Australia’s commercial and industrial rooftop solar market remains one of the country’s largest untapped clean energy opportunities, with up to 85.6 GW (around 86 GW) of technical potential still available, according to the Institute for Energy Economics and Financial Analysis (IEEFA). The June 2026 report, Unlocking the Clean Energy Potential of Australian Business Rooftops, says regulatory complexity, fragmented electricity tariffs and slow grid connections continue to hold back investment despite strong financial returns.
Australia has become one of the world’s leading residential rooftop solar markets, with approximately 22 GW of installed household solar capacity. By comparison, the commercial and industrial segment has installed only 5.6 GW, comprising 4.3 GW of systems below 100 kW and 1.3 GW of systems above 100 kW.
The annual installation rate also highlights the gap. Businesses add only around 600 MW of rooftop solar each year, while the residential market installs approximately 2,500 MW (2.5 GW) annually, despite the strong economic case for commercial solar.
IEEFA estimates that urban commercial and industrial rooftops alone could accommodate approximately 40 GW of additional solar generation. When rural, regional and agricultural buildings are included, the country’s total rooftop solar potential rises to 85.6 GW, commonly rounded to 86 GW.
The revised estimate is substantially higher than an earlier assessment of 62.2 GW, reflecting improvements in photovoltaic technology. The update assumes solar module power density has increased from 156.25 W/m² to 215 W/m², allowing significantly more generating capacity to be installed on the same roof area.
Of the 85.6 GW opportunity, approximately 12.8 GW is available on commercial buildings, 26.2 GW on industrial and utility-related facilities, and 46.7 GW across rural and agricultural properties, making the agricultural sector the largest untapped rooftop solar market in Australia.
Despite this enormous technical potential, deployment forecasts remain relatively modest. Under conservative scenarios, commercial rooftop solar capacity is projected to reach only 17 GW by 2050, while more optimistic forecasts suggest 31 GW. Even the higher estimate would utilise only a fraction of the available 85.6 GW rooftop resource.
Battery storage is emerging as an increasingly important part of commercial energy systems. Australia currently has approximately 276 MW and 263 MWh of installed commercial and industrial battery storage, compared with 2,787 MW and 5,057 MWh in the residential market.
Industry demand is accelerating, with 82 percent of surveyed participants reporting stronger interest in commercial battery storage. IEEFA projects that battery capacity for small businesses could reach 21 GWh by 2050. Typical commercial battery installations are designed at around 250 kW / 500 kWh with a two-hour duration, while smaller business systems average approximately 50 kWh.
Commercial rooftop solar also offers compelling financial returns. Most projects achieve payback periods of 5 to 7 years, making them economically attractive for businesses seeking to reduce electricity costs. However, investment continues to be constrained by policy and regulatory barriers rather than project economics.
One of the biggest challenges is Australia’s 16 electricity distribution networks, each operating different tariff structures. Demand charges can account for up to 40 percent of a business’s electricity bill, making long-term savings difficult to predict. In addition, businesses frequently face grid connection delays ranging from several months to one year, reducing investment certainty.
IEEFA notes that commercial electricity demand aligns closely with daytime solar generation because businesses consume most electricity during working hours. This high level of self-consumption reduces pressure on transmission infrastructure while improving the value of rooftop solar systems. However, current regulations limit the ability of businesses to fully benefit from behind-the-meter consumption, peak demand reduction and electricity exports.
The report argues that commercial rooftop solar falls into a policy gap. Residential solar benefits from established rebate programmes, while utility-scale renewable projects attract institutional financing and long-term procurement mechanisms. Commercial rooftop systems receive comparatively little targeted support despite their strong technical and economic potential.
To unlock Australia’s 86 GW rooftop opportunity, IEEFA recommends four major policy reforms. These include financing mechanisms to overcome landlord-tenant split incentives, standardized electricity tariffs across all 16 distribution networks, nationally consistent fast-track grid connection processes to reduce delays of several months to one year, and regulatory reforms enabling rooftop solar and battery systems to compete fairly with traditional network infrastructure.
According to the June 2026 report, Australia’s commercial rooftop solar market remains significantly underdeveloped. With only 5.6 GW installed compared with 22 GW in the residential sector, annual installations of 600 MW versus 2,500 MW, battery demand rising, commercial storage projected to reach 21 GWh by 2050, and potential business energy savings estimated at up to AU$1 billion per month during periods of high wholesale electricity prices, IEEFA concludes that targeted policy reforms could unlock one of Australia’s largest clean energy resources while strengthening grid resilience, lowering electricity costs and accelerating the country’s transition to a decentralized, low-emission power system.
SHAFANA FAZAL
