Australian businesses, farms, and community organisations are set to benefit from a significant expansion of the federal government’s Small-scale Renewable Energy Scheme (SRES), which will allow much larger solar photovoltaic (PV) systems to access upfront financial incentives. Announced on August 5, 2026, these changes are intended to apply to mid-scale solar installations from October 1, 2026, marking a pivotal shift in how commercial entities can reduce their energy costs and accelerate renewable energy adoption.
Under the proposed arrangements, solar PV systems with a total onsite capacity between 100 kilowatts (kW) and 1 megawatt (MW) will become eligible to create Small-scale Technology Certificates (STCs). Previously, systems exceeding 100 kW were only able to claim Large-scale Generation Certificates (LGCs), a different incentive mechanism. This expansion is projected to reduce the upfront installation costs for eligible mid-scale solar systems by approximately 20 per cent.
Bridging the ‘Missing Middle’ in Australian Solar
Climate Change and Energy Minister Chris Bowen highlighted that while over one in three Australian homes now boast rooftop solar – the highest uptake globally – larger energy users have largely been excluded from similar upfront incentives. The existing SRES scheme, which has successfully driven the residential solar boom, previously capped eligibility at 100 kW. This left a ‘missing middle’ of medium-sized commercial and industrial projects that were too large for the SRES but often too small or complex for the LGC market.
“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,” Minister Bowen stated.
The government anticipates this policy adjustment will help unlock significant new commercial rooftop solar capacity across Australia, supporting manufacturers, farmers, retailers, transport and logistics companies, schools, and hospitals in transitioning to cleaner, cheaper energy.
Tangible Savings for Businesses
The financial benefits for businesses are substantial. For example, a 250 kW solar system installed at a medium-sized business could generate approximately 345 MWh of electricity annually, potentially leading to around $50,000 in electricity cost savings each year. For an 850 kW system, the annual generation could reach approximately 1,173 MWh, delivering estimated yearly electricity savings of around $175,000.
The upfront cost reduction from STCs translates into considerable initial savings. Based on an STC price of approximately $39.40 (Zone 3, with a 5-year deeming period), a 250 kW system could see around A$68,000 in savings, while a 500 kW system could benefit from roughly A$136,000 in upfront discounts.
These figures underscore the compelling economic case for commercial solar, particularly when coupled with declining solar panel costs. In 2026, the average cost for a 100kW commercial solar system is approximately $39,999 after rebates, producing around 400 kWh/day.
Old vs. New SRES Eligibility
To clarify the impact of the changes, the table below outlines the previous and expanded eligibility criteria for solar PV systems under the SRES:
| Feature | Previous SRES Eligibility (Pre-Oct 1, 2026) | Expanded SRES Eligibility (From Oct 1, 2026) |
|---|---|---|
| Maximum System Size | Up to 100 kW | Up to 1 MW |
| Eligible Certificates | Small-scale Technology Certificates (STCs) | Small-scale Technology Certificates (STCs) |
| Affected Sector | Primarily residential and small businesses | Residential, small businesses, and mid-scale commercial, industrial, agriculture, community facilities |
| Upfront Cost Reduction | Yes, for systems under 100 kW | Yes, for systems up to 1 MW (est. 20% reduction) |
It is important to note that existing arrangements for systems smaller than 100 kW under the SRES will not be affected by these changes, ensuring continuity for the established residential solar market.
The Role of Battery Storage
As businesses consider larger solar installations, the integration of battery energy storage systems (BESS) becomes increasingly attractive. Batteries allow commercial operations to store excess solar generated during the day for use during peak demand periods or at night, further maximising savings and enhancing energy independence. The federal government’s Cheaper Home Batteries Program, while primarily targeting residential uptake, also offers support for small businesses and community facilities.
While the SRES expansion focuses on solar PV, businesses planning new installations should explore how battery solutions can complement their systems. Information on available incentives, such as the federal battery rebate, can be found in our comprehensive guide: Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates. For businesses with existing solar setups looking to add storage, understanding retrofitting options and associated rebates is crucial: Retrofitting Solar Batteries in Australia 2026: Your Guide to $4,200+ Rebates.
Implementation and Outlook
The government intends for the SRES changes to apply from October 1, 2026, subject to the necessary regulations being in place. Additional design, installation, and compliance requirements for mid-scale solar PV systems are under consideration, with further information to be published before the changes take effect.
This expansion is expected to be budget-neutral, with minimal additional compliance costs, estimated at only $1 to $2 annually. The move signifies a strategic effort to diversify Australia’s renewable energy landscape, shifting beyond predominantly residential solar to unlock the vast potential of commercial and industrial rooftops. This policy aims to accelerate carbon abatement through increased renewable electricity generation, contributing to Australia’s broader energy transition goals.