Solar Rebates and Incentives Explained

The environmental benefits of installing a solar system are well documented. But for households, there also exist substantial financial benefits in the form of federal and state rebates and incentives.

Accessing these incentives requires that households familiarise themselves with various acronyms and calculations that can be somewhat confusing.

With that said, here is a general overview of the various rebates and incentives on offer, and how a household looking to install a solar system might take advantage of them.

Australian Government rebates for solar power

To help the Australian Government meet its Renewable Energy Target (RET), it has incentivised the cost of installing solar photovoltaic (PV) systems for households.

This incentivisation program is called the Small-Scale Renewable Energy Scheme (SRES). A core principle of the SRES involves the issue of Small-Scale Technology Certificates (STCs) to eligible households.

STCs determine the exact rebate a household will receive when they have a solar system installed.

Importantly, the solar system needs to have a DC solar panel capacity of fewer than 100 kilowatts (kW) to qualify for the rebate.

Calculating the number of STCs you may receive

The number of STCs a household receives is based on three things:

• The size of the solar system. In other words, the total output of energy (in kilowatts) that the panels produce.
• The rating of the solar zone that a household resides in. Australia is divided into 4 solar zones according to the amount of sun they receive annually. Melbourne and indeed most of Victoria lies in Zone 4, which has a rating of 1.185. However, residents in the northwest of Victoria such as those in Mildura lie in Zone 3 with a rating of 1.382.
• The number of years remaining until the scheme is phased out in 2030, otherwise known as the deeming period..

To calculate the number of STCs you might receive, multiply the three numbers together.

For example, if a household in Melbourne installs a 5 kW system in 2020, they will receive 59.25 STCs (5 kW multiplied by the 1.185 zone rating multiplied by the 10-year deeming period).

For a simpler calculation of STC, consider that 1 STC is equivalent to 1 megawatt-hour (mWh) of renewable energy. To calculate the value of your STCs in this way, you need to know how many megawatts your system will produce by the end of 2030.

Since the value of STCs is partly reliant on the amount of energy a PV system can generate before 2030, it makes sense to install the system as soon as possible. The longer you leave the installation, the lower the rebate you will receive.

How much will your rebate be?

The value of each STC in dollar terms fluctuates with market supply and demand. If you’re unsure, your installer should be able to tell you the current price. But broadly speaking, the STC price has averaged approximately $39 in 2020. On the aforementioned 5 kW system above – one of the most popular in Australia – you could expect a rebate of around $2,310

Clarification on the rebate

One important thing to understand about the rebate is that it is more like a discount. That is, the solar system installer is responsible for calculating and then applying the STC discount to the total cost of the system itself.

Alternatively, you can claim the value of STCs yourself by registering them on the government market exchange. However, you will have to wait in a queue for your claim to be processed. By claiming later, you will also have to pay full price for the solar system upfront.

Victorian government rebate and loan

In addition to federal government rebates, eligible Victorian residents can receive a rebate and loan for the cost of installing a solar (PV) system.

To be eligible, they must:

• Be owner-occupiers.
• Have a combined annual household income of less than $180,000
• Own a property valued at less than $3 million
• Not own a pre-existing solar PV system
• To complement the Australian Government (STC) incentive, eligible households can also apply for an interest-free loan of up to $1,850 and an additional rebate of up to $1,850.

Quick facts about solar (PV) system interest-free loans:

There are no interest or establishment fees, reducing upfront costs

1. Loans are available to eligible owner-occupiers and also to landlords.
2. For a loan of $1,850, the monthly repayment is $38.54 over a four-year term.

Applying the rebate and loan to a real-world example

For this example, consider a solar (PV) system that is expected to cost $6,000 to install. Note that this price has the Australian government STC incentive factored in already.

From this amount, a further $3,700 can be subtracted in the form of:

• The $1,850 rebate – paid directly to the solar provider via the Solar Victoria Portal.
• The $1,850 interest-free loan – also paid directly to the solar provider via the Solar Victoria Portal, but repaid by the household over four years

State and territory government rebates and incentives

While Victorian residents enjoy relatively high incentivisation from their state government, the degree of incentivisation varies from state to state.

Here is a quick look at state and territory incentives that are independent of any national schemes:

• New South Wales – the Empowering Homes program offers loans of up to $14,000 for solar battery systems and $9,000 for adding batteries to existing solar PV systems.
• Queensland – the Queensland Government offers interest-free loans for solar systems. They also offer loan and grant packages for battery systems and combined solar and battery systems
• Western Australia – does not offer solar rebates or loans.
• Tasmania – does not offer solar rebates or loans.
• South Australia – through the Home Battery Scheme, the SA Government offers a rebate of up to $6000. In addition to the battery subsidy, low-interest loans are also available.
• Northern Territory – like WA and Tasmania, the NT Government does not currently offer incentivisation.
• Australian Capital Territory – the ACT Solar for Low Income Program offers a subsidy of up to $2500. They also offer a battery rebate of $825/kW for systems up to 30kW through their Next Generation Energy Storage program

Feed-in tariffs

A feed-in tariff (FIT) is a credit rebate made to a household for any electricity they generate which is fed back into the grid. Like other solar rebates, the FIT is not paid as cash in hand but is applied as a reduction to an energy bill.

For each kilowatt-hour (kWh) that the household generates, it will receive a FIT in the range of 7-16 cents. The actual FIT value varies according to the state of residence and also to individual energy retailers. Therefore, it’s important to shop around.

In Victoria, there are two types of feed-in tariffs available:

• Single rate tariff. This applies one rate for all of the electricity produced in the home, regardless of the time of day
• Time-varying tariff. This tariff applies different rates at different times of the day. For example, households earn the highest tariff during the peak time of 3 pm to 9 pm weekdays. The lowest off-peak rates apply daily from 10 pm to 7 am, while the tariff for all other times is priced somewhere in the middle.

Conclusion

Accessing these rebates and incentives may seem like a lot of work, but an accredited solar provider can take care of the whole process for you. At the very least, installers assume responsibility for determining STCs and then applying the discount to the installation cost.

Once STCs have been finalised, make the most of the Victorian state government rebates and loans to further reduce your upfront cost. With such generous incentives on offer and the ability to save money selling electricity back to the grid, it has never been a better time to install a solar system in your home.

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