Australian businesses, farms, and community organisations are set to benefit from a significant federal government reform, with the Small-scale Renewable Energy Scheme (SRES) expanding to cover rooftop solar systems up to 1 megawatt (MW) in size. Announced on August 5, 2026, this policy change is anticipated to reduce the upfront cost of eligible medium-sized solar installations by approximately 20% and is slated to commence on October 1, 2026, pending the necessary regulatory adjustments.
The expansion addresses what has been termed the “missing middle” in Australia’s solar energy transition, where large commercial and industrial rooftops have been underutilised despite their substantial potential. While Australia leads the world in residential rooftop solar adoption, with around 22 gigawatts (GW) installed, businesses have only deployed approximately 5.6 GW, predominantly from systems smaller than 100 kilowatts (kW).
Under the previous SRES rules, only systems up to 100 kW were eligible for Small-scale Technology Certificates (STCs), which provide an upfront discount on installation costs. Larger systems were subject to the less favourable Large-scale Generation Certificates (LGCs), creating a financial disincentive for mid-scale commercial installations. The reform brings systems between 100 kW and 1 MW into the STC framework, aligning the incentives more closely with the actual energy demands of medium and large commercial users.
Significant Savings for Commercial Operations
The financial implications for businesses are substantial. For example, a 250 kW solar system installed at a medium-sized business could generate an estimated 345 megawatt-hours (MWh) of electricity annually, potentially saving around AUD 68,000 in electricity costs each year.
“Lower energy costs will improve productivity and competitiveness across manufacturing, agriculture, retail, transport and logistics, with benefits flowing through to households using those goods and services.”
Larger operations stand to save even more. An 850 kW system could produce approximately 1,173 MWh annually, delivering estimated yearly electricity bill savings of around AUD 230,000. These figures highlight the direct economic relief the expanded scheme aims to provide, allowing businesses to invest savings back into their operations and potentially pass on benefits to consumers through lower prices. For a comprehensive understanding of how federal and state incentives reduce costs, refer to our guide on Australian Energy Rebates in 2026: Your State-by-State Guide After Federal Relief Ends.
Illustrative Annual Savings from SRES Expansion
| System Size (kW) | Estimated Annual Generation (MWh) | Estimated Annual Electricity Savings (AUD) |
|---|---|---|
| 250 | 345 | $68,000 |
| 850 | 1,173 | $230,000 |
Note: Savings are estimates based on government projections and will vary based on electricity usage patterns, tariff structures, and geographic location.
Implementation and Broader Impact
Federal Climate Change and Energy Minister Chris Bowen made the announcement at the National Press Club in Canberra on August 5, 2026. He emphasised that the reform is expected to be budget-neutral for the government, with additional compliance costs estimated at only AUD 1 to AUD 2 annually. The expanded SRES is expected to commence on October 1, 2026, subject to the necessary regulations being put in place.
Beyond direct financial savings, the move is expected to bolster Australia’s energy security by increasing distributed generation and reducing reliance on the grid during peak demand periods. Generating more electricity at the point of consumption can also alleviate pressure on network infrastructure. The government also intends to work with the Australian Energy Market Commission (AEMC) to streamline and accelerate connection approvals for these larger commercial and industrial solar systems, addressing a historical bottleneck for larger installations.
This expansion provides a significant opportunity for a wide array of entities, including manufacturers, agricultural operations, retailers, transport and logistics companies, schools, hospitals, and various community facilities, to substantially reduce their operational costs and contribute to Australia’s renewable energy targets. For those considering solar installations, understanding the new cost structures is crucial. More information on typical system costs can be found in our detailed guide on Solar Panel Cost Australia 2026: $3,000–$13,000 by Size (After Rebates).
Community organisations, in particular, will find this expansion beneficial. The ability to install larger systems with a significant upfront cost reduction could unlock numerous projects aimed at reducing community energy burdens. Further details on how such organisations can engage with solar initiatives are available in our guide to Community Solar in Australia 2026: $2,800 Rebates & How to Join (State-by-State Guide).
This policy shift marks a pivotal moment for Australia’s commercial solar sector, aiming to unlock a vast untapped potential of over 80 GW of commercial rooftop solar capacity across the nation.