The calculation is a straightforward ratio, but each input hides a judgement call.
The formula
The Clean Energy Regulator publishes the method as: (STC creation estimate + cumulative adjustment) divided by (relevant acquisitions minus exemptions), times 100.
For 2026 that works out as (24,100,000 minus 2,617,218) divided by (219,610,453 minus 35,462,777), times 100, giving 11.67 per cent. In words: take the number of STCs expected to be created, correct for earlier mismatches, and spread that over the liable electricity that retailers will acquire, after exemptions.
The inputs
STC creation estimate. The regulator commissions independent modelling of rooftop solar, hot water and heat pump installations, using forecasts of installations, system sizes and deeming periods. The January 2026 projections underpin the 2026 estimate of 24.1 million STCs, excluding those created under the Cheaper Home Batteries Program.
Cumulative adjustment. If liable entities surrendered too many or too few certificates in earlier years, the difference is rolled into the next calculation. In 2026 the adjustment reduces the target by about 2.6 million certificates.
Relevant acquisitions. The total electricity acquired by liable entities for retail load, in MWh.
Exemptions. Electricity that is exempt from the obligation, such as some emissions-intensive trade-exposed activities, is excluded.
Who sets it
The percentage is not chosen by the regulator alone. The regulator produces the estimate, and the binding STP is set by the Minister by 31 March of the compliance year. The regulator then publishes it. Because the process is formulaic, the regulator and the Minister are not negotiating a price. They are confirming a calculation.
Why there is a cumulative adjustment
Without it, forecasting errors would pile up. If the regulator over-forecast creation, retailers would have been forced to buy too many certificates and the surplus would never be used. The adjustment cancels that out over time. It also explains why the series swings, as you can see in the STP by year table.
What it means for the market
Accurate forecasting keeps the market balanced, but errors cause price moves. We explain how forecasting accuracy feeds through to the spot price in what drives STC prices.
A worked reading of the 2026 numbers
The 2026 inputs show how the pieces fit. The estimate of 24.1 million certificates is reduced by a cumulative adjustment of about 2.6 million, leaving roughly 21.5 million to be surrendered. Relevant acquisitions of about 219.6 million MWh, less roughly 35.5 million MWh of exemptions, leave about 184.1 million MWh of liable electricity. Divide 21.5 million by 184.1 million and the result is 11.67 per cent. A one-million change in the creation estimate moves the STP by about half a percentage point, which shows how sensitive the figure is to the forecast.
What this means for installers
Behind the formula is a simple promise: the scheme is built to buy the certificates you create. For your own claims, the numbers that matter are system size, zone and deeming period; use the STC calculator and the STC formula explained. For market context, see how STC trading works and the pricing page.