Technical Details

What happens to solar power that isn't used on site?

Solar panels produce power whenever they're in sun light. If you're using electricity at that instance then the solar power will flow to you, but if there's more solar power being produced than is being used across your property then the excess solar power will flow out into the electricity grid.

This power is far from wasted! You personally receive a credit for this power on your power bill - the price you receive for your solar energy is called the Feed in Tariff (FiT).

On a larger scale your excess solar power helps supply all other Australians with cheap clean energy - the exported solar power reduced NSW power bills by over $2 billion dollars over a 12 month period in 2016-17! Rooftop solar systems also played a crucial role in preventing blackouts over summer by provided much needed power generation.

 

What goes into SunTenants' solar value calculator?

Our solar value calculator is built on industry guidelines and typical retail prices for electricity and solar systems.

We present two financial quantities: the simple Returns on Investment (ROI) and the more sophisticated and accurate Internal Rate of Return (IRR). The payback period is based on the IRR.

The simple Returns on Investment (ROI) is simply the first year's income divided by the system cost. We use the following assumptions to forecast the ROI:

  • The solar system lifetime is 25 years,
  • The rent increase due to solar is fixed at the initial (year 1) value,
  • SunTenants’ monitoring fee is $95 p.a. (we subtract this from the rent increase).

The Internal Rate of Return is described here. We use the following assumptions to forecast the Internal Rate of Return (IRR):

  • The solar system lifetime is 25 years,
  • The rent increase due to solar increases in line with electricity price inflation at 5% p.a.,
  • Inflation (CPI) is 3% p.a.,
  • The solar asset is depreciated linearly over 20 years,
  • The inverter is replaced in year 11 at a cost of $500,
  • SunTenants’ monitoring fee is $95 p.a. (we subtract this from the rent increase).

We do not purport to be future tellers and the calculations results are best seen as illustrative examples of how the future may turn out, under the stated assumptions.

 

What warranties do SunTenants solar systems come with?

Solar systems come with two types of warranties: manufacturer's warranty their products (the solar panels, inverter, etc), and the solar company that installs the system provides a warranty for their workmanship.

SunTenants sets the following minimum standards for solar systems installed through us:

  • Workmanship Warranty - minimum 5 years, up to 10 years for some installers.
  • Solar Panel Warranties - minimum 10 years, up to 12 years standard; product warranty and 25 year performance warranty.
  • Inverter Warranties - minimum 5 years, up to 12 years standard.
  • Wattwatchers Monitor Warranty - 5 years

 

What does SunTenants consider in selecting trusted solar installers?

We take a holistic view of our partners. We hand pick the solar installers we work with, selecting them based on their reputation for quality products and services, their history and financial security, and their alignment with our values. We're extremely proud of the companies we're working with, they are well established industry leaders who, together with SunTenants, are perfectly placed to unlock the latent potential of Australia's rental properties.

The companies are all Clean Energy Council accredited installers and many are also Clean Energy Council Approved Retailers.

 

Is SunTenants' rent increase fair?

We believe it is! While tenant's precise solar savings depend on how they use power and what retail offer they choose, our data shows that 100% of SunTenants sun power rental tenants are saving more on their power bills than they're paying in extra rent, and 100% of owners are receiving their weekly solar returns through the increased rent. Simple.

 

How is the rent increase calculated?

We calculate the rent increase based on the amount of energy the solar system is forecast to produce and the price paid by your local utility for solar power exported into the grid, called the "Feed in Tariff" (FiT).

The formula used is simple: we multiply the forecast annual energy production by the FiT and then divide by the number of weeks in a year to get a value in terms of $/week.


Why is rent increase calculated in this way?

Our objective is to derive a transparent formula that consistently calculates a rent increase that is fair to owners and tenants, providing owners with attractive returns and tenants with significant solar savings.

Our goal is not to perfectly predict how much a tenant will save and to split these savings 50-50 with the property's owners. Firstly, there is no way to accurately predict a particular tenant's solar savings as this depends on their power usage habits and their chosen retail offer, and secondly, defining what fraction of these savings should go to the owner (who paid for the system) is as contentious as it is unclear.

Our practical solution is to adopt the formula given above which:

  1. reliably produces a rent increase that provides owners with attractive returns and tenants with attractive savings;
  2. ensures that the worst outcome for tenants is that the rent increase is equal to their solar savings (which would occur if they used zero energy during daylight hours); and
  3. rewards tenants for shifting their power usage to solar hours, just like owner-occupiers with solar.

 

What feed in tariff do you use in the calculation?

Feed in tariffs vary between retailers and sometimes even between different offers from the same retailer.

We don't want to dictate what retail offer tenants should sign up to, and nor do we wish to get caught up in transient marketing offers. We therefore adopt a FiT that is typical in your state (often this is not the largest FiT available). We update these rates on a regular basis.

Our current typical FiTs are:

  • NSW  12.5 c/kWh
  • Vic     11.3 c/kWh
  • Qld    11.0 c/kWh
  • SA     16.0 c/kWh
  • ACT   12.5 c/kWh
  • WA     7.2 c/kWh
  • Tas     8.9 c/kWh
  • NT     25.0 c/kWh

 

What if feed in tariffs change?

Feed in tariffs are less volatile than retail prices but they do change occasionally due to government regulations, energy market prices, and retail competition.

They are unlikely to decrease dramatically over the period of a typical rental lease due to the political pressure of Australia's 1.8 million solar owners. While any decrease in FiTs reduces tenant's savings (and the solar savings of all solar customers) the impact of these changes is very unlikely to reduce the solar savings to be less than the extra rent.

In the long term all energy prices will evolve and SunTenants will update our calculations (both the forecast rent increase and the recorded solar savings) accordingly so that new tenants move in under the conditions of their day.


What retail tariffs are used in the solar savings calculations?

We don't want to dictate what retail offer tenants should sign up to, and nor do we wish to get caught up in transient marketing offers. We therefore adopt retail prices that are typical of your city/state (without discounts or fixed term contracts). If you manage to get a better deal, your solar savings will be somewhat less than those calculated by SunTenants, while if you pay more than this your solar savings will actually be even greater than calculated by SunTenants.

Our current typical retail prices (excl. GST) are:

  • Sydney        28.9 c/kWh
  • Melbourne   27.0 c/kWh
  • Brisbane     25.5 c/kWh
  • Cairns        25.9 c/kWh
  • Adelaide     37.8 c/kWh
  • Canberra    21.45 c/kWh
  • Perth          24.0 c/kWh
  • Hobart        23.5 c/kWh
  • Darwin       23.6 c/kWh
  • A. Springs  25.6 c/kWh