Renters account for nearly a third of Australian households, yet many are missing out on energy upgrades that could slash their power bills and improve home comfort, according to the Institute for Energy Economics and Financial Analysis (IEEFA). The main obstacle is landlords' lack of motivation to invest in upgrades such as insulation, efficient appliances and rooftop solar.
This 'split incentive' problem arises because landlords bear the cost of upgrades while tenants enjoy the energy bill savings. IEEFA energy finance analyst Jay Gordon explained that with no financial motivation, property owners often fail to act. Separate research from Energy Consumers Australia found that 44% of owner-occupiers have solar panels compared to just 11% of renters, highlighting the disparity.
IEEFA modelled thousands of scenarios across different household types and states, finding that a combination of efficiency upgrades, efficient appliances and rooftop solar could halve energy bills for most rental properties. Collectively, these upgrades could save renters $20bn within a decade and $107bn by 2050, outweighing the capital costs. However, regulation is needed to address the split incentive, with Victoria set to introduce minimum energy efficiency standards for rentals from March next year.
The IEEFA report recommends a coordinated approach across all states and territories, including standard requirements to replace gas or inefficient electric appliances with efficient electric alternatives when they break down. For non-appliance improvements like rooftop solar, standards could offer landlords flexibility. Future reforms could also tie federal tax incentives, such as negative gearing, to minimum property standards.
Independent energy consultant Tim Forcey suggested tenants can take steps without landlord involvement. Using reverse cycle air conditioning for heating instead of gas, switching to efficient shower heads, draft-proofing, closing wall vents, and covering windows with bubble wrap for insulation can all reduce energy costs. In summer, a perforated foil product inside windows can reflect heat. These measures save money and improve comfort.
The benefits extend beyond households. Gordon noted that energy savings ease strain on power networks during peak demand, and in regions with widespread gas appliances, upgrades free up gas supply for critical industries. The IEEFA analysis shows a net reduction in average-day peak electricity demand in summer and winter, even if some renters increase consumption after upgrades.
