REPS2 at a Crossroads. Why Scale, Certainty & Capability Matter.

Change in itself is not a problem. Policy frameworks should evolve as markets mature and technologies improve, but the scale and direction of this change raises legitimate questions about why a program that has consistently delivered value needed such a significant reset, let alone a reduction of this magnitude.

Under REPS2, annual ambition has been reduced from 3.75 million gigajoules to 1.65 million. That represents a 56 per cent reduction in target volume.

At a time when energy costs remain elevated, and decarbonisation pressures are intensifying, it is difficult to reconcile this contraction with South Australia’s broader energy and climate objectives, or the nation’s federal net-zero targets.

One of the strengths of the previous REPS framework was its inclusion of commercial and industrial customers through an array of robust methods that catered to the bespoke nature of the market segment. Large businesses consume a substantial share of the state’s energy and offer some of the most cost-effective efficiency opportunities. Supporting those upgrades was not just about emissions; it was about business productivity, competitiveness, and resilience in the face of rising operating costs.

Removing Large Energy Users from the scheme leaves a notable gap. These businesses now face the challenge of decarbonising without any targeted support from the state’s primary energy productivity mechanism, at a moment in history when both capital and certainty are hard to come by.

Just as importantly, scale matters, not only for energy outcomes, but for people and capability. Programs like REPS work because they create consistent demand for specialist skills including energy assessors, electricians, HVAC technicians, controls experts and project managers. That scale underpins business investment in training, systems and innovation. When ambition is reduced, so too is the incentive to build and retain that expertise in South Australia.

The results under the previous framework speak for themselves.

In 2024, more than 2,100 businesses benefited from incentives under the program, up from 1,573 the year before and 1,284 the year before that. Hundreds of tradespeople have been employed through REPS-supported work, developing skills that are directly aligned with the state’s long-term energy transition.

These outcomes were not accidental; they were the product of sustained, predictable policy settings.

The contrast with the consultation process earlier in 2025 is particularly hard to ignore. Industry was asked to consider scenarios that involved significantly higher targets, including discussions around doubling Gigajoule (GJ) volumes. Many businesses made decisions on the assumption that ambition would be maintained or increased. The drastic reduction has therefore come as a surprise, leaving parts of the sector scrambling to adjust.

The timing of the announcement has not helped. Releasing major policy changes on Christmas Eve, a mere 7 days prior to them taking effect, after months of limited communication and at a point when most businesses were closed, has added to a sense of disconnection between government and industry. Clear, early signals are essential in schemes where investment decisions are made months in advance.

The uncertainty is far from over. While we now know what has been removed, key details remain outstanding. Activity policies for the remaining eligible upgrades have not yet been released. GJ calculation methodologies are unconfirmed, rebate values may change, and retailer targets for 2026 have not been disclosed. Until those pieces are in place, activity claims under REPS2 cannot be approved or processed, leaving the remaining parts of the industry in a holding pattern.

There are, however, positive elements worth acknowledging.

The new Priority Group target of 750,000 GJ is a meaningful increase on previous years, which typically sat around 500,000 GJ. For Priority Group households, this represents a stronger commitment to equity and cost-of-living relief, and it should deliver tangible benefits.

The challenge now is ensuring that this focus does not come at the expense of the broader system. Residential and small business upgrades are essential, but they cannot carry the energy transition alone. Large-scale productivity gains, specialist skills development and business investment, all rely on programs of sufficient size and certainty.

REPS has worked because it balanced ambition with practicality, and social outcomes with economic ones. As REPS2 continues to take shape, there is still an opportunity to rebuild confidence, restore scale where it matters, and ensure South Australia retains the capability it has spent years developing.

In energy policy, as in many other markets, scale and business confidence is not a nice-to-have, it is what drives action and makes lasting progress possible.