Australian businesses, farms, and community organisations are poised for significant reductions in solar installation costs, with the federal government announcing a major expansion of the Small-scale Renewable Energy Scheme (SRES). Announced on August 5, 2026, the reform will increase the maximum eligible solar system size under the SRES tenfold, from 100 kilowatts (kW) to 1 megawatt (MW). This crucial change is set to commence from October 1, 2026, subject to the necessary regulations being in place, and is expected to cut the upfront cost of eligible medium-sized solar systems by approximately 20%.
The move directly addresses the “missing middle” in Australia’s solar transition, a segment where businesses and larger energy users have previously been limited in accessing the same upfront certificate-based support that has driven the nation’s world-leading residential rooftop solar uptake. While around 40% of Australian homes now feature rooftop solar, commercial and industrial installations have lagged, despite vast untapped potential on commercial rooftops.
Unlocking Significant Upfront Savings
Under the expanded scheme, solar PV systems with a total onsite capacity between 100 kW and 1 MW will now be eligible to create Small-scale Technology Certificates (STCs). Previously, systems larger than 100 kW were only eligible for Large-scale Generation Certificates (LGCs, which offer a different, often less immediate, financial incentive. The ability to claim STCs upfront will provide a substantial point-of-sale discount for eligible projects.
Minister for Climate Change and Energy, Chris Bowen, highlighted the impact at the National Press Club, stating that lower energy costs would enhance productivity and competitiveness across various sectors, including manufacturing, agriculture, retail, transport, and logistics, with benefits ultimately flowing to households through goods and services.
The financial benefits are considerable for businesses considering mid-scale solar. Government estimates suggest potential discounts of:
“A 250 kW system installed at a medium-sized business could generate about 345 MWh of electricity annually and potentially save around $50,000 in electricity costs each year. A larger 850 kW system could produce approximately 1,173 MWh annually and deliver estimated yearly electricity savings of around $175,000.”
At current STC prices, this translates to roughly $68,000 off a 250 kW commercial solar system and up to $230,000 off an 850 kW system. The government anticipates the SRES expansion to be budget-neutral, with compliance costs estimated at only $1 to $2 annually.
| System Size | Estimated Upfront Discount (AUD) |
|---|---|
| 250 kW | $68,000 |
| 500 kW | $136,000 |
| 850 kW | $230,000 |
These figures are based on government examples and market estimates, reflecting the value of STCs at approximately $272 per kilowatt upfront. It is important for businesses to obtain detailed quotes from accredited installers, as the exact STC value can fluctuate with market conditions.
Why the ‘Missing Middle’ Matters
Australia currently boasts about 22 GW of residential solar capacity, but only around 5.6 GW of commercial rooftop solar, despite an estimated 80 GW of commercial roof space suitable for panels. This disparity is largely due to the previous 100 kW cap on SRES eligibility, which made larger commercial installations less financially attractive through upfront incentives.
By extending STC eligibility to 1 MW, the government aims to stimulate adoption among a broader range of commercial and industrial energy users. This includes manufacturers, farmers, retailers, transport and logistics companies, and other community facilities, enabling them to harness solar power more effectively to reduce operational costs.
Implementation and Broader Context
The expanded SRES is slated to take effect from October 1, 2026. Businesses considering new or expanded solar systems within the 100 kW to 1 MW range should begin planning now to capitalise on these upcoming changes. The Clean Energy Regulator (CER) will publish further information regarding commencement dates and eligibility requirements as regulations are finalised.
This federal initiative complements existing state-based support and general energy bill relief programs across Australia. For example, businesses in New South Wales are also seeing new commercial battery incentives under the Peak Demand Reduction Scheme (PDRS), with specific activities (BESS3-BESS5) commencing on September 1, 2026, offering significant upfront discounts for battery storage. Victorian businesses, meanwhile, can access additional incentives for eligible 30 kW to 200 kW commercial and industrial solar systems through Victorian Energy Upgrades. For a comprehensive overview of available support, readers can refer to our guide on Australian Energy Rebates in 2026: Your State-by-State Guide After Federal Relief Ends.
The expansion of the SRES for commercial solar marks a critical step in accelerating Australia’s transition to a cleaner energy future, leveraging the vast potential of commercial and industrial rooftops to contribute to the nation’s renewable energy targets. This policy adjustment is anticipated to drive significant investment in mid-scale solar, offering substantial economic benefits for businesses and contributing to overall grid stability by integrating more distributed generation. For those considering integrating battery storage alongside their new solar system, insights into current offerings can be found in our detailed analysis of Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates.
Looking Ahead to 2026
The Australian Energy Market Operator (AEMO)‘s 2026 Integrated System Plan (ISP) forecasts a doubling of electricity demand by 2050, driven by electrification across transport, industry, and new sectors like data centres. To meet this, the ISP calls for close to 120 GW of utility-scale wind and solar by 2050, alongside over 30 GW of grid-scale batteries. The expanded SRES plays a role in fostering the distributed generation necessary to support this ambitious transition, ensuring that businesses are empowered to be part of the solution while simultaneously reducing their operational overheads.
With the changes to the SRES, 2026 is shaping up to be a pivotal year for commercial solar adoption in Australia, offering a clear pathway for businesses to invest in renewable energy with tangible, immediate financial benefits.