An STC trader looks like a middleman. Underneath it is a small working-capital business.
How the money moves
- An installer lodges a claim, and the trader pays or promises a rate.
- The CER creates STCs once validated.
- The trader sells them: to liable entities (largely retailers) through the Clearing House at $40, or on the spot market, which has been roughly $38 to $40 at the time of writing.
- The difference, less costs, is the margin.
Because the Clearing House buys at a fixed $40 when sellers have certificates to lodge, the margin is usually driven by what the trader pays installers, not by a volatile market price. See what an STC is worth.
How a trader funds the float
Paying installers before it is paid means the trader funds a gap of days or weeks, using its own cash, shareholder money, or a bank or specialist facility. Faster settlement means a bigger float, which is why 24-hour payment is hard to offer and easy to advertise.
What a trader earns
Revenue sources differ. Some take the spread, some add fees, some run an agent model that charges per claim, and some do all of the above. STC agent fees and aggregator versus broker explain the models. Volume matters, so volume rates are common.
The risks a trader carries
- Rejection risk. A claim that fails or is later invalidated can leave the trader holding a payment it made. Contracts handle this differently; see rejection after payment.
- Price risk. If a trader holds certificates and the market falls, the margin shrinks.
- Counterparty risk. A buyer or a funder may fail to pay on time.
- Operational risk. Wrong bank details, duplicate payments and fraud.
- Regulatory risk. The registry rules change, as the mid-scale and battery expansions show.
What this means for installers
You are choosing a counterparty as much as a rate. A trader that is well capitalised, checks claims and has been in the market a long time is less likely to leave you chasing money. Energy Merchants is backed by REC Traders, which has been trading since 2004; rates are on pricing, and the switch page and choosing a certificate trader help with comparisons.