Helping Low-Income Households take advantage of Solar Power
Delivered by the Central Victoria Greenhouse Alliance (CVGA) in partnership with three metropolitan Sustainability Alliances (EAGA, WAGA, NAGA), Darebin City Council and the State Government.
Low-Income Solar is a $5.1 million project, delivered by four sustainability alliances including the CVGA across 25 municipalities that aims to deliver 1200 2kW solar systems to households on rate relief and prove the validity of Councils offering this as a normal service in years to come.
Residential Solar Uptake
In recent years there has been a massive uptake in residential, and now increasingly, commercial solar electricity generation.
From a standing start, Australia now has 1.4 million households with solar on their roofs and we installed a collective 100 MW of solar in the first 2 months of 2016 alone.
Solar energy generation has been a success story across the country largely because it makes commercial sense to generate your own energy and offset ever-rising electricity prices from the traditional generators and retailers.
A Classic Market Failure
There is one group of people who have been unable take advantage of this boom: low-income households without access to the initial capital required to purchase and install the equipment. In a cruel twist, it is generally these households who pay the highest proportion of their income on purchasing energy and who are therefore the most impacted by its increasing cost.
This is a classic market failure. Though these households would gain the greatest benefit from the installation of solar panels, they are the least likely to be able to do it.
For over ten years the CVGA has been in directly involved in helping to build momentum in the sola r market, from building Australia’s first medium-scale solar parks at Bendigo and Ballarat to delivering the federal government’s, $42 million Central Victorian Solar City project.
Throughout this period, we have observed this market failure in action and in 2014 we found a way address it.
A Council Response: Darebin City Council Solar $avers
Solar $avers was a highly successful program delivered by Darebin City Council in 2015 that has paved the way for Low-Income Solar. Darebin City Council invested $3million installing solar panels on 294 homes on their rates relief list.
The novelty of the approach was the financing mechanism. Council used reserve and borrowed funds to install the systems and is recouping the loan through a special charge on the rates payments (s163 of the Local Government Act).
The advantages of the Darebin model are that:
- Everyone wins: Council gets its money back and residents save between $10 – $30 per month on their electricity bills (and up to five times as much after the loan is paid out)
- Council was able to direct the program to households for whom to program was intended
- the loan is tied to the property and not the resident (and as a rates charge, the debt is secured against the property)
- Council could access much lower interest rates than residents (potentially as low as 2.5%), thus overcoming the key barrier to uptake for this group of people
CVGA’s Low-Income Solar
The success of the Solar $avers model prompted the CVGA to partner with three other Sustainability Alliances and Darebin City Council to design a larger trial that would iron out delivery issues in both metropolitan and regional municipalities and pave the way for general Council uptake from 2019.
In August this year we secured $871,000 through the New Energy Jobs Fund to cover staff, some marketing and data collection costs. The CVGA will be employing one Sustainable Energy Officer 2-4 days per week starting early 2017 for two years. This SEO will be responsible for delivering the project on behalf of participating Councils (the ‘Broker’ in the schematic below):
The CVGA component of the trail aims to deliver 222 systems across ten participating Councils. At present, only Ararat Council is the rates model with the other 9 Councils opting for a direct Bank Australia loan to participating households. At under 5%, this interest rate is still much lower than these residents would normally be able to access, though still twice the rate potentially available through the Solar $avers rates model.