The number of small-scale renewable energy system installations has continued to increase in 2017, particularly solar panel systems, reversing the gradual downward trend since 2013. There was a 25 per cent increase in the number of systems installed so far in 2017, compared with the same period last year. This increase has impacted the volume of STCs in the market.
The third quarter surrender for 2017 occurred on 28 October 2017 and the clearing house remained in a modest surplus following surrender. When the clearing house is in surplus, STCs are primarily sourced from the open market and have traded below $40.
Participants who choose to offer STCs for sale in the clearing house should expect a delayed sale, as certificates are likely to remain there for a period of time until the supply in the broader market is diminished. There remains considerable uncertainty as to whether, or when, a STC shortage may arise, however, it is unlikely to be before mid-2018 (first quarter surrender occurs on 28 April 2018).
The below graph tracks the spot price and availability of STCs over time. The graph shows that the STC surplus is still significantly lower than the peak reached between 2011 and 2015.
Data current as at 13 December 2017.
STC spot prices are based on end of week closing rates sourced from TFS Green and Mercari. This view of pricing does not take into account daily price fluctuations.
The Renewable Energy Target operates through the creation of tradable certificates, which create an incentive for additional generation of electricity from renewable sources. Certificates are created and issued through the
REC Registry—the online platform managed by the Clean Energy Regulator.
Small-scale Renewable Energy Scheme is a market-based scheme. There are two markets for STCs: the open market, and the
STC clearing house where certificate prices are set at $40 (GST exclusive). Participants should be aware that STCs are a commodity and prices will fluctuate in the open market based on the balance of supply and demand along with other factors. The Clean Energy Regulator does not regulate the STC open market. Prudent commercial measures may be necessary to manage exposure to price fluctuation.
In setting the small-scale technology percentage, an adjustment is made for any over or under supply of STCs in a previous year. Due to the high rate of STC creation so far in 2017, the 2018
small-scale technology percentage is expected to increase, which will increase demand for STCs next year.
For more information on supply and demand dynamics in the Small-scale Renewable Energy Scheme, please see the previous
market update or the Small-scale Renewable Energy Scheme page.
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