Read time: 4 mins
Based on Effects of renting on household energy expenditure: Evidence from Australia, published in July 2022.
Australian renters are using more energy than similar non-renting households, leading them to pay higher bills. Policymakers looking to deliver socio-economic and environmental benefits could consider additional measures to boost the energy efficiency of rental properties.
Read time: 4 mins
Based on Effects of renting on household energy expenditure: Evidence from Australia, published in July 2022.
1
Renters are spending about eight per cent more than similar non-renting households on residential energy.
2
Rental providers often have an inadequate incentives to invest in energy efficiency.
3
Policy responses could include clear energy efficiency ratings for all rental residences, and incentives for owners to install solar panels.
Renters are using more residential energy and paying more for their energy bills than similar non-renters.
Research co-authored by an ANU expert found that renters spend around eight per cent more than otherwise similar Australian households on residential energy, additionally burdening households who are already under financial pressure.
The key reason for this renter disadvantage is likely to be informational. The market typically doesn’t have full information on the energy characteristics of a rental residence.
This means discounts on energy-inefficient residences are often inadequate, and energy-efficient residences are unable to attract a fair premium. Rental providers thus have a weak incentive to invest in energy efficiency improvements such as insulation.
This shows the market needs better information. Clear energy efficiency ratings for rental residences nationally would help address the underlying cause of the disparity.
Well-designed minimum standards are also a useful approach. The ACT, for example, has recently introduced an energy efficiency standard for ceiling insulation for rental residences.
Another approach is to provide incentives for rental providers to equip their properties with energy-efficient equipment and solar panels. In Victoria, for example, targeted solar subsidies have been introduced for rental properties.
Interventions by governments can set the scene for cost reductions as markets mature. For example, ‘solar for apartments’ schemes, like one the ACT has introduced, may help the market gain momentum that can be maintained even after a subsidy scheme has wound down.
“The rental market is challenged by a lack of energy efficiency information . . . this creates a case for government action.”
