The Solar Panel Rebate (That we are not allowed to call a rebate!)

By Finn Peacock – Chartered Electrical Engineer, Ex-CSIRO, Founder of SolarQuotes

The current legislation means that the solar rebate started to reduce one fifteenth every year from Jan 2017 until it drops to zero in 2032.

So, despite what you might have heard, there are no plans to axe the rebate overnight – it will be a very gradual reduction.

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What most people aren't aware of is that the dollar value of this 'solar rebate' could plunge at any time if demand for solar systems suddenly increases.

How so? I go over the exact mechanism (known as STC creation) further down the page, but in a nutshell, the system 'self regulates'.

What that means is, if the market for solar runs hot, the value of the 'rebate' goes down in step with a thing called the 'STC price'. The STC price can have a value between $0 and $40. In other words, $40 is the highest it can go by law.

The STC system is designed so they will normally stay near their maximum price of $40 each, but if demand for solar is high then their price can fall.

So – the higher the STC price, the more the 'rebate' is worth. 

At the time of writing (May 2018) the value of an STC is around $37-$38. This translates into a rebate of roughly $650 per kW installed based on the lower end of the range

The rebate that is not officially a rebate!

To make things confusing, the current "Rebate" for anyone buying a solar system of up to 100kW is called the STC program. Which stands for Small-scale Technology Certificate.

STC's are created when new solar systems are installed. As an example, a new 5kW solar system in Sydney will create 89 STC's.

89 STC's at a value of $37 per STC = $3239. This is what you would see as the "solar rebate" discount on your solar quote.

The government says that this "STC program" is not a "solar rebate". From their website:

"Under the Small-scale Renewable Energy Scheme the reduction in the cost of your solar panel is not a rebate. You will not qualify for any Government-based financial recompense at the completion of any process relating to STCs."

I think what our bureaucratic friends are trying to get across is that the thousands of dollars you get off your solar system price (usually by assigning the rights to its STC certificates to your installer) does not actually come from the government.

It is a government scheme, but it compels other people to buy your certificates. So it is a government run scheme, using other people's money.

There are no special restrictions around claiming the 'rebate'

This solar rebate Financial Incentive subsidises the upfront cost of installing a solar power system and is not means tested in any way.

The only criteria for claiming it are:

1) Your system is less than 100kW in size.

2) You get it installed and designed by a Clean Energy Council accredited professional.

3) You use panels and inverters that are approved for use in Australia by the Clean Energy Council.

Note: Do not confuse this 'rebate' with the Feed In Tariff (FiT). The FiT is a State Government subsidy in which most states force electricity retailers to pay you a minumum tariff for the electricity that your solar system will export to the grid.

You don't need to fill out any tedious paperwork to claim the 'rebate'

Paperwork sucks – the installers are the ones who will claim the rebate on your behalf (and apply it to the final cost of your system, effectively acting as a discount), so leave it all to them.

Why you should consider getting quotes for solar sooner rather than later

As mentioned above, the amount of 'rebate' you can claim depends on the current market price of an STC. 

When more people are buying solar, more STC's are being created – meaning the price of STC's generally decreases (Supply and demand – gotta love economics 101!).

A few years ago, when the government really looked like it was going to scrap the rebate, demand for solar installations caused the price of STC's to drop to $17.50 – less than half of what it is now.

So if you got a 5kW system today, you'd claim a 'rebate' of approximately $3,250 (5kW x $650  = $3,250). However, if demand for solar goes up and the STC price drops to $17.50 again, you'd only be able to claim a 'rebate' of under $1,500 for the exact same system. 

If you get 3 free quotes for solar now, that's the first step towards locking in the current 'rebate' based on an STC price of ~$37 – but if you wait, the STC price could drop and significantly reduce the savings you can claim.

If you're considering installing solar panels for your home or business, SolarQuotes can help you get quotes from high-quality installers quickly and easily:

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About Finn Peacock

I'm a Chartered Electrical Engineer, Solar and Energy Efficiency nut, dad, and founder of SolarQuotes.com.au. My last "real job" was working for the CSIRO in their renewable energy division.

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