Australian businesses will be able to dip into a $62 million pool to help them become more energy efficient and reduce greenhouse gas emissions.
The grants of between $10,000 and $25,000 are also expected to help take pressure off power bills once the projects take effect.
Small and medium-sized businesses in all sectors will be able to apply for funding for measures such as installing energy monitoring tools, upgrading or replacing air conditioners with high-efficiency units and replacing heat boilers with pumps.
Assistant Energy Minister Jenny McAllister said the grants would enable businesses to become more competitive while saving money on power bills.
An Energy Consumers Australia survey found more than a third of small businesses reported electricity as one of their biggest overheads, while a further 38 per cent said it was a substantial cost to the business.
"Improvements in energy efficiency will ease pressure on energy bills for these SMEs (small and medium-sized enterprises) and on the grid, and drive better energy performance across the economy," Senator McAllister said.
"Our government is committed to helping reduce the cost of running a business in Australia through lower energy costs while taking strong action on climate change."
The grants will be allocated across states and territories based on their share of small and medium businesses.
The first round of grants will open up $16 million, with the second round to be delivered next year.
