Recent fluctuations in the STC market has impacted everyone involved in the solar industry of late. These movements were anticipated after the release of the 2017 STP in April and a drop expected around June / July.
The STP, or Small-scale Technology Percentage, is established by the Clean Energy Regulator to adequately manage the approach to the 2020 Renewable Energy Target (RET). Each year, a quota of certificates is set for the surrendering entities (energy retailers, mining companies etc.) who are forced, under the RET legislation, to purchase RECs from the either the market or the clearing house.
This year, this percentage has been set a lot lower than it had historically. Essentially, this means not as many certificates are required for surrender and we can assume we are on track to reach the RET in 2020. A reduction in purchasing requirement means demand decreases. Add to this a huge number of certificates already available in the market and a continuing, strong amount of investment in both domestic and commercial solar, and the circumstances for a reduction in the value of STCs is evident.
So where to from here? Emerging Energy is forecasting a short-term spike in the coming fortnight followed by an adjustment downwards. With a large number of certificates available to the liable entities, they are in a position to dictate pricing once again, likely pushing it downwards. Our expectation is for a leveling out in the low $30 range into the back end of 2017.