Home / News & Insights / What the SRES Expansion Means for Businesses
Commercial solar is set to become more accessible to Australian businesses following a major expansion announced for the Small-scale Renewable Energy Scheme.
Until now, the SRES has generally supported eligible rooftop solar systems no larger than 100 kW. Systems above that threshold have operated under a different incentive framework. The current Clean Energy Regulator guidance still reflects that 100 kW SRES limit.
The Australian Government has now announced an expansion that will extend the solar discount to installations of up to 1 MW, with the expanded arrangements expected to start from 1 October 2026.
The government says the change is expected to reduce installation costs for eligible commercial, industrial and agricultural solar projects by around 20%.
For businesses with substantial daytime electricity consumption, the change could significantly alter the business case for larger rooftop solar projects.
Right now, the Small-scale Renewable Energy Scheme (SRES), the federal scheme that provides an upfront discount through Small-scale Technology Certificates (STCs), only applies to solar systems up to 100kW in size. Anything larger falls into a completely different scheme, the Large-scale Renewable Energy Target, which works through Large-scale Generation Certificates (LGCs) instead.
The split at 100kW comes down to a few key differences:
The practical difference matters a lot. STCs are claimed upfront, as a discount deducted from your installation invoice, based on your system’s estimated generation over a fixed deeming period. LGCs are earned annually based on what your system actually generates, and sold on an ongoing basis rather than banked as one lump discount. For a business, that means a 99kW system gets a chunky day-one price reduction, while a 110kW system gets no upfront discount at all, just a slower trickle of certificate income over time. This is exactly why many commercial installers have historically recommended sizing systems just under the 100kW line, even when a larger system would better match a business’s roof space or energy use.
On 5 August 2026, the Australian Government announced it intends to expand SRES eligibility for solar photovoltaic systems from 100kW up to 1MW, roughly ten times the current threshold. The government’s stated intention is for this to apply to systems installed from 1 October 2026, though it is still subject to the relevant regulations being finalised, so it is not yet locked in as of the time of writing.
If it proceeds as announced, this would let far more warehouses, factories, agricultural facilities, schools, and shopping centres access an upfront STC discount rather than being pushed into the LGC scheme by their system size. The government’s own estimate suggests the change could reduce upfront installation costs by around 20% for mid-scale systems, and cites an example of roughly $68,000 off a 250kW installation as an indication of the scale involved.
Because this measure has not yet been finalised, we would treat any specific savings figure with caution until the regulations are actually in place. What we can say with confidence is the direction of travel: businesses currently sitting just above the 100kW line, who may have been advised to undersize their system to chase STC eligibility, should hold off on locking in a design until this change is confirmed one way or the other.
For any commercial system at or under 100kW, the existing STC mechanism already applies, and it is worth understanding properly rather than treating it as a black box.
The scheme is legislated to run until the end of 2030, after which no new certificates will be created, so the discount available today is meaningfully larger than what will be available in a few years’ time.
Batteries are handled separately from solar, and businesses are explicitly included in the current settings, not just households.
The federal Cheaper Home Batteries Program, despite its residential-sounding name, extends to small businesses and community organisations as well, provided the battery is paired with solar, sized between 5kWh and 100kWh, and uses Clean Energy Council approved equipment. The Clean Energy Regulator’s stated intent is to keep the discount at around 30% of the typical installed cost, delivered through the same STC mechanism used for solar.
NSW also runs a Virtual Power Plant incentive that businesses with an eligible battery can access, on top of the federal discount. Eligibility and the exact payment depend on your VPP provider and contract, and the incentive is calculated on the battery capacity made available to the grid, up to a set limit. For businesses with predictable daytime demand, pairing a commercial battery with a VPP arrangement can add a further, ongoing revenue stream on top of the upfront savings.
Batteries are handled separately from solar, and businesses are explicitly included in the current settings, not just households.
The federal Cheaper Home Batteries Program, despite its residential-sounding name, extends to small businesses and community organisations as well, provided the battery is paired with solar, sized between 5kWh and 100kWh, and uses Clean Energy Council approved equipment. The Clean Energy Regulator’s stated intent is to keep the discount at around 30% of the typical installed cost, delivered through the same STC mechanism used for solar.
NSW also runs a Virtual Power Plant incentive that businesses with an eligible battery can access, on top of the federal discount. Eligibility and the exact payment depend on your VPP provider and contract, and the incentive is calculated on the battery capacity made available to the grid, up to a set limit. For businesses with predictable daytime demand, pairing a commercial battery with a VPP arrangement can add a further, ongoing revenue stream on top of the upfront savings.
Outside of energy-specific rebates, the instant asset write-off is worth raising with your accountant when budgeting a commercial solar or battery project. For businesses with an aggregated annual turnover under $10 million, it allows an immediate deduction for eligible assets under $20,000 per item, rather than depreciating the cost over several years. Larger commercial solar and battery installations often exceed this threshold as a single asset, so the write-off tends to be more relevant to smaller ancillary purchases, EV chargers, or components of a staged rollout, than to a full-scale commercial system.
This is a tax matter, not an energy rebate, and the specific threshold and permanency of the measure is still subject to legislation working its way through Parliament. We are not accountants, and this should be confirmed with yours before you rely on it in a business case.
These two NSW certificate schemes cover a wide range of business energy upgrades, but standard commercial solar panel installation is not a straightforward eligible activity under either, unlike batteries, HVAC upgrades, lighting, and other efficiency measures. If you are planning a broader energy efficiency project alongside solar, it is worth having a proper review done rather than assuming solar automatically qualifies just because other upgrades on the same site might.
Process
For most homeowners, the process is straightforward.
Commercial solar design should start with interval electricity data. This shows when your site consumes power and how closely that demand aligns with solar production.
Roof area, shading, structural condition, switchboards, electrical infrastructure and network connection capacity all affect what can realistically be installed.
The goal is not necessarily to install the largest possible system. A well-designed commercial system should consider how much solar can be consumed on site, how much may be exported and whether future demand is expected to increase.
The incentive framework depends on project capacity, installation timing and applicable program rules. For projects being planned around the expanded SRES, businesses should confirm the final eligibility requirements before committing to an installation.
A commercial solar proposal should clearly explain estimated annual generation, self-consumption, grid purchases, electricity savings and expected payback assumptions. Businesses should be able to see how those calculations were reached.
For businesses with strong daytime electricity consumption and enough roof space to justify a system in the tens or low hundreds of kilowatts, the current settings already make a reasonable case, particularly with STCs still available for systems up to 100kW. For businesses with larger sites who have previously been squeezed by the 100kW cutoff, it is worth waiting for confirmation of the SRES expansion before finalising a system size, since the difference between an LGC-only system and an STC-eligible one is substantial.
As with residential systems, actual payback periods vary with your consumption pattern, tariff structure, and system design, and we would rather give you a considered estimate based on your actual bills than a headline number that will not hold up under scrutiny.
Is the SRES expansion to 1MW confirmed?
It has been announced by the Australian Government, with an intended start date of 1 October 2026, but it remains subject to regulations being finalised. We recommend confirming current status before locking in a system size based on it.
Can my business claim both STCs and a battery rebate?
Yes, solar and battery incentives are assessed separately, and a business can claim STCs on an eligible solar system as well as the federal battery discount on a qualifying battery.
Does the instant asset write-off apply to a full commercial solar system?
Usually not to the whole system, since most commercial installations exceed the per-asset threshold. It may apply to smaller components or ancillary equipment. Confirm with your accountant.
Should I size my system under 100kW to guarantee STC eligibility?
That depends on your roof space, consumption, and appetite to wait for the SRES expansion to be confirmed. This is exactly the kind of decision worth discussing properly before committing to a design.
Rules around commercial solar and battery incentives are shifting this year, and getting the system size and timing right can materially change your return. Get a free, no-obligation commercial solar assessment from Neo Energy and we will walk you through what applies to your site today, and what to watch for as the SRES changes are finalised.
