We can thank Nik Bicanski for today’s inspiration. Nik is one of my sales reps and he asked if we could talk about the solar rebate as nearly every single quote he has been out to lately the client has asked ‘is there still a rebate?’
The answer to that is yes, there is.
But it is in the wind down phase over the next few years. We will talk about how it’s winding down in a minute but first let’s look at how the rebate works.
For starters I’m not meant to call it a rebate. According to the Clean Energy Regulator I am meant to call it a solar financial incentive. But everyone calls it the rebate and has done for years and I believe no one had their finger nails pulled out for calling it rebate.
The amount of the rebate is determined by the amount of solar power you put on your roof and the zone you are in. By zones I mean the further north your solar system is located the more rebate you get for every kw of solar installed. This means a 5kW solar system in Queensland gets more than a 5kW solar system in Tassie. Quite a bit more actually. This is because solar systems produce more power during a year the closer you get to the equator.
But moving on. Tassie is all in the same zone so it doesn’t matter where you are in Tasmania 5kW of solar receives the same rebate amount whether you are on Bruny island or Smithton.
The mechanism or formula is this.
5kW of solar in Tassie is deemed by the Clean energy Regulator to be able to produce 59 MWh of solar energy in a 10 year period so that 5kW system is allowed to create 59 Small-Scale Technology Certificate or STC’s.
Those certificates have to be bought by energy generators like hydro, AGL, Origin etc. The price we get for those certificates can fluctuate as its demand based market. The prices at the moment for us are fluctuating around $35 and $36 per certificate.
Back to our 5kW system that in Tasmania is deemed to be able to produce 59 MWh of energy in 10 years is allowed to create 59 of these certificates.
59 x the $35 buy price is $2,065 and that is the discount you would receive for a 5kW system.
If it was a 10kW system it would be exactly double so that is 118 certificates or $4,130.
The largest system you can install under the STC program is 100kW of solar and this is the most popular size for bigger businesses and that equates to 1185 certificates or $41,475 off the price. So as you can see there is a scale of economy to be gained with bigger systems. Especially with labour and balance of systems costs so the bigger the system the more you can leverage the price downwards.
Let’s talk about how it’s in the wind down phase.
5 years ago the rebate certificate formula was based on 15 years of production. This year it has been 10 years and next year, as of the 1st of January it will be 9 years and the following year 8 years and so on.
So it has been winding down for quite a while.
Let’s look at our 5kW example this year the rebate is 59 certificates for that system which is $2,065
Next year that 5kW system will be able to create 53 certificates or be worth around $1,855
The year after that it will 47 STCs and and around $1,645
We are now in the rapid part of the wind down stage of the solar rebate and from here the maths are easy.
Next year the rebate will reduce by 1/10 th and the year after 1/9th and the year after 1/8th
And for those that are a bit on the math dyslexic side of things 1/9th is bigger than 1/10th and and 1/8th is bigger than 1/9th so every year the rebate dollar value exponentially drops quite significantly.
There you have it. The rebate is still around, it’s not going to end but it is going to drop but in another 4 or 5 years it will be of so little value it’s probably not going to be worth doing the paperwork for.
Use those rebates while they are still worth something. Solar without rebates is still going to be about 100 times better as an investment than having money in the bank so the end of the rebates will not sound the death knell for the solar industry while we still require energy and as Electric Vehicles grow in numbers there will be another solar boom off the back of that.
Call DMS Energy on 1300 502 599 to find out more or to arrange your site inspection and quote.
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