According to the Australian government, the Small-scale Renewable Energy Scheme (SRES) will soon undergo a drastic change, which will see the limit on capacity raised from 100 kilowatts up to 1 megawatt. The announcement was made by Minister of Climate Change and Energy Chris Bowen on August 5, 2026, and is expected to come into force on October 1, 2026, provided that the respective regulations are ready.
Such a large increase will allow a number of businesses, farms, educational institutions, hospitals, community organizations, and other entities with average to big consumption of energy to get financial aid from the program, in case they apply for it under the newly adopted conditions. From now on, all the installations will get the possibility to produce certificates for the energy units produced. Instead of receiving renewable energy generation certificates like before that are based on the capacity of systems, but having the possibility to get money transferred to them.
Addressing the "Missing Middle"
Minister Bowen referred to the reform as a direct response to the issue he called the "missing middle," which is linked to the energy transition in Australia. Although Australia is the world leader in terms of residential rooftop solar, with solar panels already installed in approx. 40% of households and generating around 22 gigawatts of capacity, the commercial and industrial sectors have not been able to catch up. As per the figures from the Institute for Energy Economics and Financial Analysis (IEEFA), businesses have installed about 5.6 GW of rooftop solar, most of it from systems that are below 100 kW.
"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 said in a statement. "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."
The government estimates that the untapped solar potential on commercial, industrial, and agricultural rooftops across Australia could add an extra 80 GW of solar energy capacity. "That's an opportunity we should miss no longer," Minister Bowen declared.
Substantial Cost Reductions for Businesses
The expanded SRES is expected to reduce the upfront installation costs for medium-sized solar systems on commercial, industrial, and agricultural buildings by approximately 20%. Government estimates suggest a discount of around AUD 68,000 on a 250 kW solar system, and approximately AUD 230,000 on an 850 kW system. A 250 kW system installed at a medium-sized business could generate about 345 MWh of electricity annually and deliver estimated yearly savings of around AUD 50,000 on electricity costs. An 850 kW system could produce approximately 1,173 MWh annually with yearly savings of around AUD 175,000.
The government expects the SRES expansion to be budget neutral, with additional compliance costs estimated at only AUD 1 to 2 per year. The scheme, which has been providing discounts for solar upgrades since 2011 and has supported more than 490,000 battery installations since 2025, will continue to be administered by the Clean Energy Regulator.
Industry and Expert Reactions
The announcement has drawn widespread support from energy experts, industry bodies, and environmental advocates.
Rob Potter, Head of Policy and Advocacy at the Smart Energy Council, welcomed the expansion, saying it will ease investment risk and accelerate deployment across the commercial and industrial sector. "Over 10 million Australians have slashed their power bills with solar, now it's businesses turn to do the same," he said. "[This is] just the kickstart [the commercial and industrial sector] needed. It didn't need huge subsidies. It didn't need huge grants. It just needed a little bit of a nudge, which is what the minister has delivered."
Johanna Bowyer, Lead Analyst for Australian Electricity at IEEFA, noted that commercial buildings are particularly well-suited to rooftop solar because their electricity demand aligns with solar generation during daytime hours. "Many businesses and community facilities, such as offices, shopping centres, farms, hospitals and schools, tend to use more energy during the day, in typical working hours, which lines up well with when solar systems generate power."
The Australian Conservation Foundation also endorsed the reform. National Climate Policy Adviser Annika Reynolds stated: "ACF has long championed the expansion of federal schemes to better unlock rooftop solar for commercial premises. Rooftop solar is a win-win – it's good for nature, and good for people."
Broader Economic and Grid Benefits
New modelling by Victoria-based research firm Nexa Advisory estimates that commercial and industrial consumer energy resources – including rooftop solar and batteries – could deliver up to AUD 39.7 billion in gross energy-system benefits every year. This comprises approximately AUD 39.2 billion in annual wholesale market benefits and AUD 500 million in annual network peak-reduction value.
Nexa Chief Executive Officer Stephanie Bashir emphasised that the benefits would extend well beyond the businesses installing the equipment. "Unblocking investment in commercial and industrial solar and batteries would benefit every energy consumer, not just the businesses installing them," she said. "Our modelling shows that a AUD 2 billion government subsidy could reap up to AUD 39.7 billion in gross system benefits every year, including lower wholesale electricity prices and reduced pressure on the grid."
Nexa's analysis identifies the technical potential for 63.3 GW of commercial and industrial rooftop solar and 28.7 GW of battery capacity across Australia.
Faster Grid Connections Also on the Agenda
Beyond the rebate expansion, the government has also asked the Australian Energy Market Commission to develop reforms aimed at making grid connection approvals for medium-sized commercial solar systems faster and more consistent. Johanna Bowyer noted that slow and unpredictable approval processes have remained a significant barrier to investment. "The process for getting a medium-sized solar project's grid connection application approved can be slow and unpredictable, and that can discourage investment," she said.
Looking Ahead
The expanded SRES is expected to commence on October 1, 2026, subject to the necessary regulations being in place. Industry observers anticipate significant uptake in the first six months, with some experts suggesting around 300 MW of commercial and industrial solar could be installed shortly after the scheme takes effect. Over the longer term, the Smart Energy Council projects the expansion could drive the installation of up to 30 GW of additional capacity across the commercial and industrial sector.
For manufacturers, farmers, retailers, logistics centres, schools, hospitals, and community organisations across Australia, the message is clear: the economics of commercial solar have just become significantly more compelling. As Minister Bowen put it: "More rooftop solar means lower energy costs, a stronger economy and faster progress towards an energy system powered by Australian renewable energy."
