source: Clean Energy Regulator
STP Percentage - STC Target
This means liable entities (generally electricity retailers) are required to surrender approximately 37.9 million small-scale technology certificates (STCs) to meet their Small-scale Renewable Energy Scheme (SRES) obligations for 2024.
Contents
- About the small-scale technology percentage
- Setting the small-scale technology percentage
- Calculating the small-scale technology percentage
- Non-binding small-scale technology percentage
- Previous small-scale technology percentages
About the small-scale technology percentage
The SRES creates a financial incentive for individuals and small businesses to install eligible small-scale renewable energy systems such as solar panel systems, solar water heaters and air source heat pumps. It aims to balance supply and demand by requiring all STCs that are created to be surrendered over time. To do this each year, the STP is set and liable entities are required to surrender STCs equal to the amount estimated to be created in that year, plus or minus an adjustment for previous under or over surrenders.
The number of STCs each liable entity is required to source and surrender each year is calculated by multiplying the amount of wholesale electricity (relevant acquisitions) they acquire (minus exemptions) by the STP for that compliance year. Liable entities surrender STCs quarterly to the agency to meet their Renewable Energy Target (RET) obligations.
The Quarterly Carbon Market Report provides regular information on the markets the agency administers, including STC creation trends and whether a surplus or deficit is likely to emerge for the year.
Setting the small-scale technology percentage
Each year the agency recommends a percentage to the Minister for Climate Change and Energy using data or estimates for matters the minister must consider, as set out in the Renewable Energy (Electricity) Act 2000 (the Act). These matters are:
- estimated STC creations for the year
- estimated relevant acquisitions of electricity for the year
- the cumulative adjustment (the difference between previous STC creations and surrenders)
- estimated exemptions.
The minister may also consider other matters when determining the STP.
The STP must be set by regulation by 31 March of the setting year, otherwise a default percentage is applied.
Estimated STC creations for the year
The STC creation estimate is the average of consultants' forecasts (see the consultants' modelling reports). For 2024, the estimated number of STC creations is 33.6 million.
For creations in 2023, this figure is based on data to 31 October 2023 and the Clean Energy Regulator's (CER) estimate of STC creations for the remainder of 2023.
Estimated relevant acquisitions of electricity for the year
Relevant acquisitions of electricity are wholesale electricity purchases by a liable entity, as defined in the Act. These are estimated based on the sum of acquisitions reported by liable entities in the REC Registry 2 years prior to the setting year, rounded to the nearest 100,000 megawatt hours (MWh).
Data 2 years prior is used because compliance and assessment activities for that year have been completed and the number is unlikely to change. This process assumes electricity demand remains relatively stable, in line with the Australian Energy Market Operator's predictions.
Under or over-estimating relevant acquisitions and exemptions has a relatively minor impact on the STP calculation. Estimated relevant acquisitions of electricity for 2022, used in the 2024 STP calculation, are 214,000,000 MWh.
Cumulative adjustment
The cumulative adjustment accounts for over or under supply of STCs in previous years. It equals the sum of all STCs created minus the sum of all STCs surrendered, since the SRES started. The cumulative adjustment is added to the STC creations estimate.
In 2023 STC creations were significantly higher than required surrenders. This resulted in a positive cumulative adjustment for the 2024 STP calculation. The 2024 STP cumulative adjustment is 4,328,821 STCs.
Other considerations included in the cumulative adjustment are the:
- 659,564 STCs converted to Large Scale Certificates (LGCs) when the RET was split into the Large-scale Renewable Energy Target and SRES.
- 547,701 STCs flagged in the REC registry as voluntarily surrendered, over the life of the SRES.
Estimated exemptions
Businesses receive exemption certificates (in MWh) for electricity used in emissions-intensive trade-exposed (EITE) activities. Businesses exchange these certificates with their electricity retailer to reduce electricity costs. The electricity retailer surrenders exemption certificates to the agency to reduce their RET liability.
Each year we estimate the EITE exemptions and deduct this amount from the acquired electricity estimate for that year. Like relevant acquisitions, data 2 years prior to the setting year are used as they are unlikely to change.
Estimated EITE exemptions for 2022, used in the 2024 STP calculation, are 35,600,000 MWh.
Calculating the small-scale technology percentage
The matters the minister must consider when setting the STP are expressed by the formula:
For the purpose of calculating the STP, 1 MWh of electricity is equivalent to 1 STC.
The 2024 STP calculation is:
Default small-scale technology percentage
If the STP is not set by 31 March in the setting year, a default value automatically comes into force. To date the default STP has not been applied.
Non-binding small-scale technology percentage
The Act requires the agency to publish non-binding STPs for the 2 years following the setting year. The non-binding STP is intended to give an indication of what the STP could be in those years. This is not accurate in years when there is a large difference between STC creations and STC estimates. Non-binding estimates should be considered a general guide only.
The non-binding STPs do not bind the CER or affect the determination of a liable entity's liability in those years.
The non-binding STP is calculated using the following formula. As with the STP, STC creations are the average of consultants' forecasts (see modelling reports). For 2025, this is 28.8 million STCs and for 2026 it is 23.9 million STCs.
