Australian businesses, farms, and community organisations are set to benefit from a significant reduction in solar installation costs, with the federal government expanding the Small-scale Renewable Energy Scheme (SRES) to cover larger systems. Announced on August 5, 2026, the reform is anticipated to cut the upfront cost of eligible mid-scale solar systems by approximately 20% for commercial and industrial energy users, with implementation slated for October 1, 2026, pending final regulations.
Previously, the SRES scheme primarily supported rooftop solar installations up to 100 kilowatts (kW), leaving a ‘missing middle’ of larger commercial and industrial operations unable to access the same level of financial incentive as residential customers. This new policy extends eligibility to solar photovoltaic (PV) systems with a total onsite capacity between 100 kW and 1 megawatt (MW), allowing them to create small-scale technology certificates (STCs). Systems larger than 100 kW were previously only eligible for large-scale generation certificates (LGCs), which operate under different market dynamics.
Minister for Climate Change and Energy, Chris Bowen, stated that the change aims to allow more businesses and communities to realise the benefits from solar that households already enjoy. “We’re putting more rooftops to work and helping businesses, farms and community organisations cut energy costs by slashing the cost of installing medium-sized solar systems by around 20 per cent,” Minister Bowen said.
Significant Savings for Commercial and Industrial Users
The expansion is a direct response to the disparity in solar uptake between residential and commercial sectors. While one in three Australian homes now have rooftop solar, commercial and industrial businesses have installed significantly less, largely due to the previous rebate limitations. According to the Institute for Energy Economics and Financial Analysis, Australia’s residential solar capacity stands at 22 gigawatts (GW), compared to only about 5.6 GW for businesses, with most of that being systems under 100 kW.
This policy shift is expected to unlock substantial savings for a broad range of entities, including manufacturers, farmers, retailers, schools, hospitals, and community facilities. For example, a 250 kW system installed at a medium-sized business could generate approximately 345 MWh of electricity annually, potentially leading to yearly electricity cost savings of around AUD$50,000. An even larger 850 kW system could produce about 1,173 MWh annually, delivering estimated yearly savings of around AUD$175,000.
“Eligible projects are expected to receive an upfront discount of approximately 20 per cent, helping organisations reduce and stabilise their energy costs.”
Impact on Energy Bills and Grid Stability
The ability for businesses to generate more electricity at their point of consumption is anticipated to reduce pressure on the broader electricity networks and assist in managing periods of high demand. This decentralised generation contributes to a more resilient and stable grid, particularly as Australia transitions away from coal-fired power. The Clean Energy Regulator (CER) will administer the expanded scheme, which is expected to be budget neutral, with additional compliance costs estimated at only AUD$1 to AUD$2 annually.
The move is also seen as a catalyst for community solar projects, enabling regional communities to generate more of their own energy and share in the economic and energy security benefits. Fast, high-quality solar builds designed for regional conditions can support local employment and strengthen energy resilience. For businesses looking to optimise their energy strategy, understanding the nuances of different electricity plans remains crucial. You can find comprehensive guidance on Choosing Your Australian Energy Provider in 2026: A Definitive Guide to ensure you are on the best possible tariff.
Broader Policy Context
The federal government is also working to improve network connection processes for mid-scale solar projects through targeted regulatory changes. This complements broader efforts to accelerate Australia’s clean energy transition, though challenges remain in meeting ambitious renewable energy targets. A recent Bloomberg New Energy Finance (BNEF) report, published on August 4, 2026, indicated that Australia faces hurdles in reaching its 82% renewable energy target by 2030, citing issues with wind development, permitting, and grid connections.
However, the expansion of the SRES for commercial and industrial applications demonstrates a concrete step towards addressing these challenges by fostering increased distributed generation. This initiative directly supports Australia’s goal of reducing greenhouse gas emissions in the electricity sector and increasing renewable electricity generation under the Renewable Energy Target (RET). Businesses considering larger solar installations can now factor in significant upfront savings, making the transition to clean energy more financially viable. Furthermore, combining solar with energy storage solutions can maximise self-consumption and further reduce reliance on grid electricity. For information on battery options, refer to our guide on Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates, many principles of which apply to commercial setups.
This policy change is expected to drive substantial investment in the commercial and industrial solar sector, accelerating Australia’s clean energy uptake and providing tangible economic benefits for thousands of businesses across the nation.
| System Size | Estimated Annual Generation | Estimated Annual Savings |
|---|---|---|
| 250 kW | 345 MWh | AUD$50,000 |
| 850 kW | 1,173 MWh | AUD$175,000 |