First Quarter STC target easily reached

29 Apr 2011

The small-scale renewable energy scheme has now completed its first compliance quarter. Liable parties were required to surrender 35% of the 28 million annual STC target by 28 April 2011- notionally 9.8 million.An analysis of the STC Registry on 28 April 2011 shows that:

• A total of 12.1 million STCs were approved and registered by the regulator
• Of these, 8.8 million had been surrendered by liable parties to meet their first quarter liability
• A total of 118,000 STCs had been purchased and settled through the clearing house, this represented 1.3% of the total STCs surrendered
• 3.3 million STCs remained in surplus and of these 750,000 STCs remained in the clearing house and were not settled
• A further 2.8 million STCs had been submitted to the regulator and had not yet been approved

Some interesting observations:

• The 8.8 million surrendered STCs are more than 1.0 million short of the 9.8 million target for the first quarter (10% lower). This is due to some liable parties seeking to reduce their liability where they can demonstrate that their electricity sales in 2011 were less than their 2010 sales. STCs to be surrendered for the first three quarters of the yearare based on the previous year’s sales with a truing up occurring in the fourth quarter surrender on 14th February based on actual electricity sales for 2011. In addition, some liable parties may not have surrendered sufficient certificates in time and will be required to pay the penalty of $65 per STC.
• Including certificates pending registration, there is a total of 6.1 million STCs that will be available to meet the second quarter’s notional target of 7 million. The second quarter’s target could be as low 6.3 million based on the 10% reduction experienced in the first quarter.
• The large surplus of STCs in the market means that it will be a very long time until the clearing house comes into play in any meaningful way. The wholesale STC price has fallen considerably over the last two weeks with the wholesale spot price on Thursday 28th April reaching a low of $26.