Alex Marks | 08 Jun 2022
The energy crisis
There’s been a lot of media coverage recently over the unprecedented turmoil in Australia’s energy markets. A combination of factors has caused the steepest increase in wholesale prices for electricity and gas ever experienced, and these high prices are expected to continue well into 2023. While this will have an impact on all households across Australia, one of the hardest hit by the rising energy costs will be those in social housing.
The causes of these increases are due to our reliance on fossil fuels and an ageing grid:
- The fallout of the Russian invasion of Ukraine has led to massive increases in prices for oil and gas. Considering some of Australia’s electricity is generated using gas-powered turbines, this has compounded problems for Australia’s electricity retailers.
- The wet weather on Australia’s eastern seaboard has disrupted railroads that provide coal to Australia’s largest coal power station in Eraring on the NSW Central Coast. This means the power station has had to throttle down electricity output.
- The cold snap that started in May means electricity demand increased as people heated their homes and offices just at the time that solar production starts to dip as the days become shorter.
- Constraints in interstate connections mean that excess hydropower capacity in Tasmania and brown coal-fired capacity in Victoria can’t be exported to NSW and Queensland to alleviate their shortages.
- Constraints in the capacity of the poles and wires in Western Victoria and NSW mean that perfectly good solar and wind farms are sitting dormant because the grid can’t handle the new generation capacity.
Bill shock and energy poverty
Authorities responsible for price regulation have already approved massive increases to Default Market Offers (the standard electricity contract for homes and small businesses) from 1 July. South Australia’s prices will be going up 20%, Queensland’s by 18%, and New South Wales customers will be hit with a 12% increase.
Research has shown that people on lower incomes spend a larger share of their money on energy bills than people on higher incomes. For the top 20%, energy bills only take up 1-2% of their monthly income. For the bottom 20% of income-earners, energy bills eat up 7% of their monthly budget, and that’s before the energy tariffs are hiked up on 1 July.
When low-income people face massive increases in energy bills, they face stark choices: feed the kids or let them go hungry, pay the rent or fall into arrears with the landlord, or pay the power bill or get threatened with disconnection. Energy hardship payments don’t automatically get increased when power prices rise. This is a situation faced by a million Australians each month, and that number is only going to get higher.
The solution: SolShare
Allume’s existing customer base of over 1000 apartments with rooftop solar, including over 600 social housing dwellings, have the best defence against these steep increases: rooftop solar. Prior to the energy crisis, these residents were already saving around $300-$350 per year compared to the default offer provided by electricity retailers. Now that is set to surge to between $400 and $500 per year. That’s a lot of money for someone on the pension, JobSeeker or the minimum wage.
Considering that it costs next to nothing to maintain a rooftop solar installation, these increased savings on electricity bills will only accelerate the payback period for the capital outlay. To put that in other terms: investing in rooftop solar is now more financially attractive than ever before.
A case study: Rooftop Solar for City West Housing, NSW
City West Housing is a leading Community Housing Provider in NSW. They connected rooftop solar to 226 apartments in three apartment complexes in their portfolio with Allume’s SolShare technology. See the video below for the real-world benefits experienced by the residents in City West Housing’s Carriageworks community in Everleigh in Sydney’s inner west.
How can we connect as many people as possible as quickly as possible to rooftop solar?
Shared solar installations using Allume’s SolShare technology can connect more people to rooftop solar people in low-income communities per dollar spent than any other approach. Government subsidies can leverage co-investment by Community Housing Providers to get rooftop solar installed as soon as possible.
Successful examples of this approach include Solar Victoria’s rebate of up to $1,400 per dwelling for the installation of rooftop solar by Community Housing Providers. Housing authorities in the Australian Capital Territory and South Australia have outright funded rooftop solar installations on public housing. The City West Housing installations were funded by the NSW Government, but this funding program has since closed.
We need these programs to be continued, expanded and replicated by other states and the Commonwealth Government so we can ensure that the energy crisis doesn’t hurt vulnerable people who are least able to endure it.
If you’d like to find out if the SolShare will be suitable for your new or existing community housing project, get in touch with the team today.