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.