Solar costs for business to be slashed under energy scheme expansion

The cost of installing solar at schools, supermarkets, factories and farm buildings will be slashed by about 20 per cent under the expansion of a federal government scheme.

Speech excerpts seen by the ABC show Climate Change and Energy Minister Chris Bowen will announce the expansion of the Small-scale Renewable Energy Scheme (SRES) from 100 kilowatts to one megawatt during an address at the National Press Club.

The government estimates retailers could save almost $70,000 installing a 250kW solar system and a large retail complex or logistics warehouse could save more than $230,000 on a 850kW system.

The move comes after households and businesses took up batteries in droves after the introduction of the Cheaper Home Batteries Program in 2025, which allowed a subsidy worth about 30 per cent of the up-front cost of a system to be claimed.

The program has breathed new life into residential solar installations, which began to lag last year but have since picked up. Almost 4.5 million households now have rooftop solar.

In the speech, Mr Bowen will note that many residential solar panels are visible from an aeroplane over a capital city, but that very few can be seen on industrial buildings.

“The missing middle is mid-scale solar,” he will say.

The ‘missing middle’

Under the SRES, solar installations generate certificates that are traded on the open market.

But businesses and farmers have struggled to benefit from the scheme since its inception in 2011 because it does not apply to systems beyond 100kW, which is sufficient for a house but not a factory or large shed.

According to the Institute for Energy Economics and Financial Analysis, Australia’s residential solar capacity sits at about 22 gigawatts, but businesses have only installed 5.6 gigawatts, most of which is accounted for by rooftop systems below 100kW.

The government expects businesses to not only adopt more solar amid the scheme expansion, but also have their electricity bills lowered.

“The technical rooftop potential for solar on commercial, industrial and agricultural rooftops could exceed 80 gigawatts. That’s an opportunity we should miss no longer,” Mr Bowen will say.

“This isn’t just about energy bills, it’s good for productivity, freeing up capital to invest back in their business.”

Mr Bowen will also ask the Australian Energy Market Commision to ensure network providers approve commercial and industrial solar more quickly.

See Saw Wine business development manager Maggie Jarrett welcomes that change.

The New South Wales Central Coast winery has installed 30kW of solar across three farms and is looking to add more.

“Red tape has been a massive barrier for us and just trying to understand the complexity behind that red tape, when you are an agricultural business, is difficult, especially small and medium businesses,” Ms Jarrett said.

She said any reduction in up-front costs would also help.

“A 20 per cent reduction is a massive amount when you’re looking at 1-megawatt solar panel developments, probably enough, as well, to enable that kind of business case to your banks to be able to get loans,” Ms Jarrett said.

“I think the other piece is that it’s indicating that the government supports this sort of development, which always makes financial people kind of put their ears up and say, ‘Hey, if the government’s backing it, there’s probably more opportunity in this space.'”

Industry push amid renewable target headwinds

Several analysts have predicted that Australia will not reach its target of 82 per cent of electricity being generated by renewable energy by 2030, but in recent months Mr Bowen has said he is confident it will be achieved.

There has long been an industry push for more to be done to unlock the solar potential for businesses but approval delays and the up-front cost of systems has prevented that from eventuating.

Smart Energy Council policy head Rob Potter said the SRES expansion was a “game changer”, particularly when coupled with the government’s battery subsidy program.

“Adding solar to commercial and industrial rooftops is the equivalent to 10 coal-fired power stations,” he said.

Australian Conservation Foundation climate policy advisor Annika Reynolds welcomed the announcement, but said increasing renewable energy uptake was not enough on its own.

“The Albanese government isn’t nailing it when it comes to fossil fuel exports, but on the domestic renewables front it’s just about bang on,” she said.

“However, pressing down on the accelerator for renewables alone is unlikely to get Australia to 82 per cent renewables by 2030, which is what we need for a safe climate and an energy independent grid.

“We urge the Albanese government to explore every possible lever to firming up the closures of remaining coal and gas clunkers in Australia.”