Government rebates
One of the reasons we are able to provide the Midea heat pumps at such a great price is because they generate renewable energy credits, and these are worth around $800 at current prices.
How are renewable energy credits created?
They are created under the Australian Government’s Small-scale Renewable Energy Scheme, which is part of the Renewable Energy Target (the RET). Under this scheme individuals can receive a financial benefit for installing small-scale renewable energy systems. These include rooftop solar systems, solar water heaters and heat pump water heaters.
Entities such as electricity retailers have to purchase these credits (known as Small-scale technology certificates or STCs) so that they can meet their renewable energy targets.
How many credits do heat pumps earn?
Each type of heat pump is tested to see how much electricity it would consume over a 10-year period. This is compared to the electricity a standard electric hot water system would use.
In the case of the Midea HP170 and HP280 heat pumps in Climate Zone 3 (which includes Sydney), the testing found that they would use 28,000 kWh or 28 megawatt hours less electricity than a standard electric water heater over a 10-year period.
Each megawatt hour of avoided electricity is worth one STC. And so, every time a Midea heat pump is installed in Sydney, 28 STCs can be created.
What do you do with the STCs?
We sell the STCs on the open market. How much we get depends on the going rate, which is currently around $35 per STC.
If you do the maths, we might receive about $900 – 950. If we receive more than the $800 we pay you, this helps pay the administration costs that arise from trading STCs. If we receive less, well, that’s the way it goes.