Commercial Solar STC Rebates Are Expanding to 1 MW from October 2026

A major change is coming to commercial solar in Australia.

The Australian Government has announced plans to expand the Small-scale Renewable Energy Scheme (SRES) so that solar PV systems up to 1 megawatt (MW) can qualify for Small-scale Technology Certificates, commonly known as STCs.

At present, STCs are generally associated with systems up to 100 kW. Under the proposed reform, eligible commercial and industrial solar systems up to 1 MW will be able to access an upfront STC discount.

The intended commencement date is 1 October 2026, subject to the required regulations being in place.

For businesses considering solar, particularly those with large daytime electricity loads, this could materially improve project economics.

What is changing?

The current SRES threshold of 100 kW is proposed to increase to 1 MW.

This means eligible solar systems between 100 kW and 1 MW, which have historically sat under the Large-scale Renewable Energy Target, may instead qualify for STCs.

The reform is aimed at supporting what is often referred to as the “mid-scale” commercial solar market.

This includes businesses such as:

• manufacturers
• warehouses
• shopping centres
• clubs
• schools
• agricultural businesses
• community organisations
• commercial property owners
• hospitality venues
• cold storage and food processing facilities

The Government has indicated that the change is intended to make larger rooftop solar projects easier to justify financially and reduce upfront capital costs.

How much could the new STC discount be worth?

The Government has stated that the expanded SRES is expected to provide an upfront discount of approximately 20% for eligible mid-scale solar projects, although the actual benefit will vary depending on the project, location, certificate price and installation cost.

For Zone 3 locations, which include Sydney, Brisbane, Adelaide and Perth, the Government provides the following examples:

Solar system size	Indicative upfront STC discount
250 kW	Approximately $68,000
500 kW	Approximately $136,000

These figures are indicative only, but they give a good sense of the scale of the benefit available to businesses.

An example using current commercial solar assumptions

To demonstrate how the numbers may work in practice, the following example uses:

• Solar installation cost: $1.10 per watt ex GST
• STC value: $38.50
• Zone 3 rating: 1.382
• Deeming period: 5 years
• Electricity value: $0.15 per kWh
• Solar production: approximately 1,380 kWh per installed kW each year

Under these assumptions:

Solar size	Gross cost ex GST	Approx. STC discount	Net cost after STCs	Annual solar generation	Annual electricity savings
100 kW	$110,000	$26,604	$83,397	138,000 kWh	$20,700
250 kW	$275,000	$66,490	$208,511	345,000 kWh	$51,750
500 kW	$550,000	$133,018	$416,983	690,000 kWh	$103,500
750 kW	$825,000	$199,507	$625,493	1,035,000 kWh	$155,250
1,000 kW	$1,100,000	$266,035	$833,965	1,380,000 kWh	$207,000

These figures assume the solar energy is used onsite and offsets electricity worth $0.15 per kWh.

Actual savings will depend on the business load profile, electricity tariff, export percentage, roof orientation, system performance, network constraints and other site-specific factors.

What does this mean for a 250 kW commercial solar system?

A 250 kW system provides a useful example.

Using the assumptions above:

• Gross system cost: $275,000 ex GST
• Estimated STCs: 1,727
• STC discount: approximately $66,490
• Net system cost: approximately $208,510
• Annual generation: approximately 345,000 kWh
• Annual electricity savings at $0.15/kWh: approximately $51,750
• Simple payback: approximately 4 years

Interestingly, the Government fact sheet uses a very similar example, estimating that a 250 kW solar system producing around 345 MWh per year could save approximately $50,000 annually where electricity costs of around 15 cents per kWh are avoided.

One of the most important changes: the five-year deeming period

One of the strongest features of the proposed reform is how the STCs are expected to be calculated.

The Government has stated that eligible mid-scale systems will use the current five-year deeming period each year until the end of the SRES in 2030, rather than the deeming period reducing each year.

This is particularly significant for businesses considering solar later in the decade.

It means an eligible mid-scale project installed in a later year may still receive the benefit of a five-year STC calculation, subject to the final regulations.

What happens to systems already under the LRET?

Existing mid-scale solar systems already registered under the Large-scale Renewable Energy Target will continue under that scheme.

Expansions to generation units registered under the LRET, and new systems greater than 1 MW, will also continue to be treated under the LRET.

This is important because the reform does not simply convert every existing commercial solar installation into the STC scheme.

The treatment depends on whether the project is new, an expansion, already registered under LRET, and whether the combined system size remains under 1 MW.

What will businesses need to qualify?

The Government fact sheet sets out a number of expected requirements.

Eligible mid-scale solar installations will need to comply with:

• maximum system size requirements
• installer and product accreditation requirements
• electrical safety requirements
• relevant planning approvals
• network connection agreements
• installer declarations
• engineering and connection documentation where required

For an expansion to an existing solar system, the combined capacity must remain within the proposed 1 MW limit for SRES eligibility.

So while the incentive may become more attractive, businesses should still expect proper engineering, network approvals and project compliance to remain critical.

Why this matters for commercial solar

Australia has had extraordinary uptake of residential solar, but the commercial sector has lagged behind.

The Government fact sheet notes that approximately 22 GW of solar has been installed in the residential sector, compared with around 5.6 GW across businesses. It also notes that about 780 MW of mid-scale solar between 100 kW and 1 MW is currently registered under the LRET.

There is a huge amount of commercial roof space that remains underutilised.

For many businesses, the previous 100 kW STC threshold created a financial and administrative divide.

In some cases, businesses intentionally kept systems below 100 kW simply because the STC pathway was simpler and more financially attractive.

Extending the scheme to 1 MW could remove much of that artificial ceiling.

Which businesses are likely to benefit most?

The strongest candidates are generally businesses with high electricity use during daylight hours.

Examples include:

• manufacturing facilities
• refrigeration and cold storage
• food processing
• shopping centres
• warehouses
• clubs and hospitality venues
• aged care facilities
• schools
• agricultural operations
• commercial property portfolios

The greater the proportion of solar energy that can be consumed onsite, the stronger the financial return is likely to be.

What about solar and batteries together?

The Government fact sheet also confirms that businesses eligible for mid-scale solar support may still be able to access the Cheaper Home Batteries Program, provided the relevant battery eligibility criteria are met.

This creates the potential for solar and battery systems to work together to reduce both daytime and evening grid consumption.

For some businesses, battery storage may also improve solar self-consumption where a portion of daytime solar would otherwise be exported.

Should businesses wait until October 2026?

Not necessarily.

While the reform is intended to apply to eligible systems installed from 1 October 2026, businesses can start preparing now.

Good early-stage work includes:

• reviewing electricity interval data
• assessing daytime electricity demand
• completing roof and structural assessments
• determining the optimum solar system size
• checking network connection requirements
• modelling solar export levels
• assessing whether battery storage is commercially worthwhile
• preparing indicative financial returns

The key is to avoid assuming that every announced detail is final until the supporting regulations are in place.

A major opportunity for Australian businesses

If implemented as announced, this reform could be one of the most important changes to commercial solar economics in years.

For a business considering a 250 kW, 500 kW or even 1 MW rooftop solar system, the upfront STC benefit could be substantial.

At the same time, the long-term savings from reducing grid electricity consumption may be significantly larger than the upfront incentive itself.

The right solar system size should still be determined by the business’s actual energy use, operating hours, roof space, connection capacity and commercial objectives.

But for many businesses, the new SRES expansion could make larger solar projects considerably more attractive.

Want to understand what this could mean for your business?

I help businesses assess commercial solar and battery opportunities based on their actual electricity consumption and site conditions.

A proper feasibility assessment should look at:

• electricity interval data
• current tariffs
• daytime load
• proposed solar production
• export percentage
• STC eligibility
• network constraints
• expected annual savings
• simple payback and return on investment

If you are considering commercial solar between 100 kW and 1 MW, now is a good time to start assessing the opportunity ahead of the proposed October 2026 changes.