The 1 January 2027 STC Step-Down: What It Means for Solar Installers' Cash Flow

Oct 12

4 min read

On 1 January 2027 the deeming period for small-scale solar drops from 5 years to 4. That one change cuts the number of STCs a typical rooftop system earns by about a fifth, and the point-of-sale discount your customers see drops with it. Battery STCs step down on the same day.

For a solar installer that assigns STCs at the point of sale, this is a cash-flow event, not just a pricing change. Here's what to check before Christmas.

If you want the accounting side of certificates first, our guide on accounting for STCs and LGCs covers how to recognise them.

The figures from the Clean Energy Regulator

The Clean Energy Regulator sets the deeming period by installation year. It falls by one year every year until the scheme ends in 2030:

Installed in 2026: 5 years
Installed in 2027: 4 years
Installed in 2028: 3 years
Installed in 2029: 2 years
Installed in 2030: 1 year

The STCs a solar system earns depend on the system type, its capacity in kW, its location, the installation date and the deeming period. Location and size don't change on 1 January, so the drop from 5 years to 4 is a straight 20% cut for the same system on the same roof.

Batteries work differently. They have no deeming period. Instead the CER sets an STC factor per kWh of usable capacity, which falls in steps:

May to December 2026: 6.8 STCs per kWh
January to June 2027: 5.7
July to December 2027: 5.2

The full factor applies to the first 14 kWh, 60% to capacity above 14 and up to 28 kWh, and 15% above 28 and up to 50 kWh. The drop from 6.8 to 5.7 is about 16%.

What that looks like on a job

Take a rooftop system that would create 100 STCs if it's installed in December. Install the same system in January and it creates about 80. At the STC clearing house price of $40 excluding GST, that's roughly $800 less per job.

Add a 13.5 kWh battery. At 6.8 per kWh it earns about 92 STCs before rounding. At 5.7 it's about 77. That's another 15 or so certificates, roughly $600 at $40.

The clearing house price is the ceiling the CER sets, not a guaranteed sale price. Open market prices move daily, so use your own recent sale prices when you run these numbers.

1. It's the installation date that counts

The deeming period follows the year the system is installed, not the year the STCs are created or sold. You have 12 months from the installation date to create the certificates in the REC Registry, but a job installed on 4 January gets the 2027 figures even if it was quoted and deposited in November.

So every job sitting in your pipeline with a December install date is exposed. Rain, a late inverter delivery or a DNSP approval that drags on can push it into January.

2. Check what your quotes promise

Most installer quotes show the price after the STC discount. If the quote locks that number in and the install slips into January, you wear the difference.

Look at your quote and contract wording now. A sentence saying the STC discount is based on the CER figures at the date of installation, and may change if the installation date moves into a new period, gives you a basis to adjust. Speak to your lawyer about the exact wording for your terms.

3. GST is still on the full price

This catches people out. The ATO's position is that the installer works out GST on the full price of the system and installation, not the discounted price the customer pays. The STC discount is treated as a separate assignment of certificates.

You can only claim a GST credit on that assignment if the system owner is registered (or required to be registered) for GST and the system is used in their business. A homeowner's assignment carries no GST credit. A business customer assigning STCs to you should give you a tax invoice when the amount is more than $82.50 including GST.

If your invoicing system calculates GST on the discounted figure, your BAS is understated, and the bigger December rush makes that error bigger too.

4. Plan for a December peak and a January dip

Expect customers to push for December installs. That can mean:

More STCs created in December and January, sitting with you until they sell
More labour and stock paid out in December
A slower January as demand resets to the lower discount

If you sell through the clearing house, the CER says there's no guarantee how long STCs take to sell. If you sell on the open market, the price can move between creation and sale. Either way, the cash for a December install can land well after you've paid for panels, inverters and wages.

5. Reforecast 2027 now

Build your 2027 forecast with 4-year deeming for solar and the 2027 battery factors. The cut repeats on 1 January 2028 (down to 3 years) and the battery factor falls again in July 2027. Margins built on 2026 STC values will look worse each year unless pricing, mix or costs change.

A 13-week rolling cash flow is the simplest way to see the December and January gap before it hits. Our 13-week cash flow model works the same way for solar as it does for builders.

A quick check for this week

List every job with an install date from 1 December onwards and what STC value each quote assumes.
Read your quote and contract terms on who carries the STC risk if a job slips.
Check your invoices calculate GST on the full price before the STC discount.
Ask your STC buyer or agent how long settlement is taking right now.
Update your 2027 price list and forecast with the new STC values.

Talk to a CPA

TechEdge is a CPA-led outsourced finance team for Australian solar, renewables, EPC and construction businesses. We set up STC tracking, GST and cash flow forecasting as part of our Finance Manager and Financial Controller engagements. See how we work with solar installers.

Book a free 30-minute call with a CPA, email info@techedgeaccounting.com.au or call +61 468 634 973.

This article is general information only and is not financial, tax or legal advice. Figures are from the Clean Energy Regulator and ATO websites as at 12 October 2026. Check those sites or speak to your adviser about your own circumstances.