Real estate agents, property portfolio managers and social housing organisations may find solar companies knocking on their doors with a business proposition following changes to Victoria’s energy regulations, according to Clean Energy Council policy manager Darren Gladman.
The changes, announced last week, enable solar firms to offer to install and maintain solar energy systems under power purchase agreements. So instead of paying for the panels, the occupant pays for the power they generate, generally at a lower price than main grid power.
Mr Gladman said before the changes it was too complex a process for companies to get permission from the relevant authorities to offer PPAs.
Now there is no red tape involved, he expects companies will find the greatest uptake initially in the commercial sector.
Companies that manage large portfolios of property also stand to benefit, he said, as they could use a PPA to have solar across the portfolio and on-sell the power to tenants.
“It would make the property more attractive to tenants and add value to the property,” he said.
Real estate agents could also find a viable business proposition and an added income stream in PPAs for rental homes, Mr Gladman said.
Also, because real estate agents are already high-transaction, low-margin businesses with established billing systems, the model could really suit them.
Then residential tenants would benefit from lower cost renewable electricity while the solar increases the rentability of the property and adds to its value with no upfront cost for landlords, Mr Gladman said.
The lower electricity costs could also mean fewer tenants defaulting on rent payments due to financial hardship from electricity costs, he said.
The social housing sector, he said, was where it could get “really interesting”.
“It opens up a lot more options for everyone,” he said.
The majority of the 1.4 million households in Australia that currently have solar power installed are owner-occupiers, he said.
“Landlords have rarely installed solar power to date, because they bear the cost and their tenants get the benefits,” Mr Gladman said.
“Not everyone is able to save up the money to buy their own home or buy a solar power system upfront, and this will help those on lower incomes to access the benefits available from solar.
“Victoria’s approach to solar PPAs is now more open and competitive than any other state or territory. I congratulate the Victorian Government on its leadership in this area, which will open up solar power to a huge new market and help the solar industry to flourish across the state.”
Mr Gladman said that if an individual landlord or tenant was looking to sign up for a PPA, they needed to look carefully at any termination clauses. Under the CEC code of conduct for solar providers, this must be transparent, he said.
Yaelle Caspi, policy officer for the Tenants Union Victoria, said many tenants would welcome access to solar power to save energy and reduce their power bills.
“Tenants often face high utility bills due to poor installation and inefficient appliances. There are, however, a number of considerations that could prohibit a tenant from accessing the technology despite a regulatory change,” Ms Caspi said.
She said the need to sign a contract is a major barrier, as most tenants do not have certainty beyond 12 months while PPA contracts are generally longer.
“Tenants can easily be asked to vacate a property at any given time. It would not be suitable if a tenant was locked into a contract with a solar company after being asked to vacate a property,” Ms Caspi said.
Another issue is that even if tenants are keen to access solar power, they would need permission from the landlord, and they may not be inclined to agree.
“A tenant would also be expected to pay any costs for repairing the roof after the panels are removed at the end of their tenancy. This has the potential to be very costly,” she said.