If you've ever received a quote for solar panels in Australia, you've probably seen a line item for "STC discount" or "government rebate" that knocks thousands of dollars off the price. But what exactly are STCs, how are they calculated, and how much will they save you? This guide explains the federal solar rebate system in plain English.
What Are STCs?
STC stands for Small-scale Technology Certificate. STCs are tradeable certificates created under the federal government's Small-scale Renewable Energy Scheme (SRES). When you install an eligible solar panel system (or heat pump hot water system), a certain number of STCs are generated based on the amount of renewable energy the system is expected to produce over its lifetime.
These certificates have monetary value because large electricity retailers are required by law to buy a certain number of them each year. This creates demand, which gives STCs a market price — currently around $39 per certificate.
How Many STCs Does Your System Generate?
The number of STCs your solar system generates depends on three factors:
- System size (kW): Larger systems generate more STCs.
- Zone rating: Australia is divided into four solar zones based on solar radiation levels. Zone 1 (highest radiation, e.g., far north Queensland) generates the most STCs per kW. Zone 4 (lowest, e.g., Tasmania) generates the fewest.
- Deeming period: The number of years remaining until 2030, when the scheme ends. In 2026, there are 4 years of deeming remaining — meaning fewer STCs are generated now than in previous years.
The formula is: System size (kW) × Zone rating × Deeming period (years to 2030) = Number of STCs
STC Zones and Ratings
| Zone | Rating (MWh/kW) | Typical Locations |
|---|---|---|
| Zone 1 | 1.622 | Far north QLD, NT top end |
| Zone 2 | 1.536 | Most of QLD, NT, northern WA |
| Zone 3 | 1.382 | Sydney, Melbourne, Adelaide, Perth, Brisbane, ACT |
| Zone 4 | 1.185 | Tasmania, parts of southern VIC |
STC Value Examples for 2026
Here's what typical solar systems generate in STCs in 2026 (with 4 years of deeming remaining), assuming a certificate price of $39:
| System Size | Zone 3 STCs | Approx. Value | Zone 1 STCs | Approx. Value |
|---|---|---|---|---|
| 5kW | ~28 | ~$1,090 | ~32 | ~$1,250 |
| 6.6kW | ~36 | ~$1,400 | ~43 | ~$1,680 |
| 10kW | ~55 | ~$2,150 | ~65 | ~$2,540 |
| 13kW | ~72 | ~$2,810 | ~84 | ~$3,280 |
The Deeming Period Reduction
When the SRES launched, systems installed could claim STCs for the full period until 2030. A system installed in 2020 would receive 10 years' worth of deemed generation. In 2026, that drops to just 4 years. Here's how the deeming period has reduced:
| Installation Year | Deeming Years | Relative STC Value |
|---|---|---|
| 2020 | 10 years | 100% |
| 2022 | 8 years | 80% |
| 2024 | 6 years | 60% |
| 2026 | 4 years | 40% |
| 2028 | 2 years | 20% |
| 2030 | 1 year | 10% |
This declining rebate is by design — it encourages early adoption while gradually phasing out subsidies as solar becomes more affordable. The good news is that solar panel prices have also dropped significantly over the same period, partly offsetting the reduced rebate.
How Installers Handle STCs
In almost all cases, your solar installer handles the STC process for you. Here's how it typically works:
- Point-of-sale discount: The installer calculates the number of STCs your system will generate and deducts their value from your quote upfront. The price you see is usually the "after STC" price.
- Assignment: You sign a form assigning the right to create those STCs to the installer (or their STC aggregator). The installer then creates and sells the certificates on the open market to recoup the discount they gave you.
- No paperwork for you: You don't need to create, register, or sell STCs yourself. The entire process happens behind the scenes.
STCs for Heat Pump Hot Water
STCs aren't just for solar panels. Heat pump hot water systems that replace electric resistance or gas hot water systems also generate STCs. A typical heat pump generates 25–30 STCs, worth approximately $1,000–$1,200. This is applied as a point-of-sale discount, just like solar STCs, reducing the upfront cost of a heat pump from $3,500–$4,500 down to $2,500–$3,500.
Should You Wait or Install Now?
Given that the STC rebate decreases every year, waiting means a smaller discount. However, solar panel and heat pump prices also tend to fall over time. On balance, installing sooner is almost always better — the energy savings you gain from each year of operation typically outweigh any future price reductions. Every year you delay is a year of electricity you're buying from the grid instead of generating for free.
Use our solar calculator to see your specific STC entitlement and estimated payback period based on your location, system size, and current electricity rates.