Australia has become one of the world’s great rooftop solar success stories, yet millions of renters have been left watching from the sidelines. While more than a third of households now have solar panels on the roof, the people who rent their homes have largely missed out on the savings. A new report argues that this gap could be closed, and that doing so could halve the energy bills of Australian renters.
The research, released by the Institute for Energy Economics and Financial Analysis (IEEFA), models what would happen if rental properties across the country were brought up to a sensible minimum energy standard. The headline finding is striking. Most rented homes could cut their energy bills by up to 50 per cent through a combination of insulation, efficient electric appliances and rooftop solar, adding up to around 107 billion dollars in cumulative savings by 2050.
For landlords, property investors and renters alike, it is worth understanding what the report says, why renters have been locked out until now, and where solar fits into the picture.
The renter solar gap
The numbers tell the story plainly. More than 30 per cent of Australian households rent, and that figure is only growing. Yet there is very little overlap between the people who rent and the people who benefit from rooftop solar. Renters are also far more likely to live in homes that lack basic energy-efficiency features, being almost twice as likely to go without ceiling insulation, for example.
The result is that some of the households who would benefit most from lower power bills, often those on tighter budgets, are stuck in homes that are expensive to heat, cool and run. As owner-occupiers keep adding solar panels and batteries, the divide between the two groups widens with every passing year.
The split incentive problem
So why has the market not solved this on its own? The answer is a long-running structural issue that economists call the split incentive. In simple terms, the landlord pays for any upgrade to the property, but it is the tenant who enjoys the lower energy bills. Because the person footing the bill is not the person who benefits, there is little natural reason for landlords to invest in solar or efficiency improvements.
This is why, according to the IEEFA analysis, incentives aimed at landlords alone have not been enough to shift the needle. Rebates and subsidies help, but they do not overcome the basic mismatch between who pays and who gains. The report makes the case that the most effective lever is a regulatory one, in the form of mandatory minimum energy-efficiency standards for rental properties.
What the report actually found
To reach its conclusions, IEEFA modelled more than 100,000 scenarios covering different household types across every Australian state and territory. The analysis looked at a handful of practical, cost-effective measures: installing a rooftop solar system, replacing old gas or inefficient electric appliances with modern electric ones, adding ceiling insulation, and draught-proofing.
The modelling found that in the vast majority of rented homes, a combination of these upgrades could halve energy bills relative to a poorly performing property. Crucially, the report also found that the long-term savings outweigh the upfront capital costs. Beginning the upgrades from 2027 would deliver a positive return over time, with the savings steadily building year on year. Over the coming decade the savings add up to roughly 20 billion dollars, stretching out to that 107 billion dollar figure by 2050.
There is a system-wide benefit too. Upgrading the rental housing stock would help reduce peak electricity demand and cut gas demand, which takes pressure off the grid and helps keep wholesale prices down for everyone, not just renters.
Why solar sits at the centre
While insulation and efficient appliances all play a part, rooftop solar is one of the most powerful levers in the mix. Solar panels generate electricity during the day, exactly when many of the worst energy costs would otherwise stack up, and even a modest system can take a meaningful bite out of a household’s reliance on the grid.
The report notes that for most homes the target outcome can be achieved with a relatively small rooftop solar installation alongside the other upgrades. You do not need a large or expensive system on every rental to make a real difference to the tenant’s bills. That matters, because it keeps the cost to landlords manageable while still delivering the savings renters need.
Victoria leads the way
The idea is not just theoretical. Victoria is already moving first, with new minimum energy-efficiency standards for rental homes set to be phased in from 1 March 2027. Other states are watching closely, and both New South Wales and Tasmania have been seeking public input on whether they should introduce similar standards of their own.
This signals a likely direction of travel for the whole country. Landlords in Victoria and elsewhere who get ahead of the curve now, rather than waiting for the rules to force their hand, stand to make the transition on their own terms and at their own pace.
What this means for landlords and investors
For property investors, the report reframes solar and efficiency upgrades as something other than a pure cost. With standards on the horizon, upgrading a rental is increasingly a question of when rather than if. Acting early has several advantages. A solar-equipped, energy-efficient property is more attractive to quality tenants, can command stronger rental demand, and helps protect the value of the asset as buyer and renter expectations shift toward greener homes.
There is also the matter of the federal solar incentive, which still reduces the upfront cost of an installation through Small-scale Technology Certificates. Combined with the long-term appeal of a more efficient, lower-running-cost property, the economics of installing solar on a rental look considerably better than the old split incentive framing suggested. For landlords who want to add storage as well, the federal solar battery rebate further sweetens the picture in 2026.
What this means for renters
If you rent, the report is a genuine reason for optimism, even though the changes will take time to roll out. The clearest path forward is the policy one, but in the meantime there are still options worth exploring. Some renters have success simply raising the idea with their landlord, framing solar as an investment that protects the property and keeps good tenants happy. A number of states and territories also run rebate programs and apartment-focused schemes that can help bridge the gap, and these are expanding.
The broader trend is moving in renters’ favour. As standards firm up and the cost of solar continues to fall, the day when a solar-equipped rental is the norm rather than the exception is getting closer.
The bottom line
The IEEFA report puts a clear number on something the industry has long understood. The technology to cut renters’ bills already exists and is proven, with rooftop solar at the heart of it. What has been missing is the framework to get it onto the roofs of the homes that need it. Minimum energy-efficiency standards, starting in Victoria and potentially spreading nationwide, look set to provide exactly that.
For landlords, the message is to think ahead. Upgrading a rental property with solar is shifting from a nice-to-have to an expectation, and the savings genuinely stack up over the life of the investment. At Greenlight Solar we work with homeowners and property investors alike to design systems that suit the property and the budget, whether it is a single rental or a larger portfolio.
If you own a rental and want to understand what solar could do for the property and its tenants, request a free assessment and we will walk you through the options, the costs and the available rebates.
Frequently Asked Questions
1. What did the IEEFA report find about rental energy bills?
The report found that most Australian rental homes could cut their energy bills by up to 50 per cent through a mix of insulation, efficient electric appliances and rooftop solar. Across the country these upgrades could deliver around 107 billion dollars in cumulative savings by 2050.
2. Why have renters missed out on rooftop solar?
The main reason is the split incentive. Landlords pay for upgrades like solar, but it is the tenant who enjoys the lower bills, so there has been little natural incentive for landlords to invest. This is why the report argues that minimum standards, rather than landlord incentives alone, are needed.
3. Are minimum energy standards for rentals actually happening?
Yes, at least in Victoria, where minimum energy-efficiency standards for rental homes are set to be phased in from 1 March 2027. New South Wales and Tasmania have also been consulting on whether to introduce their own standards.
4. Should landlords install solar on a rental property?
With standards on the horizon, many landlords are choosing to act early. A solar-equipped, efficient property is more attractive to tenants, helps protect the asset’s value, and the federal rebate reduces the upfront cost. The long-term savings generally outweigh the initial outlay.
5. Can renters do anything before the standards take effect?
Renters can raise the idea of solar with their landlord, framing it as an investment that protects the property. Some states and territories also run rebate programs and apartment-focused schemes that can help, and these are expanding over time.
