The STC Price: Is Your Solar Installer Ripping You Off?

Short Answer: Probably Not.

Longer Answer:

Ah, the joys of STC prices!

Every so often I get an email from someone who is desperately worried that their solar installer is using the STC price to rip them off.

The suspicion is usually kicked off by one of two things:

1) The “Surrender Your Rights” Clause

The customer has read through the solar contract and has come across a clause that looks like this:

“You unconditionally agree to surrender all your rights to create STCs for the purchased system for the next 15 years to Acme Solar”

When people read a clumsily worded clause like this it conjures up an image of the solar installer laying claim to your precious solar electricity for the next 15 years (and perhaps taking your first born too!) and they are naturally wary of signing any “rights” over to someone else.

The reality is that this daft clause is just a lawyer’s way of saying:

“You grant the installer the right to claim your upfront Federal solar rebate for you so he can reduce the price you have to pay by the rebate amount”

You are not granting the installer any rights to sell your electricity! That is a completely separate rebate called the “Feed In Tariff” and the installer can’t touch it. (Unless you have entered a very special kind of contract called a “Power Purchase Agreement” but that is another story).

So why does the clause say that you have to assign the STC rights for 15 years? Well that is because the upfront rebate is calculated based on how much CO2 your system will offset over 15 years.

Now on to the second reason some people worry that they are getting stiffed by their Solar Installer:

2) Quoting the wrong STC Price

[Note on STCs: For those who don't talk "solar" , STCs are the certificates that make up your federal rebate. Their price fluctuates on the open market. You get about 90 STCs for a 1.5kW solar system, so if the STC price is $20 then you will get a $1800 rebate, if it is $30 you will get a $2700 rebate]

The Common Allegation: The Solar Installer Quotes an STC price of, for example, $25. The canny customer looks up the STC spot price here and sees it is, for example, $28. The customer accuses the solar installer of not giving them a fair price for their STCs. The customer believes they could sell the STCs themselves and get an extra $5 per STC, saving $100′s from the price…couldn’t they?

Not really… There are 2 STC prices in the market place. An advertised “spot price”, and the price that is allowed on your system. The spot price is always higher – by up to $3 at times.

Summary of how selling STCs happens in the real world:

Upon completion of your job, you assign your (Renewable Energy Certificates) RECs to an Aggregator (a third party company) for say $25.

It takes an Aggregator 4 weeks to convert your RECs into sellable “Registered Certificates” – often also referred to as STC’s.

The Government (ORER) charges the Aggregator 50c / REC to convert them.

Once converted to a certificate, the Aggregator then needs to combine 30-40 other jobs / Solar PV Installations to bundle into 5000 STCs  - Now the Aggregator can sell your STCS/RECS on the open market at the current “spot price”.

So the $3 extra they may sell for, includes government fees, admin costs, risk margin and hopefully some profit for the Aggregator.

So if the STC price on your quote is a few dollars less than the current STC spot price, you are not getting ripped off! The installers are just covering the cost of selling the STCs through the STC Aggregator.