Vic Labor promises cheap solar for renters. Smart move.
Victorian Labor has announced a scheme to put solar panels on the roofs of rental properties and allow tenants to benefit from the lower electricity bills it provides. The catch is it relies on Labor being reelected on the 24th. But, looking on the bright side, if the Victorian Liberals win I’m sure they’ll be willing to give your landlord a subsidy to mine brown coal under your backyard
There’s not a lot of information available on the solar for renters program. The state government has entered “caretaker mode”, so at the moment there is no update on the Solar Victoria site. (And there may never be one!) At this time all we’ve really got to go on is a press release. It’s main points are:
- The government will pay 50% of the cost of rooftop solar, and the landlord and tenant contribute 25% each.
- The tenant pays off their share of the cost over 4 years through a levy on their rent.
- In addition to the 50% rebate, landlords will be able to get low interest loans for the remaining cost.
- $82 million will be provided for 50,000 rental properties over a period of 10 years.
- Owner corporations will be eligible if they demonstrate the benefits will be passed on to tenants.
Now I’ve gotten what we know out of the way, I’ll see if I can stretch this article out to 1,000 words with some educated guesses and crappy jokes.
A $1,300 Limit?
The press release says the solar for renters scheme will expand the rollout of the current Solar Homes program, which you can read about here. The maximum rebate it offers is $2,225 and it’s possible it will be the same for solar for renters. In the press release they give an example where they say the rebate will be $2,000 for a $4,000 system. But looking at what they have budgeted the numbers don’t add up.
For Solar Homes, Vicky Govo says they budgeted $68 million for 24,000 homes. This comes to $2,833 each with a maximum rebate of $2,225 per home. But solar for renters has a budget of $82 million for 50,000 residences which makes the total amount available only $1,640 each. If we assume the same portion of money budgeted goes towards rebates then the maximum rebate available would only be around $1,300. This limit would be hit when a system’s cost reaches $2,600 and that’s not going to buy a whole lot of solar power.
My guess is the rebate will be the same as for Solar Homes and Vicky Govo is just really bad at maths. Whatever it turns out to be, it will still be better than a poke in the eye with a blunt smoke stack.
I presume if you have a block of flats with 10 units you could install a single large solar power system and receive up to 10 times the maximum rebate for a single residence, but that remains to be seen.
It’s Only Enough For 6% Of Victorian Rental Homes
One-third of Victorian households rent, which means there’s around 825,000 residential rental properties in the state. As solar for renters will only provide 50,000 rebates, this is only enough to cover about 6% of the total. That’s not a lot, so if you are interested in getting this rebate make sure you don’t leave it too late and miss out. But without more details I can’t even take a wild guess at how quick the uptake may be. As it is a 10 year scheme they may only dole out 5,000 rebates a year.
Rebate Uptake For Private Homes Has Been Fast
The Victorian Government says almost 11,000 of the 24,000 solar rebates available for private residences have been taken. So the Solar Homes rebate bucket is close to half empty after less than 3 months. My prediction the rebates could run out in February is looking good at the moment.
There Is A Stupid Mistake In The Press Release
Whoever wrote the press release for the Victorian government made a stupid error. If you can see what it is below just shout it out. I won’t hear you, but it amuses me to imagine people doing that.
Can you see it? Yes, that’s right! It’s not Labor that will cover half the cost, it’s the Victorian Government that will. It will be a Labor Government but it’s not the same thing. Not unless Victorian Labor is planning to pay for it out of party funds, which would be awfully generous of them.
The “$4,000 panel” thing is an amusing mistake but easily made and, unlike the other one, quite forgivable.
Emission Reductions
It’s not really possible to say how much additional solar panel capacity will be installed thanks to the solar for renters scheme. Especially since it will run over 10 years and the cost of rooftop solar is still falling. But if I very conservatively say it results in 50,000 installations that average 3 kilowatts each that’s a total of 150 megawatts of solar capacity.
Victoria is the least sunny mainland state and not all the systems will face north, so let’s say they generate an average of 10.5 kilowatt-hours a day. Over a year that will come to 575 gigawatt-hours of electricity from rental rooftops. This will mostly displace coal generation1 which emits around 1 kilogram of CO2 per kilowatt-hour generated. So solar for renters will reduce CO2 emissions by about 575,000 tonnes per year. That’s equivalent to taking 190,000 cars off the road or 14 Brits off curry vindaloo.2 It will reduce emissions and lower electricity bills for renters for $82 million dollars in government funding. That’s $12.75 per Victorian assuming 50,000 tenants and landlords can agree to take up the offer.
It definitely looks like a better deal than what South Australians have. The SA Australian Government decided to spend $100 million, or $58 per South Australian, to subsidise home battery systems. While it is difficult to say what the effect of a home battery on emissions will be over its 10+ year lifespan, at the moment they increase CO2 emissions (and lose money for the householder). As a South Australian I’m feeling a bit dopey by association.
Well, that’s 1,000 words, so I’ll stop here.
About Ronald Brakels
RSS - Posts
Maybe I missed something but what is the benefit to the Landlord? Tenant can claim the Feed-in (SA anyway) so if the tenant uses all the electricity how does the landlord recover any costs?
Obviously the Tenant has to be better off but who will control all of that? Normally it’s the Landlord that sells power to the tenant and that would surely need to be part of the agreement on existing and new leases that come later.
What happens if the Tenant moves out and wants a part refund on the investment or the Landlord sells and new owner wants to redevelop, what happens then?
The scheme makes sense if the Solar system is 100% owned by the Gov as they get free/cheap realestate to place the panels and take over the retail side of providing electricity and give the Landlord a small % of the profit for the real-estate usage.
The landlord gets solar on their roof at a very low cost which makes people more willing to live their which means they can charge a premium over properties that don’t have solar. No need for anything more complex for it to be worthwhile for them. Generally landlords don’t sell power to residential tenants. (Unless they are weird in Victoria in a way I’m not aware of.)
A scheme where the government leases solar systems would potentially be better for the state’s finances, but the Victorian Government may be prohibited from doing that through agreements they made as part of electricity privatization.
The rent goes up which may make it slightly less attractive to rent for those who are short term thinkers. landord says to tenant i’m putting solar on your roof, rent will go up by $10.00 per week but you’ll save a heap on electricity bills. tenant is a young person working means they are hardly ever home during the day. they use 4kw per week and most of that is used after hours. Assuming the tenant has control of the electricity account they benefit by the feed in amount and not much more. Alternatively the landlord takes control of the electricity account and pockets the feed in. Of course they pass on the usage and daily charge (as they are allowed to do) but there is little benefit to the tenant who uses most of their electricity after dark. so tenant is now paying extra for rent and getting little benefit. when (if) tenant moves out the LL has to find the tenants share until a new tenant is found. It could work but the numbers need to be run for individuall situation.
We’ve done the numbers on this, even if 100% is exported for the minimum FiT (and in reality the tenant would use at least 20% or so of generation for standby load (fridge etc.) and weekend/public holiday daytimes) the tenant will earn more than they would pay at the 25% contribution level.
NOTE, though, that a solar system has virtually no effect on the price of BUYING a property, s the question must be:- Can the landlord really expect to get more rent for a solar system?
A solar system doesn’t add to the purchase cost because a purchaser could always buy a bigger system new for cheaper than what the old system cost the previous owner.
It’s of value to a renter because it reduces running costs. Difficult for a renter to know how much extra per week it is worth though, without finding out system specs, finding out annual yield, and doing some maths
Ron LOL but.
Most active minded voters of any persuasion are experienced enough to separate the fantasy of political subterfuge from reality looking forward. The Victorian mutterings on this subject are a case in point. A total fantasy and a cynical political subterfuge to boot.
Lawrence Coomber
Gov and electricity suppliers would be better served by running a program to place systems on public housing at no/low cost to public housing tenants. This would reduced energy bills where it is needed most, default on electricity accounts would reduce and achieve environmental goals.
I imagine this would only be allowable where the tenant remains responsible for the energy bill and the benefit for the landlord is simply that they got very cheap solar panels on their rental property, which would make it more attractive in the market. As for the benefit to the tenant, this is very well structured because the amount the tenant pays is proportional to the size of the system and whatever way it goes, the tenant will earn enough via the FiT even if they export 100% of the energy to offset more than the extra amount they pay as their 25% share of the system cost. SO it will always be better than that, cos even a household that works full time weekdays uses an appreciable amount of their generation on standby consumption (e.g. fridge), summer evenings, weekend and pubic holiday daytimes.
….and ps. This entire topic could quickly become passe if the artlicle on page 50 of today’s H/S is for real —> solar-panel embedded bike-path (also apparently workable on footpaths…and roads.
A parallel might be when a home-owner paid a (compulsory) contribution to having the road outside his house tarred/guttered/etc. and then had free use of them forever.
We live in interesting times!