’t buy your system this year you may not receive any rebate at all next year, or the rebate will likely be drastically reduced.

In short, yes, the scheme is coming to an end – by 2030 the funds will have reduced to zero and there will be no more subsidies available under that legislation.

Whilst it is a risk that the scheme can be canned (the ACCC made recommendations to this affect in their REPORT last year) it is unlikely to be scrapped in a matter of months, or even a year or two. That would be a disaster.

The two main points to consider here are:

The STC price of today is a spot price based on an open market. Ie the price available today may not be available tomorrow. The spot price has floated between ~$30-$40 per STC over the last 12 months (a good graphical HERE) and for some larger installations this can mean significant volatility in your final discount price before the certificates are traded; and
The actual cost to you of waiting to install your system can be estimated using this For the above example of a 5kW system, the estimated STC rebate available if you installed your system in 2020 would be $2,812. So, you would be $338 worse off if you delay until 2020. Not an insignificant amount, so certainly worth considering when choosing the ideal time to install a solar power system.

How do I know if I am eligible for a rebate?

The eligibility test is quite simple – the only criteria being:

The size of the solar panel system you installed is less that 100kW;
Your installation was completed by Clean Energy Council accredited solar professional; and
The panels and inverter your solar professional installed was approved by the Clean Energy Council (this can be found on the data sheets/brochures for your equipment. If you are unsure ask your provider to show you the documentation).

How does the actual process work?

For those of you interested in the details the process I’ll try and explain it in a few short steps:

Renewable Energy Certificates (RECs) are created by the government;
The government then decrees that fossil fuel generators either build an amount of their own renewable energy generation (ie wind or solar) to supplement the burning of fossil fuels OR buy the right to third party renewable energy generators through purchasing RECs;
When you install a solar power system the government grants you a certain number of RECs based on the system size and your location (if your system is < 100kW these RECs are called STCs);
Your STCs are sold (through a trading house) to fossil fuel generators with the proceeds used to discount your upfront installation price of the system;

As always if you have any questions about this post please don’t hesitate to drop me a line.