Understanding Commercial Solar Rebates
This is the ultimate guide to understanding 'commercial solar rebates' AKA business solar incentives in Australia.
Below we answer the most popular questions business owners ask us about the rebates.
So if you want to:
- Learn about the Federal Government Commercial Solar Rebate
- Check if your State Government has current energy subsidies available to businesses
- Find out about the available solar tax incentives
- Determine how much money your business can save in 2024
- Confirm your eligibility
Then you’ll find this page very helpful!
Let’s dive into it!
Business Solar Rebates in Australia: A Strategic Approach to Overhead Reduction
Going solar can be extremely beneficial to businesses of all sizes, particularly those that use the majority of their energy during the standard 9-5 schedule. A well designed commercial solar power system has the potential to become a cashflow positive asset from the day one!
The huge energy cost savings from installing solar are bolstered by significant rebates, and tax incentives tailored to businesses. Once business owners understand the energy savings possible with a well designed installation, the appeal of solar energy becomes an extremely attractive business proposition.
Outlined below are key commercial solar rebates available in Australia, aimed at expediting the return on investment for businesses:
Federal Government Solar Rebates
The Federal Government's Renewable Energy Target encompasses two key schemes that incentivise the adoption of commercial solar power systems:
- Large-scale Renewable Energy Target (LRET)
- Small-scale Renewable Energy Scheme (SRES)
These schemes generate Large-scale Generation Certificates (LGCs) and Small-scale Technology Certificates (STCs) respectively, providing businesses with compelling reasons to invest in renewable energy solutions.
Differentiating between LGCs and STCs: STCs are applicable to solar power systems below 100kW, whereas larger systems qualify for LGCs. While both offer avenues for reducing solar costs, businesses inclined to minimising upfront expenses typically favour STCs due to their immediate benefit in the form of a point-of-sale discount, unlike LGCs which are disbursed over time.
Anticipated Phase-Out of STCs and LGCs: The Federal Government has announced a gradual reduction in the value of STCs by approximately 6-7% annually, with the scheme slated for complete phasing out by 2030. Similarly, LGCs are expected to be phased out by the end of December 2030, with their value already displaying a downward trend in recent years. In other words, every day you put off installing a commercial solar system is costing your business thousands of dollars in potential rebates & energy savings.
Feed-in Tariffs
While not a direct rebate, feed-in tariffs serve as a financial incentive for solar adoption by compensating businesses for excess solar electricity exported to the grid. Although their value has decreased over time, optimising internal consumption of solar-generated power remains a lucrative strategy, given the considerable disparity between grid electricity rates and solar export rates. This is particularly beneficial when an energy audit is completed, and your business energy tariff can be optimised to maximise your energy savings.
Energy Efficient Communities Program
In addition to solar rebates, the Federal Government's Energy Efficient Communities Program targets solar uptake by offering avenues for investment in monitoring systems and energy audits, particularly catering to the food and beverage manufacturing sector.
State Government Solar Rebates
States occasionally introduce initiatives such as low-interest financing or grants tailored to specific sectors. See below the current state level rebates & grants.
Northern Territory Home & Business Battery Scheme
The Northern Territory Government’s Home & Business Battery Scheme allows homeowners and businesses receive a grant of $450 per kWh of useable battery capacity up to maximum grant value of $6,000.
ACT Business Energy & Water Program
The Australian National Territory (ACT) Government’s Business Energy & Water Program allow eligible small-to-medium businesses reduce operational costs with a rebate up to $10,000 to upgrade to energy-efficient and water-efficient technologies.
Energy Rebates are available for energy efficient upgrades including gas to electric upgrades as well as upgrades for heating, cooling, lighting and refrigeration. The maximum rebate for electric-to-electric upgrades is $5,000 (incl GST), while gas-to-electric upgrades are capped at $10,000 (incl GST).
Rebates are only available for upgrades that have not yet commenced. Eligibility criteria applies.
Instant Asset Write Off Scheme
As part of the Federal Government's 23-24 Budget, the Australian Government has recently announced changes to the instant asset write-off scheme.
Before this announcement, the threshold on eligible small business asset purchases was due to drop back to the $20,000 threshold on 1 July 2023, but the budget has proposed instead to increase the rate to $20,000, in a 12-month extension to June 30 next year (2024).
Once legislated, the asset write-off provides a way for businesses to lower their taxable income and invest in assets that help with their business operations.
When applied to business solar specifically, this tax break offers small businesses the unique opportunity to invest in an asset that manages costs through periods of uncertainty and beyond.
Beyond the instant asset write-off, the bill also underpins the Albanese government’s bonus tax deductions for small businesses that invest in energy-efficient upgrades - we have detailed these below:
Energy Efficiency Tax Break
Small and medium-sized enterprises (SMEs) are set to receive a tax incentive of up to $20,000 for implementing various energy-efficient measures, such as installing solar panels, electrifying heating and cooling systems, incorporating batteries and heat pumps, and transitioning to induction cooktops in lieu of gas. This new policy, unveiled prior to the upcoming federal budget, aims to promote sustainability and efficiency in energy usage among businesses.
Announced by Treasurer Jim Chalmers over the weekend, the Small Business Energy Incentive is expected to benefit around 3.8 million SMEs by providing a tax break to encourage the adoption of greener energy practices.
Under this budget initiative, businesses with turnovers up to $50 million will qualify for a 20% tax deduction on expenditures for batteries and other electrical devices, up to a maximum investment of $100,000 aimed at phasing out reliance on fossil fuels.
The maximum tax deduction allowable per business is capped at $20,000, with approximately $314 million allocated in forward estimates for the next four years.
Energy Minister Chris Bowen highlighted that many small business proprietors are keen to transition to electrified operations but face challenges in meeting the initial costs. He emphasised that continuing this incentive would not only alleviate this financial burden but also lead to substantial energy bill savings in the long term for businesses nationwide.
Navigating the generous rebates & tax incentives for your business. The expert team at Your Solar Quotes is here to guide you through the process. With over a decade of experience and thousands of satisfied businesses helped, we'll maximise your solar investment returns. Request obligation free quotes today to slash your business overheads, and start saving with solar!
