Commercial Solar Just Changed: What the New 1 MW SRES Expansion Means for Victorian Businesses
- J Thompson
- Aug 6
- 4 min read
Updated: Aug 13
Australia’s commercial solar market could be about to change significantly.
The Federal Government has announced plans to expand the Small-scale Renewable Energy Scheme (SRES), increasing the maximum eligible solar PV system size from 100 kW to 1 MW.
For businesses, schools, community organisations, manufacturers, agricultural operations and other medium-to-large energy users, this is much more than a minor adjustment to a rebate.
"This potentially changes the commercial equation for rooftop and ground mount solar, giving more incentives to small and medium sized businesses to consider investing in energy generating assets" - Joel Thompson
The expanded scheme is expected to commence from 1 October 2026, subject to the necessary regulations being put in place. Until then, existing SRES eligibility rules continue to apply.
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What could the incentive be worth?
The Federal Government estimates that expanding the scheme could reduce the upfront installation cost of eligible commercial, industrial and agricultural solar systems by approximately 20 per cent.
As examples, the Government estimates potential support of approximately:
$68,000 for a 250 kW solar system
$136,000 for a 500 kW solar system
These are indicative Government estimates rather than guaranteed project outcomes. The actual value available to an individual project will depend on the final regulations, certificate calculations, installation date and project eligibility.
Nevertheless, those numbers are significant.
A reduction of tens or potentially hundreds of thousands of dollars in initial capital expenditure can materially affect project payback periods, investment hurdle rates and the ability to secure internal approval for an energy project.
Why this matters for Victorian businesses
Victoria has no shortage of commercial rooftops or land for ground mount solar pv arrays.
Warehouses, manufacturing facilities, schools, accommodation facilities, recreation centres, farms, distribution centres, community infrastructure and multi-building sites often have substantially more roof area than can be utilised by a 100 kW solar installation.
The question should not simply be:
“How much solar can we fit?”
The more useful question is:
“How much energy can we economically generate and use on site?”
That requires looking beyond the roof. A good commercial solar strategy should consider the organisation’s interval electricity data, daytime consumption, seasonal demand, electricity tariff structure, maximum demand, operational profile, network constraints and future plans.
For some organisations, the optimum system might remain below 100 kW.
For others, it could be 200 kW, 500 kW or approaching 1 MW.
The proposed SRES expansion gives businesses more freedom to investigate that question without an incentive threshold influencing the design quite as heavily as it has in the past.
Bigger does not automatically mean better
The announcement should not be interpreted as a reason for every business to immediately install the largest possible solar system.
Commercial energy projects still need to be designed around the asset. A 500 kW system producing large volumes of electricity when a facility has very little daytime consumption may perform very differently financially from the same system installed at a site with strong and consistent daytime loads.
Export limits and electricity network connection requirements also remain important.
The Government has separately indicated that it intends to improve connection processes for mid-sized solar projects, but increasing the SRES threshold does not remove the need for proper electrical engineering, network assessment, connection approvals and project planning.
This is why we believe capturing real-time energy data should come before equipment selection.
Before deciding on solar capacity, businesses should understand when they consume electricity, how much they consume, what they currently pay for that electricity and how their energy requirements are likely to change over the life of the system.
What about batteries?
This development also makes the relationship between commercial solar and energy storage increasingly interesting. For some sites, additional rooftop solar may be able to offset a much greater portion of daytime grid consumption.
For others, increased solar capacity creates periods of surplus generation that could potentially be shifted through battery storage for use later in the day, during peak tariff periods or as part of a broader resilience strategy. But batteries should not simply be added because solar is being installed. Their value depends on the site.
Peak demand management, electricity tariffs, load shifting, backup requirements, operational resilience and available incentives can all influence the business case. Solar and batteries are related technologies, but they solve different energy problems.
The strongest projects generally begin by identifying those problems first.
Should businesses considering solar wait until October?
Not necessarily. In fact, organisations considering a commercial solar project may benefit from using the next several weeks to better understand their position.
The proposed commencement date is 1 October 2026, and the Government has explicitly stated that this remains subject to the necessary regulations being in place.
For organisations with sites potentially suited to systems above 100 kW, now may be an appropriate time to:
Review 12 months of electricity consumption and interval data.
Review the existing electricity supply contract and tariff structure.
Understand available roof space and structural limitations.
Model several solar system sizes rather than defaulting to 100 kW.
Review potential network connection and export constraints.
Consider future electrification or increased electricity demand.
Assess whether battery storage has a genuine commercial or resilience role.
Revisit solar projects that were previously considered uneconomic.
Importantly, businesses should avoid making investment decisions based solely on the announced incentive until the final regulatory details and project eligibility requirements are confirmed.
"Energy procurement, solar generation, batteries, demand management, resilience and emissions reduction are becoming interconnected parts of small to medium sized businesses SMEs asset portfolios and business strategies.
For Nyawi Pty Ltd, the most interesting part of this announcement is not simply that a larger rebate may become available. It is that the economics of a segment of the commercial solar market are changing. Over recent years, we have seen organisations increasingly move beyond viewing energy simply as an overhead. |
For Victorian businesses and organisations with large sites, high daytime electricity consumption or previously constrained solar projects, the proposed 1 MW SRES threshold provides a good reason to revisit the numbers. A project assessed two years ago may not produce the same answer today.
The opportunity is not necessarily to install more technology. It is to make a better-informed energy investment and support around managing, maintaining and operating that energy investment. |