Australian businesses, farms, and community organisations are set to see significant reductions in their solar installation costs, with the federal government announcing a tenfold expansion of the Small-scale Renewable Energy Scheme (SRES). Announced on August 5, 2026, by Climate Change and Energy Minister Chris Bowen, the scheme will now cover solar installations up to 1 megawatt (MW), a substantial increase from the previous 100-kilowatt (kW) cap. This policy change, effective from October 1, 2026, is projected to cut the upfront cost of commercial and industrial rooftop solar by approximately 20%.
This move directly addresses what the government terms the “missing middle” in Australia’s solar transition, a segment where larger energy users have been largely excluded from the upfront incentives that have driven widespread residential solar uptake.
The “Missing Middle” Addressed
Australia leads the world in household solar adoption, with panels now installed on about 40% of homes, contributing around 22 gigawatts (GW) of residential solar capacity. In stark contrast, businesses have installed only about 5.6 GW, predominantly in systems below 100 kW. This disparity highlights a significant untapped potential, with estimates suggesting that commercial, industrial, and agricultural rooftops could collectively add an extra 80 GW of solar energy capacity.
Minister Bowen emphasised that unlocking this potential will not only help businesses reduce energy costs but also improve productivity and competitiveness across various sectors, including manufacturing, agriculture, retail, transport, and logistics.
“One in three Australian homes have rooftop solar, but larger energy users have been locked out because the existing solar rebate only supports systems up to 100 kW. We’re fixing that by expanding support to systems up to 1 MW, unlocking the potential of commercial rooftops and helping businesses cut power bills, invest in growth and create jobs.”
How the SRES Expansion Works
The SRES operates through a certificate mechanism, where eligible solar systems generate Small-scale Technology Certificates (STCs) that energy companies are mandated to purchase. Previously, systems larger than 100 kW were only eligible for Large-scale Generation Certificates (LGCs), which operate differently. Under the expanded SRES, new installations and expansions of existing systems up to 1 MW will now qualify for upfront, deemed STCs.
Crucially, eligible systems under the expanded scheme are expected to retain a five-year deeming rate through to December 31, 2030, rather than facing the annual step-down applied to smaller systems as the scheme gradually winds down. This provides greater financial certainty for larger projects.
Significant Savings for Australian Businesses
The government estimates that this change will reduce installation costs for commercial and industrial (C&I) and agricultural rooftops by approximately 20%. Specific examples provided indicate substantial upfront savings:
| System Size | Estimated Upfront Discount (AUD) |
|---|---|
| 250 kW | $68,000 |
| 850 kW | $230,000 |
These discounts are applied at the point of sale, effectively making larger solar systems significantly more financially viable for a wide range of enterprises, from farms and manufacturers to schools and community facilities.
For businesses considering adding battery storage to maximise their solar self-consumption and resilience, this renewed focus on mid-scale renewable energy could also align with incentives for energy storage. While this announcement specifically targets solar, the broader energy transition often sees solar paired with batteries to enhance grid stability and economic benefits. Readers interested in energy storage options can explore guides such as Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates for residential applications, and note that similar principles of maximising self-consumption apply to commercial settings.
Broader Economic and Energy Benefits
The expansion is expected to be budget-neutral, funded through the existing SRES model administered by the Clean Energy Regulator since 2011. Industry figures, such as Dr Methuen Morgan, Director of Meralli Solar, welcomed the change, noting its practical benefits for regional Australia and its potential to open doors for community solar projects. This could allow regional communities to generate more of their own energy, strengthening energy resilience and keeping investment local. For more information on how these projects work, see our guide on Community Solar in Australia 2026: $2,800 Rebates & How to Join (State-by-State Guide).
Additionally, Nexa Chief Executive Officer Stephanie Bashir indicated that unlocking investment in commercial and industrial solar and batteries would benefit all energy consumers, not just businesses. Nexa’s modelling suggests a potential $2 billion government subsidy could yield up to $39.7 billion in gross system benefits annually, including lower wholesale electricity prices and reduced grid pressure.
Faster Network Approvals Sought
Beyond the financial incentives, Minister Bowen also stated that he would ask the Australian Energy Market Commission (AEMC) to mandate network providers to approve commercial and industrial solar connection applications more quickly and efficiently. This aims to remove a key barrier that has historically hindered the uptake of larger solar systems in the C&I sector. Improved connection processes are crucial for the seamless integration of these new, larger solar assets into the National Electricity Market (NEM).
The Path Ahead
The SRES expansion is a significant step towards accelerating carbon abatement and increasing renewable electricity generation across Australia’s commercial and industrial landscape. As the regulations are finalised ahead of the October 1, 2026, commencement, businesses and organisations are encouraged to assess their energy needs and explore how this expanded rebate can translate into substantial long-term savings on their electricity bills. This federal initiative complements ongoing efforts to transition Australia to a cleaner, more resilient energy future, leveraging the vast, underutilised potential of commercial rooftops.
This announcement follows a period of strengthening solar generation data, with combined solar generation rebounding by 37% in July 2026, and utility-scale output reaching its highest July level on record. The continued growth in renewable capacity underscores the strategic importance of policies like the SRES expansion in meeting Australia’s energy goals.
Conclusion
The federal government’s decision to expand the SRES to 1MW marks a pivotal moment for commercial solar in Australia. By providing substantial upfront discounts and streamlining approval processes, the policy aims to unlock billions in potential savings for businesses and significantly boost the nation’s renewable energy capacity. This change from October 2026 offers a compelling financial incentive for the “missing middle” to embrace solar, contributing to a more sustainable and cost-effective energy landscape across the country.