Solar rebates, STCs and feed‑in tariffs in your finance plan

Solar rebates, small‑scale technology certificates (STCs) and solar feed‑in tariffs all reduce the real cost of going solar – but they work very differently, and they don’t all show up the way you think in a bank’s calculator. To shape a smart finance plan, you need to know which incentives reduce your loan amount today, which help cashflow over time, and how conservative to be in your numbers.

This guide breaks down the moving parts in plain English and shows you exactly how to plug them into a home, investment or business finance plan you can act on this week.

STCs and state rebates reduce the net solar price you actually need to fund.

1. The three main solar incentives – and what they actually do

1.1 Quick definitions

In Australia, the main incentives most households and small businesses deal with are:

1. STCs (small‑scale technology certificates) – a federal scheme that effectively acts like an upfront rebate for systems up to 100 kW.
2. State or territory solar rebates – one‑off grants or discounts that further cut the upfront price, sometimes means‑tested.
3. Solar feed‑in tariffs (FiTs) – credits your retailer pays you for excess solar you export to the grid.

For finance planning, think of STCs and rebates as reducing the price you need to finance, and FiTs as improving ongoing cashflow, alongside your reduced power bills.

1.2 How STCs work in practice

Under the Small‑scale Renewable Energy Scheme, eligible solar systems earn STCs based on:

• System size (kW)
• Your postcode "zone" (how sunny it is)
• Years remaining until the scheme phases out (scheduled 2030)

Most installers handle STCs for you. They quote a "price after STC discount", meaning they take ownership of the certificates and knock the value off the invoice.

So if the headline system price is $12,000 and STCs are worth $3,500, you’ll usually see it as a $8,500 quote. From a finance point of view, $8,500 is the cash price you’ll actually need to pay or borrow.

For finance, treat STCs as an automatic price reduction, not extra cash you can spend elsewhere.

1.3 How feed‑in tariffs really behave

Feed‑in tariffs are retailer credits per kWh of electricity you export. In recent years:

• Typical FiTs in many states have fallen into ~5–12c/kWh ranges (exact rates vary by retailer and plan and change frequently).
• Your usage tariff (what you pay for power) is usually much higher – say 25–40c/kWh or more.

That means bill savings from self‑consumption are usually worth more than export credits. For finance planning, FiTs are a nice extra, but your main payback comes from using your own solar instead of buying grid power.

Lenders know FiTs can change. They’re unlikely to give you much, if any, extra borrowing capacity just because you say, "I’ll get $800 a year in feed‑in credits." So treat FiTs as a buffer, not something to rely on for serviceability.

2. How solar incentives change your loan amount – with examples

2.1 The basic equation

When planning finance, your effective out‑of‑pocket system cost is:

Net solar cost = Cash price after STCs – state rebates – any installer discounts – any cash you contribute

This net cost is what you might pay in cash, add as a home loan top‑up, or fund with a green loan or business facility.

As highlighted in [/insights/green-loan-vs-home-loan-top-up-solar], a robust solar finance decision always compares total interest over the loan term, not just the rate.

2.2 Worked example – homeowner with a large mortgage

Assumptions (illustrative only):

• Headline system price: $12,000
• STCs handled by installer: worth $3,500
• State rebate: $1,500 (credited on invoice)
• Your cash contribution: $1,000

Step 1 – Net system cost

• Price after STC discount: $8,500
• Less state rebate: $1,500
• Less your cash: $1,000
• Amount to finance: $6,000

Now your decision is how to fund that $6,000. Options might include:

• Top up your home loan for $6,000 over 25 years
• Take a 7‑year green loan for $6,000
• Use a split approach (e.g., $3,000 cash, $3,000 finance)

In line with our existing guidance, you should model total interest paid under each option, then compare it to conservative bill savings (see Section 4).

2.3 Investors and small business – different tax and cashflow angles

For investors and small businesses, a few extra twists matter:

• Depreciation and deductions – Solar used to produce assessable income (rental property or business) may be depreciable or deductible under ATO rules. Seek tax advice.
• Loan purpose – As outlined in [/insights/restructure-home-loan-maximise-tax-deductible-interest], interest deductibility depends on what the money is used for, not which property secures the loan.
• Loan splits – Keeping a clear split for investment/business solar borrowing can protect legitimate deductions and simplify future planning.

For example, if you add a $10,000 solar system to an investment property:

• The system cost after STCs and rebates might be $6,500.
• A dedicated investment loan split of $6,500, clearly used to pay the solar invoice, can help maintain deductibility clarity (subject to tax advice).