Government Financial Incentives
What are the government financial incentives for solar systems?
The government financial incentives help you with the costs of purchasing a solar system. Some of the incentives vary from state to state.
Government financial incentives do two main things:
1. Reduce the up-front cost of your solar system. Most residential systems are eligible for these financial incentives.
2. Contribute credits from any power your solar system exports to the grid.
Small Scale Energy Certificates (STC’s)
The main government financial incentive is provided to you in the form of STC’s.
When solar systems are commissioned they generate STC’s. The number of STC’s generated depends on the panel capacity of your solar system. You can check how many STC’s you may be eligible for by using the STC calculator website located here.
A typical 6.6 kilowatt system installed before December 31 2020 will be eligible for around 100 STC’s valued at approx. $37 each. The value of STC’s can vary over time. 1 STC is equal to a megawatt hour of electricity. This results in a total value of around $3700, which your solar retailer will deduct from the overall system price. The eligible STC’s reduce every year on Dec 31, and will be zero in 2031.
Feed in Tariff (FiT)
The FiT is the other main form of financial incentive. Your inverter will direct solar power as it is produced to the appliances in your premises first. Any excess power will be directed out of your premises to the electricity grid. Your meter detects these movements in power, with a payment made by your solar retailer for every unit of electricity exported to the grid. This can vary from $0 to $0.15 per kilowatt hour. Check with your retailer what they are offering, and ensure the correct amounts are being credited to your bill after you install solar.
Caution should be used when you see a very generous FiT. Usually, there will be other tariff rates in the contract that may offset the FiT. For example, the contract may have a high peak rate of $0.50 per unit for any power consumed from the grid during peak day times.