The landscape for commercial solar procurement is shifting. On 5 August 2026, the Australian Government announced a proposed expansion of the Small-scale Renewable Energy Scheme (SRES) [1]. The intended change would allow onsite solar PV systems above 100 kW and up to 1 MW to create Small-scale Technology Certificates (STCs), instead of relying solely on Large-scale Generation Certificates (LGCs).
This expansion is intended to apply to eligible mid-scale solar installed from 1 October 2026, subject to regulations being in place. For chief procurement officers, CFOs, and facilities managers, this represents a significant change in how mid-scale commercial solar projects are financed and evaluated.
This guide details the proposed changes, compares the current LGC pathway with the proposed STC pathway, and explains how to align solar sizing with emerging battery incentives like NSW's BESS4 and BESS5.
What is the Proposed SRES 1 MW Expansion?
Currently, the SRES provides an upfront discount (via STCs) for solar PV systems up to 100 kW. Systems larger than 100 kW must participate in the Large-scale Renewable Energy Target (LRET), creating LGCs based on actual generation over time.
The proposed expansion aims to bridge the gap for mid-scale commercial and industrial energy users. By lifting the SRES threshold to 1 MW, the government intends to simplify the incentive structure and provide a more substantial upfront capital reduction for larger onsite installations.
Key details of the proposed change:
- Current Threshold: Up to 100 kW (SRES/STCs).
- Proposed Threshold: Up to 1 MW (SRES/STCs).
- Intended Commencement: 1 October 2026 (subject to regulations).
- Impact on Existing Systems: Existing accredited large-scale systems remain under LRET arrangements. Existing SRES arrangements for systems under 100 kW are unaffected.
Current LGC Pathway vs. Proposed STC Pathway
Understanding the difference between LGCs and STCs is critical for accurate financial modelling and procurement timing.
| Feature | Current LGC Pathway (>100 kW) | Proposed STC Pathway (Up to 1 MW) |
|---|---|---|
| Incentive Timing | Ongoing revenue stream based on actual generation over time. | Upfront capital cost reduction at the time of installation. |
| Administrative Burden | High. Requires ongoing metering, reporting, and certificate creation. | Low. Certificates are typically assigned to the installer for an upfront discount. |
| Price Certainty | Variable. LGC prices fluctuate based on market demand and supply. | Higher certainty at procurement. STC value is factored into the upfront quote. |
| Cash Flow Impact | Gradual return on investment. | Immediate reduction in capital expenditure. |
For a detailed financial model tailored to your site, use our Solar System Cost Calculator or request a comprehensive Commercial Energy Assessment.
Procurement Timing: Should You Wait?
The announcement of the 1 October 2026 commencement date introduces a strategic timing decision for businesses currently evaluating solar projects between 100 kW and 1 MW.
Decision Criteria for Procurement Timing:
- Project Readiness: If your project is still in the feasibility or design stage, targeting an installation date after 1 October 2026 may align well with the proposed STC expansion.
- Current Energy Costs: If your facility is exposed to exceptionally high daytime energy tariffs, the cost of delaying the project (lost savings) might outweigh the benefit of the upfront STC discount compared to ongoing LGC revenue.
- Regulatory Certainty: The 1 October 2026 date is *intended* and *subject to regulations being in place*. Procurement plans should include contingencies in case of legislative delays.
- Capital Availability: If upfront capital is a primary constraint, the proposed STC pathway offers a stronger business case by reducing the initial outlay.
Connecting Solar Sizing to BESS4 and BESS5
The proposed SRES expansion coincides with the introduction of new battery incentives, such as the NSW Peak Demand Reduction Scheme (PDRS) BESS4 and BESS5 activities, commencing 1 September 2026 [2].
When sizing a commercial solar system, it is now essential to consider future or concurrent Battery Energy Storage System (BESS) integration.
- BESS4 (20–200 kWh): Designed for small and medium businesses. Excludes data centres.
- BESS5 (200–30,000 kWh): Designed for commercial and industrial businesses. Excludes data centres.
Important Note on Battery Incentives: BESS4 and BESS5 are *not* guaranteed fixed rebates. They are certificate-funded incentives based on Peak Reduction Certificates (PRCs). The value depends on usable capacity, inverter output, network loss factors, and the variable PRC market price. For example, secondary sources estimate that eligible projects may receive value equivalent to 20–50% of installed cost (indicative only, based on an assumed $3.00 PRC price in August 2026) [3].
For BESS5, the system may have up to 30,000 kWh of usable capacity, but PRC support applies only to the first 10,000 kWh [2]. At the smaller end, eligible small-business batteries with 5–100 kWh nominal capacity may separately access federal battery STCs; only the first 50 kWh of usable capacity creates STCs, with a 6.8 base factor for May–December 2026 that tapers across the 0–14 kWh, >14–28 kWh and >28–50 kWh bands [4]. These pathways must be modelled separately and checked for stacking eligibility.
Furthermore, installing qualifying *new* solar alongside a BESS can influence the PRC calculation under the PDRS rules. Therefore, a holistic procurement strategy that evaluates the 1 MW SRES expansion alongside BESS4/BESS5 eligibility is crucial for maximising asset value.
Cable Co has a company-reported secured pipeline of 3 MW in commercial BESS projects. Our engineering team can help you navigate these overlapping incentive structures. Explore our Renewable Energy Services or review our Capability Statement for more information.
Implementation Stages and Risk Controls
To navigate these policy changes safely, commercial property owners and industrial users should adopt a structured procurement approach:
- Feasibility and Sizing: Assess site load profiles to determine the optimal solar capacity (up to 1 MW) and evaluate the business case for concurrent BESS integration. Use our Battery Storage Payback Calculator.
- Regulatory Monitoring: Track the progress of the SRES expansion regulations leading up to October 2026. Do not sign contracts that assume the STC discount is guaranteed before the legislation is finalised.
- Vendor Due Diligence: Ensure your chosen partner has experience navigating both federal STC/LGC frameworks and state-based schemes like the NSW PDRS.
- Contract Structuring: Include clauses that address incentive variability, particularly for certificate-based schemes where market prices fluctuate.
For expert guidance tailored to the Commercial Property Sector, Contact Us to discuss your specific requirements.
References
[1] Clean Energy Regulator. "Expansion of solar PV eligibility under the Small-scale Renewable Energy Scheme." August 2026. https://cer.gov.au/news-and-media/news/2026/august/expansion-solar-photovoltaic-pv-eligibility-under-small-scale-renewable-energy-scheme
[2] Independent Pricing and Regulatory Tribunal (IPART). "PDRS Rule and changes." https://www.energysustainabilityschemes.nsw.gov.au/pdrs-rule-and-changes
[3] Solar Choice. "NSW Commercial Battery Rebate." August 2026. https://www.solarchoice.net.au/commercial-solar/nsw-bess-battery-rebate/
[4] Clean Energy Regulator. "Solar batteries." July 2026. https://cer.gov.au/schemes/renewable-energy-target/small-scale-renewable-energy-scheme/small-scale-renewable-energy-systems/solar-batteries