An initiative being rolled out in Perth’s northern suburbs promises to reduce the costs of installing residential solar panels while also creating a new asset class for institutional investors.
Developer Yolk Property Group has partnered with solar energy specialists Infinite Energy, builder Ventura Homes Group, and the Department of Communities on an innovative solar power purchasing agreement at The Amble housing estate in Girrawheen.
The program offers buyers at The Amble the opportunity to install a solar power system at no cost in return for signing up to a 10-year power purchasing agreement with Inifinite Energy.
The scheme, which was developed over a 12-month period, allows buyers to purchase power from Infinite Energy at a 40 per cent discount to Synergy’s rates during the day, reverting to a more traditional power supply arrangement when the solar panels are not in operation.
At the end of the 10-year period, buyers can acquire the system for a $1 charge.
Yolk Property Group director Tao Bourton told Business News the model, still in its early stages, would open the opportunity for homeowners on limited incomes to access renewable energy.
Mr Bourton said 90 per cent of buyers at The Amble had chosen to be involved with the pilot program, which would be analysed to determine if it was possible to be used in other new estates and the established housing market.
“This is a bit of a game changer in terms of opening up opportunities for it to be applied on new house-and-land packages, but also established homes once the data is there and it’s properly understood,” he said.
“The biggest barrier to entry is cost – $5,000 extra to install solar is way out of scope for a typical first homebuyer.”
Mr Bourton said he believed the initiative to be an first for Australia, however, similar power purchasing agreements were in place in the US, which has a less-regulated and more progressive energy wholesale market.
Ultimately, Mr Bourton said Yolk and its partners aimed to create a new asset class attractive to institutional investors.
“For example, if we had 1 million of these agreements Australia-wide, Infinite Energy could manage it, and others could be the investor,” he said.
“Super funds could go and buy into this and effectively become an investor in green energy.”
Infinite Energy chief executive Aidan Jenkins, whose company was acquired earlier this year by Japanese industrial conglomerate Sumitomo Corporation, said there were several complexities to be worked through via the trial, but the ultimate aim would be to roll out similar programs across Australia and internationally.
“WA is a challenging environment to do this in, given we don’t have full electricity retail contestability here,” Mr Jenkins said.
“Part of the reason this is a pilot is we have some challenges to get around to do with metering and dealing with Synergy.
“It’s a no-brainer from a consumer’s perspective, we obviously have some challenges around making the economics work and making the billing work and that education piece, but as far as customer outcomes go, it’s fantastic.”
Mr Jenkins said the pilot project’s partners considered the initiative as a new way of providing benefits of solar power to a wider range of consumers, particularly those who do not have the capital to invest up-front in a solar panel system.
“The other thing we are going to see over the next few years is the takeup of battery storage in the residential market, and that amplifies the benefits of a power purchase agreement as well,” he said.
“At the moment, the benefit is restricted to daytime energy usage, so if we can capture that cheap solar energy that’s not being used during the day, put it in a battery and extend that benefit into the evening, the economics on something like this for the customer become even better.
“One of the key factors is how much of that solar energy is actually used.
“That will change from house to house and area to area depending on the certain demographics.
“We have lots of demand for this product and we are almost at that point where we can make some of those decisions on future developments.”
By Dan Wilkie
