The STC Market and the STC Clearing House

Companies who are liable to purchase STCs must surrender a set quota of certificates which they have purchased each quarter. Their quota is determined by the government’s Renewable Energy Target (RET) Small-scale technology percentage (STP). The number of certificates available for purchase on the market at any one time, the number of certificates that a company must purchase and the dates for quarterly surrender are all factors which affect the market price of STCs. Therefore the price fluctuates, similar to that of shares on a stock market, as supply and demand vary.

In the last couple of years the price per REC has varied from between about $15 – $55. This large price variation has caused obvious difficulties for solar installation companies when trying to factor in the value of a system’s STCs when quoting jobs.

Prior to 1 January 2011, registered agents were the sole means of trading RECs with liable parties. On 1 January the ORER made changes to this process by facilitating a government run Clearing House which trades STCs at a fixed price of $40 per certificate. STCs that are offered for sale on the Clearing house enter a queue. Once they reach the front of the queue they are sold at a guaranteed price of $40 per certificate. The purpose of creating this system was, in part, to try to provide some stability in the market price of RECs for domestic systems (STCs). So far this has not happened. The following factors have contributed to the ineffectiveness of the STC Clearing House:

  • It is not mandatory to purchase STCs through the Clearing House. Therefore traditional avenues of trade (direct from agent to liable party) are still open, and in times of oversupply of STCs in the market this has been the most common form of trade.
  • The Solar Credits multiplier scheme, along with a rising numbers of solar power systems that are being installed, have caused a significant oversupply of STCs on the market.
  • There are currently over 6 million STCs queued for sale on the Clearing House and they are moving very slowly as most trade is occurring outside the clearinghouse at a lower price.

Accordingly, the current market price for STCs sold outside the clearing house (as at 7 May 2012) was around $25