The federal solar discount is being extended to commercial systems up to 1 MW, cutting installation costs by around 20 per cent. Here's what the change means for factories, warehouses, farms and clubs, and why the timing of the money matters more than the percentage.
For years, commercial solar in Australia has worked best under 100 kilowatts. Below that line, the federal solar discount comes straight off the invoice and projects are straightforward to approve. Above it, systems move into the large-scale scheme, where certificates accrue year by year against metered output rather than arriving as a lump sum off the price.
Same roof, same panels, a very different business case. That ceiling is now being lifted to 1 megawatt.
On 4 August 2026, in his address to the National Press Club, Climate Change and Energy Minister Chris Bowen announced the Small-scale Renewable Energy Scheme (SRES) will expand to cover installations up to 1 MW.
"Today I announce that we are expanding the solar discount to include installations up to 1 MW in size. This will slash the installation costs for commercial, industrial and agricultural buildings by around 20 per cent."
The mechanism does not change. Eligible systems create certificates, energy retailers are required to buy them, and the value comes off the installed price rather than arriving as a grant you have to apply for. What changes is who can reach it. A tenfold lift in the size cap brings the entire mid-scale market inside the scheme.
The worked examples given with the announcement:
| System size | Upfront discount | Annual generation | Annual bill saving |
|---|---|---|---|
| 250 kW Medium enterprise, e.g. a retailer | ~$68,000 | ~345 MWh | ~$50,000 |
| 850 kW Manufacturing, large retail or logistics | ~$232,000 | ~1,173 MWh | ~$175,000 |
The framing was productivity rather than emissions. As Bowen put it, the change "isn't just about energy bills, it's good for productivity, freeing up capital to invest back in their business."
The headline is the discount. The more important shift is the timing of the money.
Under the large-scale scheme, certificates are issued against actual generation over the life of the asset. The value is real, but it arrives slowly, it depends on a certificate price you cannot lock in years ahead, and it carries ongoing administration. To a finance committee weighing a capital request, that is a forecast, not a discount.
Under the small-scale scheme the value is deemed and taken off the delivered price. It is a number you can put in a board paper. That is what opens up the 150 kW to 800 kW range for a lot of sites, and it is why the change matters more than a percentage suggests.
Bowen named the problem directly: "there is a missing middle in Australia's energy transition." He described flying into an Australian city and seeing more solar panels than backyard pools on residential streets, then looking across at the warehouse and factory roofs and seeing just how much space is still available.
The numbers back it up. On figures from the Institute for Energy Economics and Financial Analysis cited in the speech, Australian homes carry about 22 GW of solar. Businesses have installed around 5.6 GW. Technical rooftop potential across commercial, industrial and agricultural buildings could exceed 80 GW.
Part of the reason those warehouse roofs are only fractionally covered is the cut-off itself. In Bowen's words, 100 kW is "more than enough for houses. It's not much when it comes to a factory."
Alongside the discount, the Minister announced he is asking the Australian Energy Market Commission to consider a rule change requiring network providers to approve commercial and industrial solar more quickly and efficiently.
This half of the announcement deserves as much attention as the first. Above 100 kW, the network connection approval is usually the longest step in a project timeline, so more speed and more certainty there is worth a great deal to anyone planning a rooftop system. Worth noting this is a request for the AEMC to consider a rule change rather than a completed reform, so the timing is still to be settled.
Your project size may have just changed. Sites deliberately capped just under 100 kW to stay inside the old scheme can now be sized to the load rather than to the rule. If your last feasibility study was built around the 100 kW ceiling, the answer it gave you is out of date.
Readiness sets the pace. Interval data, a roof and structural assessment, a single line diagram, and a connection application in the queue. Sites with those in hand will be first to move. The Smart Energy Council expects around 300 MW to be installed within six months of the change, so there is real value in being ready early.
The wider market is moving the same way. From the same address: the national grid has gone from 33 to 50 per cent renewables since 2022, and more than 8 GW of new large-scale renewable energy and storage was connected in the last financial year, double the year before. Wholesale spot prices averaged $74/MWh last quarter, down 47 per cent year on year. Generating your own daytime power puts your site firmly inside that trend.
If your site has more roof than your last solar proposal used, it is worth remodelling. The number has changed.
Zool Energy is an energy partner, not an installer. Under our Total Care model we design, fund, build and operate the system ourselves, under one fixed cost-per-kWh agreement, for 10 to 25 years. One counterparty carries the engineering, funding and operating risk, which is what gets an energy decision through a conservative board.
Discounts like the SRES flow into that agreement: they reduce the delivered cost of the system, which shows up in your rate rather than in a certificate process you run yourself. The same applies to the connection work. The application, the network negotiation and the export limit conversation are all ours to manage.
That is the model behind projects like City Golf Club Toowoomba and Carina Leagues, and it works the same way for a factory, a warehouse or a farm: full commercial solar delivered and operated under one agreement, with no upfront capital outlay from the business (fees apply under the agreement).
In NSW and thinking about storage too? The federal solar discount and the NSW battery incentive are separate schemes, and a site can be eligible for both. See what BESS4 and BESS5 mean for commercial sites.
Yes. The Small-scale Renewable Energy Scheme provides an upfront discount on eligible solar installations, applied as a reduction to the installed price rather than a grant you claim afterwards. It previously covered systems up to 100 kW. The federal government announced on 4 August 2026 that it will expand to cover systems up to 1 MW, which brings most commercial, industrial and agricultural rooftops into the scheme.
The size cap is increasing from 100 kW to 1 MW, a tenfold expansion. Systems in that range become eligible for the upfront solar discount through small-scale technology certificates rather than accruing large-scale generation certificates against metered output over time.
The Australian Government estimates around 20 per cent off the upfront installation cost. Its worked examples put a 250 kW system at roughly $68,000 off and an 850 kW system at roughly $232,000 off. Actual value depends on system size, location and certificate prices at the time of installation.
Systems above 100 kW fell outside the small-scale scheme and instead earned large-scale generation certificates against metered output over the life of the asset. The value was real, but it arrived gradually, moved with a certificate price that could not be locked in, and came with ongoing administration. That made the business case harder to approve, so many sites capped their systems just under 100 kW rather than sizing to their actual load. The expanded scheme delivers the value upfront instead.
The expansion was announced on 4 August 2026 in the Minister for Climate Change and Energy's address to the National Press Club. A commencement date was not given in the announcement, and the change remains subject to legislation and regulation.
Any site with substantial roof space and daytime electricity use. The announcement named factories, warehouses, farming sheds and large industrial premises. In practice this also covers logistics and cold storage, shopping centres, schools, clubs, aged care and manufacturing facilities across Australia.
The Minister announced he is asking the Australian Energy Market Commission to consider a rule change requiring network providers to approve commercial and industrial solar more quickly and efficiently. This is a request for the AEMC to consider a rule change rather than a completed reform, so the timing is still to be settled.
No. This is a federal solar measure. State schemes such as the NSW Peak Demand Reduction Scheme cover battery storage separately, and a site can be eligible for both.
Yes. Under a funded agreement the certificate value reduces the delivered cost of the system, which flows into the fixed cost-per-kWh rate rather than arriving as a rebate your business has to claim itself.
All figures, quotes and estimates in this article are those of the Australian Government as stated in the Minister's address, not estimates by Zool Energy. Commencement date, final eligibility conditions and scheme rules are subject to legislation and regulation and had not been settled at the time of writing. Certificate prices move with the market. Eligibility depends on site, network area and system configuration. Total Care agreements are subject to credit assessment and contract terms. Source: the Hon Chris Bowen MP, address to the National Press Club, Canberra, 4 August 2026. Rooftop capacity figures attributed in the address to the Institute for Energy Economics and Financial Analysis. Installation forecast attributed to the Smart Energy Council.
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