This article was originally published by Green Energy Markets.
The level of solar installations registering Small-scale Technology Certificates (STCs) in 2014 was 13 per cent above the STC target. Both solar PV and solar hot water installations were higher than the level incorporated into the 2014 target.
Solar PV installations creating STCs amounted to approximately 816 MW (7 per cent higher than the target level); and
60,000 solar hot water systems created STCs in 2014 (27 per cent higher than target).
Having reached the end of 2014 we have assessed how the solar industry has performed in meeting the 2014 STC Target. The Small-scale Renewable Scheme (SRES) comprises a self-correcting target. The target is determined based on an estimate of the likely level of STCs to be registered for the year and adjusted for any surplus or deficit from the previous year. The STC target for 2014 was 18.66 million STCs which comprised an estimate of 16.71 million to be registered in 2014 together with 1.95 million surplus STCs carried forward from 2013. The 16.71 million STC target for 2014 translates into solar PV installations of approximately 761 MW and 47,300 SWH systems.
STC registrations above target
A total of 18.85 million STCs were registered in 2014 (Figure 1). This was 12.8 per cent (2.14 million) more than the estimated level of registrations (16.71 million) that was incorporated into the 2014 STC Target.
The actual level of valid STCs submitted for registration in 2014 was 18.17 million, which was somewhat lower than the number of STCs actually approved. The Clean Energy Regulator (CER) upgraded its registry in September 2014 which speeded up certificate registration and resulted in a significant reduction in the number of STCs that were pending registration. There were only 584,000 STCs pending registration at the end of 2014 compared to 1.26 million at the end of 2013. This means that there were 676,000 more STCs registered during 2014 than initially expected.
The level of STCs submitted for registration by the market was reasonably stable throughout 2014 (green bars in Figure 2) with a slight increase towards the end of the year. The level of STCs that gets approved or registered by the CER (blue bars in Figure 2) varies considerably on a week to week basis and increased noticeably from September 2014 (post registry upgrade).
Level of surplus STCs and falling electricity sales
At the end of 2014 there were 2.77 million registered STCs in excess of that required to meet the 2014 target. In addition there were 578,000 STCs that were pending registration of which 351,000 had been approved and were just awaiting the payment of the registration fee.
Liable Parties need to surrender STCs in proportion to their electricity sales. This proportion is defined as the Small-scale Technology Percentage (STP) and is set at the beginning of each year. There has been a reduction in electricity demand over recent years and this has resulted in less STCs being surrendered.
Electricity demand has continued to fall in 2014. In the National Electricity Market (NEM) electricity consumption reduced by 1.1 per cent in 2014. A large proportion of the reduction is due to reduced power use by energy intensive industry which have partial exemption from meeting the STC Target. The effective under-surrender of STCs for 2014 may therefore be considerably lower and in the range of 0.1 to 0.4 million STCs.
The surplus that gets carried forward into 2015 is estimated to be at least 2.77 million, however the surplus that the market sees is higher than this as:
there is likely to be an under-surrender of STCs in 2014 due to falling electricity demand (between 0.1 and 0.4 million STCs); and
578,000 STCs were pending registration at the end of 2014. Most of these are expected to be approved and available in time to be used to meet the 2014 fourth quarter surrender requirement by 14 February 2015.
As a result the surplus of STCs in the market at the end of 2014 is 3.6 million STCs. Of these 404,000 were lodged in the Clearing House.