Rooftop solar goes gangbusters in 2017. (Source: Domain)
It’s official, 2017 was a record-breaking year for rooftop solar installations in Australia in spite of our government’s desire to slow renewable energy development and prop up fossil fuel industries as long as possible. It’s no surprise really, given the fact that electricity prices across the nation went up dramatically last year AND solar feed-in-tarrifs (FIT’s) doubled. This means that the financial return on a rooftop solar investment is much better than having money in the bank or even paying down a mortgage. Depending on how much you pay for power, how much you get as a FIT and how much electricity you are able to use during the day directly from your solar system, the basic ROI for most solar home owners is somewhere between 10% and 20%. With banks paying about 2% interest on savings account it’s little wonder that record numbers of Australian homes are putting solar on their roofs.
In fact we recommend that people put as much solar as they can on their home (see our Sept 22 Newsletter for more on this). In most cases this is limited to about 6kW of solar on a 5kW inverter but if you have 3-phase power and lots of roof space it could be as much as three times the size. Even if you end up exporting most of the solar power directly to the grid, with a FIT of 12-13c/kWh you can still get a return in the range of 10-15%.
For small business owners who primarily use electricity during the day the ROI from rooftop solar can be as high as 25-30% meaning that the system will pay for itself in as little as 3-4 years. After that you’ve got many, many more years of free electricity to enjoy. Here’s a case study from Solar Quotes blog to back me up on this.
When you see those sorts of numbers you start to wonder why ANY home or business in Australia DOESN’T have solar on their roof. I think a lot of people have hesitated because they’re waiting for the ‘perfect time’ but meanwhile they’ve missed out on years of financial savings. Another one of the big reasons is that many people don’t own their own home or business premises.
Solar For Landlords
So what about rental properties? How can a landlord and/or a tenant get a financial benefit from putting solar on the roof of an investment property?
The fundamental problem for most landlords is that they own the property but the electricity bill is usually in the name of the tenant. This means that any financial benefit from rooftop solar in the form of reduced daytime electricity use or credit for electricity exported to the grid accrues to the tenant and not the landlord.
A perfect example of this is the house next to the Greeny Flat which we are currently upgrading for improved energy performance. (Click here for more information and videos on that whole process). This is an investment property owned by my mother. She plans to put solar on the roof but she’s not sure when to do it or how to achieve a financial return on that investment.
The simplest way for Mum to recoup the cost of installing a solar system would be to put the rent up. But it’s a competitive market and her tenants may not be prepared to pay extra for a house with solar, even though they will benefit from reduced electricity bills.
Another way to do it would be for Mum to put the electricity bill in her name and for the renters to pay for the power they use plus the daily supply charges. That way Mum would directly get the financial reward for the solar power produced. But it would also complicate the rental agreement because every three months Mum’s property manager would have to figure out how much electricity the renters had used and how much extra they owe. And then what happens if they disagree or refuse to pay? It could create a very sticky situation between Mum and her tenants.
One option that I have just thought of would be for Mum to install the solar on a completely separate meter and simply export all of the electricity to the grid. That way she would get a financial return from the roof space she owns which is currently doing nothing (apart from keeping her tenants dry). But it wouldn’t benefit the tenants at all and the ROI would be less because she’d have to pay a second lot of daily supply charges. Still, I think this is worth looking into along with various programs that have been set up specifically to manage the financial arrangements between tenants and landlords who have rooftop solar systems.
We are currently at the point with our Home Energy Retrofit where we are ready to replace the old tile roof with a new, light-coloured Colorbond roof. In fact that is due to happen next week (no doubt we will manage to break the drought in the process). Once the new roof is on we’ll be ready to seriously consider the Triple-Bottom-Line benefits of putting solar on the roof. I’ll be looking carefully into our options and reporting on the findings over the next few weeks. So stay tuned, especially if you are a landlord or tenant yourself.
Heat-Reflective Paint
Following our recent discussions about the benefits of using light-coloured roofs in a warm climate like Australia a reader sent me a link to the following YouTube video which briefly demonstrates the benefits of heat-reflective paint. Thanks Doug!
Other Things That Caught Our Eye Last Week
This NewAtlas article talks about how sea-level rise appears to be accelerating and may happen much faster than previously predicted. Not a happy thought but a good reminder of why it’s important to reduce our energy use as much, and as quickly, as possible
Pot Power
I won’t presume to know where any of our readers stand on the issue of legalising marijuana but the fact is this is happening at a rapid rate around the world. 10 out of the 50 US states could potentially legalise recreational use in 2018. Personally I don’t have a problem with people smoking dope but I’m starting to get a bit concerned about the climate change implications of increased growing of Cannabis. According to this article from The Guardian…
A study by scientist Evan Mills, with the Lawrence Berkeley National Laboratory, revealed that legalized indoor marijuana-growing operations account for 1% of total electricity use in the US…In 2012, Colorado became the first state to legalize recreational marijuana. Two years later, Denver’s 362 marijuana grow facilities consumed more than 2% of the city’s electricity usage. Statewide facilities are behind roughly half of Colorado’s new power demands.
With a whole lot more states set to follow Colorado’s lead in legalising the growing and smoking of pot this could turn into an energy consumption nightmare second only to the processing of Bitcoin transactions.
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