How to bring the benefits of solar to renters

All-Energy Conference: A Sydney-based social enterprise has developed a model to unlock solar for renters in houses and apartments, providing access to much cheaper energy and, importantly, a return on investment for property owners.

Speaking at the All-Energy Australia 2017 Conference, associate lecturer at Macquarie University and SunTenants founder Dr Bjorn Sturmberg told the Energy Efficient Buildings session that despite having one of the highest rates of solar installation per capita in the world, one in three Australians were “locked out of solar”.

“Almost one in five Australian households have solar – that’s over 1.7 million properties,” he said. In states like Queensland and South Australia it’s like one in three.

“But one in three Australians are locked out of solar. They’re locked out of energy efficiency as well. They are locked out of EV charging when it comes along. They are locked out of everything because they rent and or live in an apartment.”

Dr Sturmberg said there were some local government areas of Sydney, such as North Sydney, where more than three-quarters of the population were locked out.

“It’s a problem because solar is now the cheapest energy and so you are locked out of taking control of your energy bills,” he said.

Solar now costs just 4-5 cents per kWh while grid electricity costs up to 35 cents per kWh – with GreenPower costing even more.

“There’s a huge amount of value in there,” Dr Sturmberg said. “How do we unlock that value?”

Currently it falls to the owner of an investment property to invest in energy efficiency and solar installation.

Dr-Bjorn-Stromberg, solar, all energy Australia

Tackling the split incentive

“But all the benefits of those upgrades are felt by the tenants who reduce their energy bills,” he said.

With the help of an innovation fellowship from the Myer Foundation, Dr Sturmberg has established SunTenants to “bring the solar evolution to Australian rental properties”.

The enterprise seeks to solve the split incentive problem by sharing the benefits of solar between the tenant and the owner.

This is how it works:

  • The owner invests in the solar system, which increases the property value
  • The solar system produces power
  • SunTenants monitors the system and display the property’s data to tenants in the apartments
  • The tenants buy solar power for 20c/kWh (current pricing) and receive a share of SunTenants’ profits
  • The owner receives a $10/kW/month and a share of SunTenants’ profits
  • Owners who install batteries receive a premium

“We work out how much energy the tenants are consuming and then we bill the tenants for the solar that they consume,” Dr Sturmberg said.

“Twenty cents, which is a lot less than the 25-35 cents they would be paying for grid power. Then we pay the owner a fixed price of $10 [a month] per kW of solar capacity.

He said the innovative part of the solution, which had not been done before, was separating out the variability of tenant power use – differing due to demand, time of day, system performance, weather, etc – from the fixed fee the owner gets.

“The owner gets a really fixed, secure guaranteed return on investment – equivalent to around a 10 per cent return on investment.”

SunTenants is currently working on its first project, a duplex on NSW’s Central Coast. The enterprise will work not just with apartments but with single dwellings too. The company takes care of the system quality, maintenance and performance.

“We take responsibility of the quality of the system because we are paying a fixed return to the owner so if that system is not performing we have no energy to sell,” Dr Sturmberg said.

“We also take on the responsibility of the variability of usage. That’s SunTenants’ problem; the owner just gets a return. We can manage all these with analytics and we can aggregate this solution across many properties where these things will average out.

Dr Sturmberg was instrumental in the Stucco Solar and Storage project – one of Australia’s first apartment buildings to combine solar and batteries.

The project took the form of an embedded network with tenants buying power from the Stucco housing cooperative rather than the grid. A 30.2kW solar system and bank of batteries were installed into the heritage building in Sydney’s Newtown behind one shared meter. Submeters monitor the power consumption of each tenant. The Stucco energy network passes on grid energy at cost to the tenants and offers a discount rate for its solar energy.

Dr Sturmberg said the project has had a “massive impact” on the tenants’ lives. The low-income students are enjoying a 54 per cent reduction in their energy bills and are now 76.7 per cent self-sufficient (34.5 per cent solar, 42.2 per cent storage & 23.4 per cent grid).

However, Dr Sturmberg said “bureaucratic paper wars” hampered the project for 18 months.  Problems included heritage issues, alternative fireproofing solutions, a retailer licence exemption, and a requirement from the Australian Energy Regulator to retrofit the energy network to enable the tenants to exit the scheme and choose their own retailer if they were no longer happy (not very likely with half-priced bills!).

The model he now advocates is individual solar systems for each apartment in low-rise multi-unit dwellings or a single solar system for common areas in high-rise dwellings.

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Comments

3 Responses to “How to bring the benefits of solar to renters”

  • Jo Muller says:

    I think the maths is right AND the numbers are as you say.
    SunTenants are taking the risk and the administrational effort out of the “solar” relationship between landlord and tenant.
    And for that service they clip the ticket. Fair enough.

  • Matt – doesn’t your calculation assume 100% utilisation of all energy generated? That seems unlikely. So Suntenants is making their margin on anything above about 40% utilisation. In return for the margin they’re taking on all the risk and management. Yes landlords could do it themselves, but it looks like they’d need to get registered as an energy retailer and certainly they’d have to take on the risk and management, which they’re currently not doing.

  • Matt says:

    The maths on this doesn’t quite seem right. Is the owner really only getting $10/kW/month? For a 5kW system that would generate something like 7000kWh per year, worth about $1400 at 20c/kWh, the owner gets a return of $600? Assuming that the system costs them about $5k, that means a simple payback of more than 8 years versus just over 3 years if they could somehow come to an agreement with the tenant themselves directly?!

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