REBATES

Government Solar Incentives – STCs & LGCs

The Renewable Energy Target is split into two parts. The Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). Both schemes create financial government incentives to invest in renewable energy generation.

Solar PV Systems up to 100kW are eligible for the SRES and systems above 100kW are eligible for the LRET.

STCs

Definition of STCs (Small-scale Technology Certificates):

STCs are generated when a Solar PV System is installed, provided the solar panel capacity is under 100kW. The quantity of STCs generated is contingent on the size of the solar system and its geographic location.

These STCs can be traded in a dynamic market, effectively reducing the overall installation cost for residential or commercial property owners. In most cases, Solar Installers typically assume ownership of the STCs generated and adjust the customer's bill accordingly, making the process seamless for the end-user.

Current STC Price Explanation:

The price of STCs is subject to market dynamics and may experience fluctuations. Historically, the lowest recorded STC price was $16 per certificate. As of the date of this article, the STC price stands upto $39 per certificate. Please note that these prices can change over time due to market conditions.

Eligible Projects for STCs under the Small-scale Renewable Energy Scheme:

To qualify for STCs, projects must adhere to specific criteria outlined in the Small-scale Renewable Energy Scheme. The eligibility requirements are as follows:

• STCs must be created within 12 months of the installation.
• The solar panels and inverter used must be approved by the Clean Energy Council.
• The maximum allowable capacity for the system is 100kW DC (based on the nameplate rating of the solar panels, not the inverter).
• The project must comply with all relevant local, state, and federal government legislation.
• It should also adhere to Australian and New Zealand standards.

The following projects ARE eligible for STCs if the total system remains under 100kW in capacity:

• Expanding existing capacity or upgrading solar systems.
• Installing an additional, separate solar system.
• Replacing an existing solar system.

Calculation of STCs:

The calculation of STCs is determined by considering several key factors, including the system's geographic location (zone), installation date, deeming period, and system size in kilowatts (kW). The following formula illustrates the method:

Number of STCs Created = Postcode Zone Rating x Deeming Period Years x System Size in kW

By using this formula, the appropriate number of STCs can be determined for a given solar system installation.

LGCs

WHAT IS AN LGC?

An LGC, or Large-scale Generation Certificate, represents the generation of one megawatt-hour (MWh) of net electricity from a renewable energy generation system.

HOW ARE LGCS DIFFERENT TO STCS?

Although LGCs and STCs share similarities, there are two notable distinctions between these certificate types:

Generation Basis: LGCs are generated according to actual data readings of the renewable power produced by the power station. They can be issued periodically (yearly, quarterly, or monthly) throughout the station's operational life, up until the Renewable Energy Target (RET) concludes in 2030.

Generation Basis for STCs: In contrast, STCs are based on the anticipated renewable energy generation of a small-scale generation unit, also extending until the RET concludes in 2030.

How do LGCs Work?

To be eligible for Large-scale Generation Certificates (LGCs), the designated person, generator, or producer must become a registered 'power station' accredited with the Clean Energy Regulator (CER).

LGCs are specifically generated by solar energy systems with a capacity of 100kW or greater. A certificate is issued for each megawatt-hour (MWh) of solar energy generated. The total number of certificates is calculated monthly using a formula established by the Australian Government's Clean Energy Regulator. If the provided figure is approved by the regulator, an LGC is generated and awarded to the designated person. This LGC is also recorded in the Renewable Energy Certificates (REC) registry. The holder can claim LGCs annually, quarterly, or monthly.

As previously mentioned, LGCs function as a tradable currency that can be exchanged with other parties. For example, they can be sold to energy retailers or on the wholesale market. Under the Renewable Energy (Electricity) Act of 2000, energy retailers are obligated to purchase LGCs from accredited entities. Retailers acquire LGCs at a government-set price, whereas buyers and sellers on the wholesale market determine their prices, which fluctuate based on supply and demand. LGCs are also available in batches of 5000 certificates in the open market. These certificates serve as an additional revenue source for businesses, significantly enhancing their return on investment. Retailers who acquire LGCs can use them to meet government electricity purchase requirements.

Accreditation Process for Becoming an LGC Generator:

In order to generate Large-scale Generation Certificates (LGCs) through a solar energy system, the system must undergo an authorization process. Here are the key steps for accreditation:

Eligibility Criteria:

• The solar energy system must not rely on fossil fuels.
• The system's capacity must exceed 100kW.

Accreditation Process:

• Register as a person in the online Renewable Energy Certificate (REC) registry.
• Submit an application for accreditation.
• Pay the applicable application fees.
• Your application will be assessed.
• You will be notified of the outcome of your application.

Following these steps will enable you to obtain accreditation as an LGC generator and begin generating certificates through your solar energy system.

Process for Creating and Registering LGCs:

Once a power station is accredited and actively generating electricity, it can initiate the submission of Large-scale Generation Certificates (LGCs) for certification. The Clean Energy Regulator reviews LGCs for certification on a monthly, quarterly, or yearly basis (generating for less than a month is not accepted). The generation of LGCs occurs directly within the online Renewable Energy Certificate (REC) Registry, and the certification process comprises the following five steps:

• Pre-Creation Information Review:

-Eligibility for LGC creation begins with nominated persons from approved institutions.

-LGCs cannot be generated prior to actual power generation.

-LGCs cannot be created for periods shorter than a month.

-All LGCs must be generated by December 31st after the electricity generation.

• Pre-Creation Checks:

-Prior to generating an LGC, individuals must be nominated by an accredited institution.

-Familiarity with the LGC formula is required.

-Authorization to use the REC Registry is necessary.

For first-time LGC claims, prepare responses to basic validation questions, document them, and upload them to the REC Registry alongside your claims.

Assemble supporting documentation for LGC creation. This documentation should be posted to the REC Registry and must include:

-Metered data from electricity meters to accurately measure the electricity generated by the solar panel systems.

-Data verifying that all electricity generated is from solar energy.

-Power station details, including its name.

-Year and month of generation.

-Fuel sources.

-Quantity of LGCs to be created.

Conclusion of the Large-Scale Renewable Energy Target:

As per the current legislation, the Large-Scale Renewable Energy Target is scheduled to conclude on December 31, 2030.

Eligibility for Claiming LGCs by Generation:

Any electricity generated from the moment your system obtains accreditation approval from the Clean Energy Regulator and effectively fulfills electricity demand, whether it is consumed on-site, channeled into a storage system, or supplied to the electricity grid, qualifies for LGC claims.

Impact of Installing a Zero Export Device on LGC Creation:

The installation of a zero export device has a direct effect on LGC creation. Electricity generated by the system that is curtailed or prevented from being exported by a zero export device will not be eligible to generate LGCs. Consequently, this curtailed electricity will decrease the LGC payouts.

Advantages of Choosing a Fixed Price Option:

Opting for a fixed price Off-take Agreement offers several benefits, including:

Risk Mitigation: By selecting a fixed price option, you can shield yourself from potential downward fluctuations in the LGC trading market.

Price Stability: Locking in a fixed price today guarantees you a stable and predictable LGC return, providing you with financial certainty.

Advantages of Choosing a Variable Price Option:

Opting for a variable price option offers several benefits, including:

Market Flexibility: The variable price option allows you to track and adapt to changes in the market spot price, offering flexibility in your investment strategy.

Cost Savings Potential: With the LGC target already achieved, there is a likelihood that prices will gradually decrease between now and 2030. Choosing a variable price option could lead to cost savings over time.

Definition of an Offtake Agreement:

An LGC offtake agreement is a formal contract established between the Power Station Owner, acting as the supplier, and LGC agent, functioning as the buyer. This agreement outlines the negotiated pricing terms that govern the creation and purchase of forthcoming LGCs, derived from eligible electricity generated by the Power Station within the confines of its accreditation entitlements.

Metering Requirements for First-Time Power Stations:

If this is your first time setting up a Power Station, the necessary metering varies based on your annual electricity generation:

• Power Station Generating Under 750 MWh Annually: In this case, a monitoring device installation is sufficient. Many of our Power Station owners have found the Solar Analytics smart monitor to be an excellent choice, and it seamlessly integrates with our setup.
• Power Station Generating Over 750 MWh Annually: For Power Stations generating more than 750 MWh, it is essential to install a NEM standard meter to meet the requirements.

If you would like more information on government incentives for solar please get in touch on 1300 319 866, or submit an enquiry online.