Australia has become a rooftop solar powerhouse, but millions of renters are still missing out on the technologies helping homeowners slash their energy bills — a gap which a new report says could be closed through mandatory minimum energy-efficiency standards for rental properties.
The Institute for Energy Economics and Financial Analysis (IEEFA) estimates most rental homes could cut energy bills by up to 50% through insulation, efficient electric appliances and rooftop solar, generating about $107 billion in energy bill savings by 2050.
Cumulative energy bill savings from rental property upgrades, 2030–2050 (IEEFA modelling) Source: Institute for Energy Economics and Financial Analysis (IEEFA).
Why Are Renters Missing Out On Solar?
A long-running structural problem in the rental market known as the “split incentive” means landlords pay for upgrades, while tenants pay the energy bills.
That mismatch has left rental homes consistently lagging behind owner-occupied homes on insulation, efficient appliances and rooftop solar.
“More than 30% of Australian households rent, and are generally locked out of home energy upgrades,” said IEEFA energy finance analyst Jay Gordon.
Solar Incentives Deliver Limited Impact
Governments have spent years offering rebates and subsidy-style programs to encourage landlords to upgrade rental properties, but uptake has remained patchy.
According to IEEFA, this is not surprising because lowering upfront costs does not change who benefits from lower energy bills.
In short, carrots alone haven’t been enough.
Is It Time For The Stick Instead?
IEEFA argues that rebates and subsidies have failed to drive widespread upgrades in rental homes.
Instead, governments may need to consider a stronger lever: minimum energy-efficiency standards that require rental properties to meet basic performance levels.
Rather than relying on voluntary uptake, those standards would mandate improvements, while still allowing flexibility in how landlords comply.
That could include insulation, draught sealing, rooftop solar, batteries, or replacing gas and inefficient electric appliances with efficient electric alternatives.
Some jurisdictions have already begun introducing rental energy-efficiency standards. The ACT has adopted minimum insulation requirements for rental properties, while Victoria is rolling out new standards covering measures such as heating, cooling, insulation and draughtproofing. New South Wales is currently consulting on similar proposals.
Could Renters Benefit Even If Costs Pass Through?
The analysis also addresses concerns that landlords could pass upgrade costs on through higher rents.
It finds that if upgrades are financed over 15 years at typical investor loan rates, energy bill savings could still outweigh repayment costs from day one.
Nationally, the modelling shows a positive net present value of $24.8 billion to 2050 across the rental sector.
Costs vs savings of rental property upgrades under a 15-year financing model (IEEFA modelling) Source: Institute for Energy Economics and Financial Analysis (IEEFA).
Cutting Energy Bills For Everyone
Beyond household savings, upgrading rental properties could also deliver system-wide benefits.
Most regions would see reduced peak electricity demand in both summer and winter, while replacing gas appliances with efficient electric alternatives would significantly cut gas use.
In Victoria, electrification could slightly increase winter peak demand, but this would be offset by much larger reductions in gas consumption.
Requiring Solar Upgrades For Renters
IEEFA says the findings highlight growing pressure on governments to find a more effective way of upgrading Australia’s rental housing stock.
With renters making up a growing share of households, Australia’s rental energy gap is unlikely to close without minimum standards, according to the analysis — shifting policy from encouraging upgrades to requiring them.
For more on insulation, efficient electric appliances and rooftop solar, see SolarQuotes’ guide to energy efficiency.
About Kim Wainwright
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