By ANNA WARWICK
In Australia’s deregulated energy market with energy companies increasing prices year-on-year and tenants crying “energy poverty”, there’s a new product in the market that allows landlords to incentivise tenants and generate an additional income stream from selling cheaper, cleaner solar power.
Riding a new wave of innovation sweeping through the energy market, an innovative win/win service offered by Australian tech company Matter answers the dilemma facing landlords and tenants with regards to installing a solar system on a rental property, namely that tenants would be lucky to break even from the investment, while landlords would see no returns.
Says Matter Co-Founder Simon Barnes, “Solar energy has reached a cost point where it’s cheaper to produce electricity where you use it than to access it after it’s been transmitted through the grid.”
Matter’s metering technology and online solar sharing platform has introduced a peer-to-peer relationship model (similar to airbnb) to the energy market. Brokered by Matter, landlords and tenants agree on a fixed price for solar power which is less than the tenant’s current energy rate. The landlord pays for installation of the panels and the tenant pays the landlord for energy consumed during daylight hours when solar power is being produced.
Through Matter, landlords receive an increased income of 15% or more per annum. And in the long term, solar panels can add in excess of $35,000 to the value of an investment property.
Tenants face Energy Crisis
Australian residents are more disgruntled, confused and crippled by power bills than ever before.
The Australian Energy Market Commission has warned that 24 per cent of all households find it difficult to pay their gas and electricity bills, with thousands facing disconnection or on energy hardship programs. Nevertheless, on July 1st 2016, at least two major energy retailers’ raised power charges yet again by a reported average of 10 per cent.
These price rises have been principally driven by over investment, often called “gold-plating” by the energy networks that distribute power to our homes. The end result are peak electricity rates that hit us hardest when we use power most, like the heat of the day when air conditioners, swimming pools and refrigerators are in use.
While solar only produces power during the day it is perfect for saving money during peak demand times, with the sunniest time of day generating the highest levels of electricity.
Educate and Empower Your Tenant
Energy customers are ready to make a change. The AEMC’s 2016 customer survey found that around half of Australian customers have not switched electricity retailers in the last five years, meaning consumers are missing out on savings. AEMC Chairman John Pierce said “many consumers find new technologies appealing, but there are significant gaps in consumer access to information about what these technologies could deliver for them,” he said.
Matter hands landlords the ability to offer tenants a set rate for daytime electricity and a new, transparent way of consuming energy with 24/7 digital information on their electricity usage at their fingertips, through an online tenant dashboard.
With a Matter solar service, renters keep their grid energy service for night-time use and supplement solar during the day, but gain a clear picture of how to shift their peak energy usage to lower cost, daytime solar power instead of evening grid energy, reducing overall energy costs.
Get Started as a Solar Energy Provider
Set up Costs
“Setting up a solar service at a residential investment property will set you back about $5k all up including panels, inverter, Matter monitoring hardware and installation” says Barnes.
Matter’s ongoing management of the solar service costs $9.90 (Incl. GST) per month and covers everything. Matter will onboard your tenant, negotiate the solar rate and bill them monthly, paying you directly. Tenant contracts are aligned to their leases and automatically renewed in-line with leases.
Rebates and Tax Deductions
Says Barnes “Yes, rebates are available for the next 15 years to help reduce the cost of solar systems. Where tax is concerned, investors will need to consult their tax advisor but yes, the investment can be written off as any other investment in your property would be.”
Turnaround on Investment
“For typical sites, both residential and commercial, payback on the initial investment is usually four to six years,” says Barnes.
Income can vary depending on a few key factors, Barnes explains. “The first is the tenant’s location, as this affects the amount of sunshine available, which determines the amount of solar electricity produced. A second factor is the tenant’s grid electricity tariff which impacts the value created.” he says.
Revenue is easy to track. Matter also provides landlords with an online login dashboard with real time monitoring of solar energy production at the property, as well as solar usage, grid usage and any excess sold back to the grid.
According to early sales figures, Matter customers are already seeing income increases on residential properties in excess of $1000 per annum.
In the long term, Barnes says “property investors have the asset for its lifetime (about 25 years) since they own the system.”
This increases the overall value of the property. “For residential properties, we’re seeing increases in capital value in excess of $35k-45k,” says Barnes. “Obviously commercial properties vary greatly in size but are considerably higher” he adds.
Will it work for your property?
Matter’s services are currently focused on single tenant properties and property portfolios, however a multi-tenant product is set to be launched in the near future, Barnes confirms.