An STC, or small-scale technology certificate, is a government-created certificate that represents one megawatt-hour (MWh) of renewable electricity that a small system is deemed to produce or displace. Install an eligible rooftop solar array, home battery, solar hot water system or heat pump, and the owner becomes entitled to a number of these certificates. That number is the “rebate” most people talk about.
The certificate is a real, tradable asset. Someone has to create it in the Clean Energy Regulator’s REC Registry, and someone has to buy it. In practice the owner hands the entitlement to the installer, the installer sells the certificates to a trader or the regulator’s clearing house, and the cash comes back to the customer as a lower upfront price. This article explains each link in that chain in plain terms.
What one STC represents
One STC equals 1 MWh, which is 1,000 kWh. For rooftop solar the number is not metered from your roof. It is calculated up front from the system size, the solar zone for the postcode and a “deeming period”, the number of years of output the scheme credits in advance. For 2026 installs that period is five years.
So a 6.6 kW system in zone 3 (rating 1.382) is deemed to produce 6.6 x 1.382 x 5 = 45.6 MWh over the period. STCs are rounded down, so the system earns 45 certificates. The full method, zone by zone, is in our guide to how many STCs a solar system gets.
Where the certificates come from
The Small-scale Renewable Energy Scheme sits inside the Renewable Energy Target. Parliament set a legislated target for renewable generation, and the scheme is the part aimed at household and small business systems under 100 kW, now extended to mid-scale solar up to 1 MW for installs from 1 October 2026. Instead of paying a cheque, the government created a market: the people who benefit from cleaner generation, electricity retailers, are legally required to buy certificates.
Those retailers are called liable entities. Each year they must surrender enough STCs to cover their share of the electricity they sell. Because they have to buy, there is always demand, and that demand is what funds the discount on your quote.
Who creates and who buys
| Step | Who | What happens |
|---|---|---|
| Install | Accredited installer | System goes in, evidence is captured |
| Assign | System owner | Signs over the right to the certificates |
| Create | Installer or registered agent | Claim is created in the REC Registry |
| Validate | Clean Energy Regulator | Claim is checked and registered |
| Sell | Installer or agent | Certificates go to a trader or the clearing house |
| Surrender | Liable entity | Retailer cancels STCs against its obligation |
Certificates must be created within 12 months of the installation date or the entitlement lapses. The deadline is the reason well-run installers do not sit on paperwork.
Why the price is capped near $40
The regulator runs a clearing house that buys STCs at a fixed $40 each (ex GST), first in, first served. It acts as a ceiling: nobody sensible sells on the open market for much less than $40 for long if they can wait for the clearing house, and nobody pays more than $40 when buyers can purchase there. At the time of writing the spot market has traded roughly $38 to $40.
The catch with the clearing house is time. Payment is not quick, and you are not given a negotiated settlement date. Open-market buyers pay a slightly lower rate in return for speed and certainty. That trade-off is the whole business of certificate trading, covered in STC trading explained.
From certificate to discount on a quote
Say the 45 STCs from our 6.6 kW example sell at $38 each. That is $1,710. If the customer assigns the certificates to the installer, the quote shows the system price with $1,710 already taken off. The installer is, in effect, financing the discount until the certificates are sold, which is why settlement speed matters to a small business. Our answer on how an STC discount appears on a quote shows the usual layout.
What STCs are not
They are not a government payment to the household, they are not income in the way wages are, and they do not pay out over time like a feed-in tariff. They are not available above 1 MW (larger generation earns LGCs, a different certificate); solar from 100 kW to 1 MW installed from 1 October 2026 creates STCs with a fixed five-year deeming period, as covered in mid-scale solar STCs. Nor are they permanent: the scheme ends on 31 December 2030, and the deeming period shrinks by one year each January until then. See STC deeming period 2027: what changes in January.
Common questions installers hear
“Is it a tax credit?” No. It is a certificate sold on a market, and the sale is a taxable supply for the seller. Customers who assign their certificates to the installer do not receive a payment; they receive a lower price. The answer on whether the solar rebate is taxable covers the household side.
“Can the customer see what the certificates are worth?” They can, and increasingly they ask. A good quote lists the STC count and the dollar value assumed per certificate, so a customer can see why the net price moves when the market moves.
“Why not just give everyone a flat rebate?” The market design means the cost sits with retailers, not taxpayers, and the amount scales with the size of the system and the sunshine it receives. A 13 kW system in zone 1 earns more than twice a 5 kW system in zone 4 because it is expected to produce more.
A small worked comparison
Take two houses. House A is a 6.6 kW system in Brisbane (zone 3), House B is the same system in Alice Springs (zone 1). Both are installed in 2026 and both earn certificates over five deemed years.
- House A: 6.6 x 1.382 x 5 = 45.6, so 45 STCs, about $1,710 at $38.
- House B: 6.6 x 1.622 x 5 = 53.5, so 53 STCs, about $2,014 at $38.
The panels are identical. The only difference is where they sit. That is why a single flat “solar rebate” figure on a national advertisement is always an approximation, and why a quote should name the zone. The same logic is what makes the number of STCs a system gets predictable enough to quote before you have even visited the roof.
What to do next
If you are an installer, learn the registry side of the process in our STC trading pillar and work through how it works. If you want today’s market number, see what an STC is worth in 2026 and the pricing page. For the definition in a single paragraph, the glossary has it.