State governments key to unlocking rooftop solar for renters, says thinktank

The addition of rooftop solar onto a home has become well established as a common-sense step to cutting household energy costs, but governments must do more to ensure renters – who often remain locked out of the solar market – can share these benefits, a new report has found.

The report, published by The Australia Institute, has called on state governments to do more to break down the barriers to solar power for those renting their homes, to unlock new supplies of clean energy and help households cut their energy costs.

Renters have generally been locked out of the rooftop solar market, due to split incentives between tenants and landlords. Without other measures, installing solar on a rental property would generally see the property owner cover the costs of the solar installation, while the tenant receives the benefits of lower electricity bills.

Some solutions have suggested the benefits of rooftop solar are shared between tenants and homeowners, with increases in rent payments negotiated in return for tenants benefiting from lower electricity costs, but uptake in such circumstances has remained low.

Rooftop solar uptake for rental properties currently sits at just 4 per cent, while uptake for owner-occupied homes is approaching 30 per cent – seeing almost one-third of Australian homes facing substantial barriers to getting solar installed.

In its latest discussion paper, The Australia Institute suggests that a combination of measures, including interest-free loans, rebates and negotiated changes to rents could be needed to break down the barriers to solar for renters.

Other recommendations include the payment of a “finders fee” for solar installers who have negotiated an arrangement between tenants and landlords, and the introduction of new tenancy laws that would require the installation of solar and other energy efficiency measures on the request of a tenant, in return for a fair increase in rental payments.

The discussion paper has been informed by a survey of South Australian residents, finding that the state that has been a leader in the uptake of renewable energy had significant untapped potential to generate more power from rooftop solar systems – and including renters could be the key.

“Getting more solar panels onto the roofs of rental properties in South Australia would be good for tenants, landlords and the environment, but more needs to be done to make it happen,” The Australia Institute’s Noah Schultz-Byard said.

“If the state government were to design and implement an effective scheme it could help to overcome the distrust and apathy that exists in the rental space, allowing tenants and landlords to unlock the financial and environmental benefits that come with installing solar.”

“South Australia can become a world leader in cracking the ‘split incentive’ problem, which has denied people who live in rental properties the benefits of rooftop solar for far too long,” Schultz-Byard added.

The Australia Institute urged state governments to deploy similar schemes to those designed by several local councils, including the ‘Solar Savers’ program run by Adelaide City Council, where the costs of systems were covered by the council and repaid through an additional council rates charge.

“Our research shows that there is significant interest from both tenants and landlords when it comes to installing solar on rental properties, but they need help getting there. The government can act as an honest broker in this space, helping to align interests, nominate an installer, guarantee quality and subsidise upfront installation costs,” Schultz-Byard said.

“A comprehensive and well-designed scheme for increasing installations on rental properties could play a significant role in helping South Australia reach 500% renewable energy by the year 2050, as outlined in the government’s recent climate action plan.”