Australia’s rate of solar adoption is something to be proud of. 15 per cent of Australian homes have solar panels installed, but when you look at comparable figures for rental houses, the difference is dramatic. Only one per cent of rental homes have solar panels installed, but Aussie tech startup Matter wants that to change.
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The “Split Incentive” Problem
So why are rentals not catching on to the solar craze? Simply put, it’s never been profitable enough for landlords to make the initial investment, just so the renters can reap the benefits. It’s such a well known problem that it has a name, the “Split Incentive” problem, and is well known in countries like the US, Japan, the UK and of course Australia. Matter is seeking to address all this unused roof space by making it profitable for landlords to install solar panels, through an Internet of Things inspired technology called Digital Solar. Part gadget, part service, Digital Solar allows landlords to accurately meter how much solar energy is being used by tenants and thus run their panels like a micro-utility.
Of course, rental houses with solar panels do exist already, even if they are a rarity. The problem is that there is currently no standard procedure for either tenants or landlords in solar-equipped properties. Some landlords may reap the benefits of the solar feed-in tariff and still charge the tenant for the entire electricity bill. Some may deduct some or all of the profit from the feed-in tariff from the bill. Others yet may charge extra on rent and pass all of the savings on the electricity bill to their customer. In each of these scenarios, the landlord makes just a trickle of profit from a utility that is initially expensive to set up. In this day and age it’s more important than ever to actively increase our use of clean energy, and by incentivising the practice for landlords, Matter hopes to get more solar panels installed on the empty roofs of rental properties.
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The Digital Solar Solution
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Through Digital Solar, landlords are able to manage their solar panels as though they were a ‘mini-utility’. The company will even arrange for installation on homes where there isn’t a pre-existing system, and it remains hands-on and helpful throughout the entire process. The Digital Solar device tracks tenants’ use of solar-generated electricity, and automatically bills them for the energy at a rate agreed upon by both parties. This benefits both renters and landlords, Matter claims, by reducing electricity bills for the former and increasing earnings for the latter, promising a return on any initial investment within five to six years. The only party who might lose out under this arrangement are renters in houses already equipped with solar panels, if their landlord decides to adopt Digital Solar’s service.
Tenancy laws in Australia state that landlords must not charge any more for utilities than is charged by the relevant authority, and in the case of on-site generated solar, they can’t charge any more than the local area retailer’s standing offer. In fact, Digital Solar recommends agreeing on a discount of 20% off the price they pay on their grid-supplied electricity. Of course most household solar panels don’t generate enough electricity to power the entire house, so the excess will come out of the grid and will be charged as usual. Digital Solar’s website features a couple of calculators — one for tenants and one for landlords — to calculate the potential benefits of using their service.
Aside from the business side of things, Digital Solar’s secondary selling point is the system that accurately measures electricity usage in real time. As many are now discovering, having an in-depth, real-time record of how electricity is used in the home can be a major step towards changing and even reducing usage habits. With the app being accessible to both the tenant and the landlord, they can both see how electricity is being consumed — and how much is being charged for a day, or even an hour’s use.
For those who are excited about the release of Tesla’s Powerwall, Digital Solar’s website suggests that battery storage will also be an option for those who want to set up a system.
Are you a landlord, or do you rent right now? What do you think about Digital Solar’s solution? Let us know in the comments below!