{"id":13742,"date":"2017-08-11T14:45:29","date_gmt":"2017-08-11T04:15:29","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=13742"},"modified":"2017-09-20T11:14:03","modified_gmt":"2017-09-20T00:44:03","slug":"reduced-stc-price-mean-solar","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/reduced-stc-price-mean-solar\/","title":{"rendered":"What Does The Reduced STC Price Mean For Solar?"},"content":{"rendered":"
\"Solar

STC prices dropping means solar prices have risen. What has that done to solar payback times?<\/p><\/div>\n

We were warned.<\/p>\n

We all knew this was coming.<\/p>\n

But who among us was prepared for the recent tumble<\/a> in the price of STCs<\/a> that lower the cost of rooftop solar?<\/p>\n

Well, I was.<\/p>\n

And my cousin, Willy — he was prepared too.<\/p>\n

And plenty of installers were prepared, especially those that have been around for a while and who have seen STC prices fall before.<\/p>\n

Unfortunately, some installers were caught with their pants down because not all of them made it clear<\/a> to their customers the quotes they gave contained a variable STC component that could change.<\/p>\n

The fall in STC prices from just under $40 in May to $31 today increases the cost of a 5 kilowatt solar system for most Australians by $860 due to a mechanism often called the “solar rebate1<\/a><\/sup>“.<\/p>\n

So is rooftop solar still a worthwhile investment for Australians?<\/p>\n

The short answer is — Hell yes.<\/p>\n

And the long answer is — Heeeeeeellllllllllllllllllll yeeeeeeeeesssssssssssssss.<\/p>\n

\"\"<\/p>\n

Most Australians suffered an increase<\/a> in electricity prices on the first of July.\u00a0 Most have also received the benefit of increased feed-in tariffs.\u00a0 Together, these changes have resulted in an improvement in the economics of rooftop solar that outweighs the disadvantage caused by the fall in STC prices2<\/a><\/sup>.<\/p>\n

Why Have STC Prices Fallen?<\/h2>\n

The value of STCs are determined by supply and demand.\u00a0 If the amount of solar whacked on roofs decreases faster than expected then their value goes up.\u00a0 This lowers the cost of solar and encourages people to buy more.\u00a0 And if a lot of rooftop solar is installed, the value of STCs fall, which discourages people from getting it.<\/p>\n

The reason why supply and demand affects STC prices is because they are part of Australia’s Renewable Energy Target<\/a>.\u00a0 Since it is a target, a system was put in place that gives some control over the amount of rooftop solar installed to allow the target to be hit.<\/p>\n

While the amount of rooftop solar has had its ups and downs as incentives have changed, the overall amount installed each year has been relatively constant since STCs were introduced in 2011, as this graph I lifted from the Australian PV Institute site<\/a> shows:<\/p>\n

\"Installed<\/p>\n

While the graph includes large scale solar farms, they are only just starting to take off in Australia and currently only amount to 5% of installed solar panels.<\/p>\n

Will STC Prices Fall Further?<\/h2>\n

STC prices have fallen by almost one quarter since May, with most of the decline occurring in a single day.\u00a0 That’s a pretty major drop.\u00a0 If it happened to shares you’d need a broker proof umbrella to be safe when strolling past the stock market.<\/p>\n

So can we be certain prices have stabilized at around $30 and a similar fall won’t occur again?<\/p>\n

No, we can’t.<\/p>\n

This is because markets are run by humans3<\/a><\/sup> and humans are kind of dopey<\/a> and are in the habit of doing really stupid things every now<\/a> and then<\/a>.<\/p>\n

But, while we can’t be certain what will happen, we can be fairly confident a similar fall won’t happen any time soon.\u00a0 One reason is because STC prices have not changed as rapidly in the past as they did last month.\u00a0 While past prices have had their ups and downs, previous swings have been more subdued, as this graph from Green Energy Trading<\/a> shows (look at the green line):<\/p>\n

\"STC<\/p>\n

As the installation of rooftop solar has been increasing<\/a>, I was expecting STC prices to fall at some point this year. \u00a0And they did. But I’m not expecting another large decrease because I don’t think installations will increase enough to cause another large fall any time soon. But feel free to check with me in a few months and I’ll see how installations are going.<\/p>\n

Will STC Prices Rise?<\/h2>\n

While STC prices may fall, it is also possible they will rise.\u00a0 I wouldn’t be surprised if they go up by a few dollars or perhaps more, but due to the increase in installations I don’t expect them get close to their maximum price of $40.\u00a0 At least not any time soon, and possibly never.\u00a0 So I can’t recommend waiting around to see if STC prices will improve before buying solar, as every month you go without rooftop solar is a month paying higher electricity bills than you need to.<\/p>\n

The Increase In The Cost Of Solar Depends On Location<\/h2>\n

The amount of STCs received per kilowatt of solar panels depends on which Zone they are installed in.\u00a0 There are four Zones:<\/p>\n

\"A

The solar rebate zones and how many STCs you get per kilowatt hour of solar panels for each remaining year of the solar rebate.\u00a0 (There are 14 years<\/a> remaining in 2017.)<\/p><\/div>\n

Most Australians live in Zone 3, which includes Brisbane<\/a>, Sydney<\/a>, Canberra<\/a>, Adelaide<\/a>, and Perth<\/a>.\u00a0 A considerable number of people live in Zone 4 which includes Melbourne<\/a> and Hobart<\/a>.\u00a0 Not so many live in Zone 2, which includes Darwin<\/a>.\u00a0 And people are few and far between in Zone 1, which includes a hell of a lot of dust.<\/p>\n

The recent $8.90 fall in STC prices increases the cost of installing one kilowatt of solar panels this year by the following amount:<\/p>\n