On August 5, 2026, the Australian government announced a historic extension of the Small-scale Renewable Energy Scheme (SRES), raising the Small-scale Technology Certificate (STC) qualifying level from 100kW to 1MW (1,000kW). This policy adjustment, which is set to take effect on October 1, 2026, would enable medium-sized businesses to claim huge point-of-sale discounts, thereby lowering commercial solar installation prices by around 20%. This removes the slow financial returns of Large-scale Generation Certificates (LGCs), making large-scale rooftop solar instantly affordable while substantially cutting the return on investment.
The "Missing Middle": Understanding the August 2026 SRES Update
For years, Commercial solar industry in Australia has had a frustrating backlog. The SRES, which offers the famous upfront STC “rebate,” was tightly limited to 100kW. This was sufficient for normal homes or small businesses. However, the federal government saw a large market gap, known as the “missing middle”.
This missing middle refers to the significant number of warehouses, industrial plants, agricultural sites, and retail malls that need systems far bigger than 100kW to balance their daytime energy demands. Previously, a Berwick company that built a 250kW system was required to participate in the Large-scale Renewable Energy Target (LRET) programme, which relied on Large-scale Generation Certificates (LGCs).
Difference Between STCs and LGCs
STCs (Small-scale Technology Certificates): These are pre-determined and applied as an instant, lump-sum upfront reduction on the cost of your solar panel installation.
LGCs (Large-scale Generation Certificates): These are issued slowly year after year depending on the actual power generated by your system, requiring continual administrative labour and yearly trade.
By increasing the STC maximum tenfold to 1MW, the government is enabling mid-scale commercial facilities to completely sidestep the LGC system, offering immediate financial relief.
Financial Impact: How Much Can Your Business Save?
The financial impact of the 2026 expansion cannot be overstated. Businesses that switch from progressive LGC generation to upfront STC reductions may save their cash for operational expansion instead of waiting years to return their solar investment.
The Australian government has released initial modelling on how this about 20% upfront cost reduction translates into real-world savings:
| Commercial System Size | Previous Framework (Pre-Oct 2026) | New Framework (Post-Oct 2026) | Estimated Upfront STC Discount |
|---|---|---|---|
|
99kW |
SRES (STCs) |
SRES (STCs) |
Standard STC pricing applies |
|
250kW |
LRET (LGCs only) |
SRES (STCs) |
~ $68,000 upfront discount |
|
500kW |
LRET (LGCs only) |
SRES (STCs) |
~ $136,000 upfront discount |
|
1MW (1,000kW) |
LRET (LGCs only) |
SRES (STCs) |
Maximum 20% capital reduction |
Note: Actual values vary based on the certificate market, your individual location and the exact installation date.
Which Australian Businesses Stand to Benefit Most?
Solar energy yields the fastest payback times when the power is utilised on-site during peak to the grid for a low feed-in tariff.
The new 1MW STC extension ideally complements businesses that operate mostly during the day. In Australia, the main beneficiaries are:
- Warehouses & Logistics Centres: With large, clear roof areas that are currently underutilised for solar power, logistics hubs may now make full use of their real estate. Instead of simply limiting installations at 99.9kW to get the upfront refund, they may design a 300kW+ system based on their real usage.
- Manufacturing and industrial sites: Heavy equipment, conveyor systems, and industrial HVAC all work hard throughout the day. A 500kW system substantially funded with STCs may significantly reduce output costs.
- Agricultural facilities and cold storage: Farming sheds and cold storage require massive, continuous daytime energy. Scaling up to a 1MW system gives enough power to offset these large cooling expenses.
- Schools, hospitals, and shopping centres: Community buildings and retail hubs experience peak energy consumption when the sun shines, making them ideal candidates for expanding mid-scale solar.
Why Planning Now is Critical for the October Rollout
While system is scheduled to go into force on October 1, 2026 until October to start the process is a strategic blunder. Large-scale commercial solar installations need a significant amount of lead time.
Because STC certifications are issued based on when the system is actually built and commissioned, a project larger than 100kW finished before the October start date would be subject to the previous LGC standards. In contrast, the predicted flood of applications would certainly generate delays in network approvals.
To guarantee your company obtains the maximum STC entitlement, you must take the following measures immediately:
1. Network Distributor (DNSP) Approval
Any business solar system built in Australia must be certified by the local network distributor (e.g. Energex, Ausgrid, Powercor, Western Power). Applications for systems ranging from 100kW to 1MW need thorough technical studies, voltage increase mitigation strategies, and, in many cases, difficult export limit discussions. The government has requested the Australian Energy Market Commission (AEMC) to investigate rule modifications for quicker approvals, although obtaining them may still take time.
2. Engineering & System Design
Scaling from a 100kW to a 500kW system entails more than just installing additional panels. It requires advanced energy modelling, structural roof inspections, and commercial-grade inverter selection. Starting the design process now ensures that your project is “shovel-ready” when the law enters into effect.
3. Equipment Procurement
The announcement of SRES expansion has already resulted in an increase in demand for Tier-1 commercial solar panels and heavy-duty inverters. Engaging a certified supplier, such as The Solar King, now secures and allocates your equipment, avoiding the inevitable supply chain delays in Q4 2026.
Trust The Solar King for Your Commercial Upgrade
Navigating incentives, compliance, and commercial engineering need a highly skilled Our business section at The Solar King specialises in large-scale system design that is especially customised for Australia.
We work directly with your local network distributor, manage all Clean Energy Regulator compliance so your company gets the discount right on your quote.
Frequently Asked Questions (FAQ)
If a system exceeding 100kW is installed and commissioned before the official start date, it will not be eligible for STCs under the new ceiling. It will be subject to the existing restrictions and will be eligible only for Large-scale Generation Certificates (LGCs), losing out on the first STC discount.
No, existing arrangements for business and residential systems less than 100kW are unaffected by these modifications. They will continue to earn STCs precisely as they do now.
The increase is mainly intended for rooftop “behind-the-meter” systems, in which power is utilised on site. Large-scale ground-mounted systems designed specifically for grid export can still be categorised as power plants needing LGCs under rigors Clean Energy Regulator standards.
Yes. The STC discount lowers the overall capital cost of your system at the point of sale. The remaining out-of-pocket expenses may be added to your company’s simplified depreciation pool for future tax deductions. We strongly advise you to contact your company’s CPA before including your solar asset into your 2026/2027 tax plan.
