Australia’s Federal Energy Minister Chris Bowen announced the country’s small-scale renewable energy scheme (SRES) will be expanded from 100 kW to 1 MW, saying it will address the “missing middle” in Australia’s energy transition.
“The missing middle is mid-scale solar,” the minister said in a statement. “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.”
Australia stands out as a global leader in rooftop solar adoption, with panels now installed on about 40% of homes. Data from the Institute for Energy Economics and Financial Analysis (IEEFA) shows about 22 GW of residential solar has been installed across the country but businesses have only installed about 5.6 GW.
Bowen said installing systems on commercial and industrial (C&I) and agricultural rooftops could add an extra 80 GW in solar energy.
“That’s an opportunity we should miss no longer,” he said.
Under the changes, new installations and expansions of existing systems up to 1 MW will be eligible for upfront, deemed certificates rather than the progressively priced large-scale generation certificates that currently apply to systems above 100 kW. Eligible systems are also expected to retain a five-year deeming rate through to 31 December 2030, rather than facing the annual step-down that applies to smaller systems as the scheme winds down.
The expanded SRES is expected to commence from 1 October 2026, subject to the necessary regulations being in place.
The changes are expected to reduce the installation costs of a solar system for C&I and agricultural rooftops by about 20% with government estimates suggesting a discount of about AUD 68,000 ($48,000) when installing a 250 kW solar system or about AUD 230,000 on an 850 kW system.
Bowen said he will also call on also ask the Australian Energy Market Commision to ensure network providers approve C&I solar more quickly.
Smart Energy Council policy head Rob Potter welcomed the expansion of the SRES, saying it will ease investment risk and accelerate deployment.
“Over 10 million Australians have slashed their power bills with solar, now it’s businesses turn to do the same,” he said.
“This is how we power up all those untapped acres of rooftops without solar.”
The announcement comes as new modelling by Victoria-based research firm Nexa Advisory estimates that C&I 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 said 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 C&I rooftop solar and 28.7 GW of battery capacity across Australia.
Under the central modelling assumptions, a 30% subsidy on the upfront cost of C&I batteries, costing approximately AUD 2 billion, combined with better tariffs and market access, could support the uptake of 29 GW of rooftop solar and 8.7 GWh of battery storage across the National Electricity Market (NEM).
“Commercial and industrial energy remains the missing middle of Australia’s transition,” Bashir said. “These projects can be delivered quickly, on existing buildings, and close to where electricity is consumed. That means more clean energy and flexible capacity without waiting for every major generation and transmission project to be completed.”
The modelled C&I solar and battery portfolio would also reduce grid-supplied electricity by 35.31 TWh annually and cut emissions by an estimated 21.88 million tonnes of carbon dioxide equivalent each year.
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