Queensland Solar For Rentals Rebate Trial Results

Queensland’s Department of Energy and Public Works has revealed some of the outcomes of a trial involving rebates for solar power system installations on private rental properties.

Under the $4 million Solar For Rentals program, up to 1,000 landlords with properties in Bundaberg, Gladstone and Townsville had the opportunity to grab a rebate of up to $3,500 on the installation of a solar power system – that was in addition to the national “solar rebate“.

The initiative saw little interest in the first three months and while not all of the rebates were ultimately taken, 670 solar power systems were installed under the program, which ran from 5 March 2019 to 30 June 2020. 166 systems were installed in Bundaberg, 78 in Gladstone and 426 in Townsville – a total of 4MW of capacity and an average rebate of $3,360.

Both landlords and tenants had to agree to participate in the trial and enter into a new lease of at least 12 months. Participating tenants received full benefits of the system, including any feed-in tariff, but agreed to pay a rent increase that couldn’t be more than the solar savings.

Solar For Rentals Findings

While some of the systems haven’t been operating for a full year as yet, here’s what the Department has found:

• Participating tenants are an average of $600 per year better off – that’s taking into account an average rent increase of $11 per week and electricity bill savings.
• For the landlords, estimated average solar system payback period is expected to be around 9 years, and that takes into account the rebate.

Analysis by the Department indicates the “sweet spot” for both tenants and landlords was a 6.6kW solar system with a 5kW inverter and a rent increase of $10 – $20 per week. Under this scenario, payback can be around 7 years states the Department. But without a solar for rentals rebate, the system payback period would be around 18 years.

At $10 extra rent per week, that would seem to put the system cost at around $9,360 – but the payback period assumes average system maintenance costs of $100 per annum are paid by the landlord, and a marginal tax rate of 37.5% is applied to rental income less maintenance expense.

While the cost of solar has dropped considerably since the program originally kicked off, landlords will still need to be pretty patient on the financial side. But they may be able to claim depreciation on the cost of the solar system, or perhaps an instant asset write-off depending on the circumstances. Either way, consult a tax professional.

The average cost of a 6.6kW system in Brisbane is currently around the $5,500 – $6,000 mark. You can also see pricing ranges from reputable solar installers in the SolarQuotes network that service Bundaberg, Townsville and Gladstone. The higher end of pricing ranges indicated on the pages linked to tend to involve premium quality components and/or particularly tricky or remote installations.

While payback for landlords isn’t rapid, the other benefits of installing solar could be seen as making a property more attractive to the right tenants (and keeping them), and of course the warm and fuzzies of helping tenants slash their emissions.

It’s not clear if there may be future rebates for PV installations on private rental properties in Queensland, but in Victoria the Solar Homes Program offers a subsidy.

The Victorian Solar for Rentals program offers eligible landlords a rebate of up to $1,850, and they can also apply for an interest-free loan of up to $1,850. Landlords and renters are required to sign a Landlord-Tenant Agreement if the loan option is taken, which varies depending on whether the renter will be making a co-contribution.