A $2 billion government incentive for commercial and industrial batteries could unlock almost twenty times that benefit for Australian families and businesses. A well-designed scheme would enable major private investment, lower wholesale electricity prices, and accelerate Australia’s energy transition.
Australia has an enormous clean energy resource sitting unused on the rooftops of warehouses, factories, shopping centres, and offices. New modelling by Nexa Advisory estimates that commercial and industrial (C&I) consumer energy resources, including rooftop solar and batteries, could deliver up to $39.7 billion in gross energy-system benefits every year.
This comprises approximately $39.2 billion in annual wholesale market benefits and $500 million in annual network peak-reduction value.
Nexa Advisory CEO Stephanie Bashir said the benefits would extend well beyond the businesses installing the equipment.
“Unblocking investment in commercial and industrial solar and batteries would benefit every energy consumer, not just the businesses installing them,” Ms Bashir said.
“Our modelling shows that a $2 billion government subsidy could reap up to $39.7 billion in gross system benefits every year, including lower wholesale electricity prices and reduced pressure on the grid.”
Nexa’s analysis identifies the technical potential for 63.3 gigawatts (GW) of C&I rooftop solar and 28.7 GW of battery capacity across Australia, substantially more than the approximately 4 GW of C&I rooftop solar installed today.
Under the central modelling assumptions, a 30 per cent subsidy on the upfront cost of C&I batteries, costing approximately $2 billion, combined with better tariffs and market access, could support the uptake of 29 GW of rooftop solar and 8.7 GWh of battery storage across the National Electricity Market.
“More solar and batteries on commercial sites would provide businesses with greater control over their energy costs while lowering wholesale prices, easing network peaks and reducing future network costs for all consumers.”
The estimate of the annual network benefit is likely to be conservative because it excludes the likely additional value from improved network utilisation, increased hosting capacity and local constraint management.
The modelled C&I solar and battery portfolio would also reduce grid-supplied electricity by 35.31 terrawatt-hours annually and cut emissions by an estimated 21.88 million tonnes of carbon dioxide equivalent each year.
The missing middle of the energy transition
C&I projects remain caught between Australia’s existing energy-support mechanisms. They are generally too big to access simple small-scale support but too small to participate efficiently in programs designed for utility-scale generation.
“Commercial and industrial energy remains the missing middle of Australia’s transition,” Ms Bashir said.
“These projects can be delivered quickly, on existing buildings, and close to where electricity is consumed. That means more clean energy and flexible capacity without waiting for every major generation and transmission project to be completed.”
The modelling suggests that an incentive alone will not be enough. Businesses also need tariffs and market products that reward flexible consumption, storage and exports, together with faster and more transparent grid connections.
Workable arrangements are also needed to address the split incentive between building owners and tenants, particularly where the landlord controls the rooftop, but the tenant pays the electricity bill.
“These challenges are real, but they are not roadblocks,” Ms Bashir said.
“With the right scheme design and complementary reforms, government can establish the business case for investment and allow the competitive market to deliver.”
A dedicated scheme for C&I solar and batteries
Nexa Advisory is calling on the Australian Government to establish a dedicated C&I tier within the Small-scale Renewable Energy Scheme, providing a simple upfront discount for eligible commercial-scale battery systems.
The scheme should be accompanied by:
streamlined and transparent grid connections;
tariffs and market products that reward flexible demand, storage and efficient exports;
financing and contracting models that allow landlords and tenants to share the benefits; and
competitive delivery arrangements and appropriate consumer protections.
“Australia has successfully helped households invest in rooftop solar and batteries. Extending that opportunity to commercial and industrial customers would support Australian businesses, accelerate the transition and help deliver a more affordable and reliable electricity system for everyone,” Ms Bashir said.
