Sunny Australia sure is the lucky country for many of us cashing in on the financial benefits of putting solar panels on their roof — but what can renters do if they want to save money and reduce their greenhouse emissions?
Skyrocketing grid electricity prices and the falling cost of solar technology saw a record number of Australian dwellings put solar photovoltaic (PV) cells on their roof in 2017, taking the total to 1.8 million.
But ever-more-elusive home ownership means there is a growing number of renters (now over 30 per cent of us) who tend to be the “solar have-nots”.
“It’s a bit of a risk of the country dividing into the solar energy haves and have-nots,” Andrew Reddaway, an energy analyst from the Alternative Technology Association (ATA), said.
And it’s not only renters’ hip pockets that are at stake here. Mr Reddaway estimates that by 2037, Australia could save as much as 5.6 million tonnes of greenhouse gas thanks to solar energy generated on the roofs of rental properties — equivalent to around a million or so cars off the road.
The main barrier to landlords installing solar panels is what’s called the “split incentive”, Mr Reddaway said.
“It’ll be the tenant who sees the benefit on the electricity bill, whereas the person who pays for the solar system is generally the landlord. So the main question is: What’s in it for the landlord?”
The line graph shows the retail price index of electricity in Australian capital cities each year since 1990. Prices were reasonably stable between 1990 – 01 and 2007 – 08 but have increased dramatically over hte last 10 years.
But according to the ATA, there are options starting to become available to get past this problem — and they mainly involve splitting the costs and the benefits of a rooftop system between the tenant and landlord.
If you’re not lucky enough to move into a place that already has solar on the roof, the first step could be to ask the landlord if they are willing to install a system in return for an increase in the rent to help cover the cost.
But this can be hard to negotiate, not least because it requires the landlord to fork out some thousands of dollars up front.
Luckily, the falling cost of solar has seen an increase in affordable finance options, not only in the private sector but also among not-for-profit groups.
One “climate conscious” community group in regional NSW called Z-Net Uralla recently teamed up with the not-for-profit CORENA fund (Citizens Own Renewable Energy Network Australia) to give landlords interest-free loans to install solar on their rental properties. CORENA also helps broker a fair rent increase to help cover the cost of repayments.
“We are hoping that the partnership can be a model for communities elsewhere to copy,” Margaret Hender of CORENA said.
There’s also a move among local councils to offer landlords interest-free loans that can be paid off via rate instalments.
Under the “solar savers” scheme pioneered by Darebin City Council in Melbourne, landlords can even transfer their loan to the new owner when the property is sold. Darebin is now targeting landlords, which means renters will be able to negotiate a rent increase to help cover the loan repayment. The City of Adelaide is another council that has followed this lead.
There are also a number of commercial schemes that offer to help manage a landlord-tenant agreement. A few of these are described in a recent article in the ATA’s ReNew magazine, along with some options for apartment dwellers, who face their own unique challenges installing rooftop solar.
But there are also solutions that don’t require the landlord to be out of pocket at all, ATA Policy & Research Manager Damien Moyse said.
This can involve a company installing rooftop solar — with permission from the landlord — and then charging the tenant, either for the electricity they use, or a fixed lease repayment, Mr Moyse said.
But, he said, no matter what a tenant does it’s important they weigh the costs and benefits before proceeding.
“You need to get some independent advice,” he said. “You can’t do the maths in your head.”
The non-profit ATA charges for a service that does this, and according to CORENA’s Margaret Hender, local non-profit groups that are members of the Coalition for Community Energy may also be able to help.
Independent advice could also help landlords, who will want to make sure they’re not dealing with “solar cowboys”, Ms Hender said.
Whether solar benefits outweigh the cost of finance, and by how much, depends on your individual case. This includes your pattern of energy use and what electricity tariff you are on.
He said in some cases tenants may be better off making their homes more energy efficient by doing such things as using energy efficient light bulbs, sealing windows and doors to keep out draughts, and choosing energy-efficient appliances.
Getting rooftop solar might make tenants feel better about doing their bit to reduce emissions while pocketing some savings.
But having to help pay for it means tenants won’t get the full financial benefit that an owner occupier would get.
According to the NSW Tenants’ Union, it’s fair enough to ask why tenants should have to contribute at all just to have access to solar electricity.
After all, putting rooftop solar on a rental property increases the value of the property, the union’s Leo Patterson Ross said.
Feb 20, 2019View More Investor News