Communal Solar Power for Strata — Roadmap to $1 million in Savings & Added Value
Earlier this year I read a statement that left me a bit baffled ‘10% of Australian homes are part of a strata plan but only 0.6% of these have roof top solar’. A figure in stark contrast with 30% of Australian homes already benefitting from roof top solar and part of the world leading 3 million solar systems on Aussie homes.
As a strata resident and an active member of our body corporate I didn’t want us to miss out on the ‘boom’ and immediately set about to look for ways to make solar work for our strata community and in the process do our bit for the planet. We set out to learn more about why the strata sector is being held back and to identify the barriers and flush out the blockers. All with an intention to share the learnings with others once we had established a pathway through the supposedly impenetrable ‘jungle’.
Our starting point to put a price on inaction by constructing a ‘do-nothing’ base case, a practice I’ve used professionally for many years. Essentially the path by default we have already elected to take given the passing of time and not much else. Gathering electricity usage and billing information from fellow residents we were able to construct a financial forecast projected over a 25-year period (the equivalent service life of a solar system) and allowing for a small quite conservative annual adjustment for energy price increases. The exercise concluded that our current do-nothing case had already committed us collectively across 7 homes to over AUD $595,000 in power bills and that is without factoring in future demands of power-hungry electric vehicles (more on that later).
Aussie homes sell faster and fetch up to $125k more when energy efficient devices have been installed.
Meanwhile eager to understand the impact energy efficiency had on property values we discovered research conducted by Domain real estate into the links between energy efficiency attributes of homes and the price they achieved at sale. The study’s findings began to illuminate a solution that absent landlords previously hesitant to commit to large capital projects could get onboard with. The Domain research compared Australian property sale transaction values from 2019 to 2022, across every state and territory. The Sustainability report concluded that homes with energy efficient features sell at a premium when compared with homes with no such additions. A difference across Australia of between +$72,750 for Units and +$125,000 for Houses in 2022.
Having established a projected spend for our future power bills we set about to understand how we could reduce this cost through roof top solar power. We discovered case studies from existing solar installations already realising 40–50% off their power bills. Many of the examples involving strata focused on common area supply only rather than whole of site power and therefore not maximising the potential solar benefit. Meanwhile we were keen to explore maximising the solar benefit by using new solar sharing hardware some body corporates may not be familiar with. This knowledge helped us propose a pathway to a $298,000 power bill saving potential, and when combined with the property premium we already had a project that could deliver $807,000 in benefits.
Very keen to explore sustainable strata further and to validate our initial findings we connected with our local council who offered to sponsor a future proofing apartments assessment. In turn council engaged expert consultants at WattBlock to review our specific site before making several recommendations, confident in the knowledge that they had already conducted over 1,000 similar assessments.
The intended aim of the assessment was targeted at improving strata sustainability whilst also assessing opportunities to reduce cost and in some cases add value to property. Typically, in such reviews the focus is on energy saving opportunities in common areas however recommendations often surface for owners to directly benefit where solar power sharing, efficient hot water systems and electric vehicle charging facilities are also considered.
Once delivered our future proofing assessment made several recommendations. A list of action items for individual owners to consider along with a number of suggestions for the body corporate. This latter group forming material for discussion at our next strata committee meeting. Specific decisions focused on which actions should be included in our 10-year capital works plan (a legal requirement in NSW).
Our specific Future Proofing Apartments Assessment focused on 3 areas 1) Hot Water Heating for the Individual Lots, 2) Electric Vehicle Charging Preparations and 3) Communal whole of site Solar Power.
Hot Water Heating (Combined Saving Potential $58,011 over 15 Years)
Most standalone dwellings, duplexes and townhouses in strata can save money by switching to a hot water heat pump (different to electric storage or gas instantaneous).
Savings achieved by upgrading hot water systems to a heat pump (different from individual electric storage or instantaneous gas) which typically achieve an average annual saving of $420 per dwelling per couple. The payback period of a heat pump system being between 3–5 years (faster for larger families) while the lifespan of this system can be up to 15 years.
1. Heat pumps are a much more efficient form of electric storage tank system that works on the same principle as a fridge or air conditioner, by extracting heat from the air and using it to heat water in the tank.
2. Heat pumps make particularly good sense when you have solar panels on your home — you’re powering the hot water system with your own “free” electricity.
3. Units are usually integrated (tank and compressor together) but can also be split (separate tank and compressor) and need to be installed in a well-ventilated area, usually outdoors.
4. Installation typically takes no more than two or three hours if it’s a straight replacement for a electric storage hot water system.
5. The compressor on the unit can be noisy like an external unit on air conditioning system and between (20dB (Library) — 50dB (Suburban traffic), so you can’t install them too close to a neighbouring home.
6. Government rebates and other incentives can help offset the purchase cost. They range in price from about $3,000–4,000 (not including rebate or installation).
Recommendation — That individual lot owners consider replacing existing hot water system with a heat pump when their current system fails, most appropriate timing depends largely on the systems age but should be swapped out well before the existing individual electric or instantaneous gas hot water system conks out, as it nears the end of its life and especially if considering home renovations.
Electric Vehicle Preparation (Combined Saving Potential $136,500+ over 10 Years)
Electric Vehicle (EV) take up in Australia is accelerating and is expected to ramp up significantly within the next 3–5 years. EV’s are considerably cheaper to run compared to equivalent petrol/diesel internal combustion engine (ICE) cars, achieving fuel savings of up to 70% and maintenance savings of around 40%. For an average car travelling 13,700 km per year, this could amount to annual fuel saving of $1,950 if the EV with a 50–60kW battery is able to charge at home via Solar power or $1,200 if the EV is able to charge overnight from the grid on an off-peak tariff once or twice a week (ref Drive August 2022).
At time of writing there are currently 43 different EV models available in Australia increasing to 58 by the end of 2022 (ref thedriven.io/ev-models), many EVs now available are considered mid-price at $45–65k with a driving range of 400–550Kms and a second hand market with prices starting from $20k. Several brands have committed to going 100% electric across their product range including Nissan, General Motors, Mazda, Volvo, Land Rover & Daimler.
A recent survey of 700 strata residents in Sydney showed that 78% were in favour of installing EV charging and 61% of Sydney strata residents would prefer to charge their electric vehicle in their own parking spot.
An EV charging strategy for strata may start with some agreed communal guidelines (by-laws) and then invest more into providing base infrastructure enabling EV charging in individual car spaces over time.
To future proof whole of strata power use a plan is required well BEFORE the first EV arrives on site. Failure of the connection to the local substation due to overloading is costly both financially $80–100k and potentially legally and risks loss of power to other residents at the site (a major inconvenience).
As an example, an individual EV fitted with a battery of 50–60kW and recharged in a residents parking spot once or twice a week would require an average 10 kWh per vehicle per day of additional electricity for an entire year. Once this figure is multiplied by several vehicles and including visitor bays the demand can become problematic if not managed within the site limit (ours is 160 Amps). An individual level 2 standard home EV charger can go up to 32 Amps and we have 12 parking bays.
Recommendation — Start a strata committee discussion and pass a by-law before the first EV arrives — Add Agenda Item to next AGM. Consider a 3 staged ‘project’ 1) Install & enable electricity monitoring device to better understand existing capacity and usage, 2) Design & Install base infrastructure + Wi-Fi and finally 3) Individual lot owner Charge Point install (this phase at time and cost of owners choosing).
Solar Power (Combined Saving Potential $261,000 over 25 Years)
Making electricity from solar takes one third of the energy of making electricity with traditional generation sources such as fossil fuels coal and gas, which waste two thirds of their energy content during production and transmission. Making use of rooftop solar electricity at point of consumption is about 5 times cheaper than electricity from the grid.
The council’s Future Proofing Apartments Assessment considered 4 solar energy options for our strata 1) Individual Solar, 2) Individual Solar + Battery, 3) Communal Solar and 4) Communal Solar + Battery we have since added two more 5) Common Only Power and 6) Common Power and Individual Lots.
Following further evaluation Option 1 (Individual Solar) was dismissed due to the complexity of equitably dividing up a complex roof space 7 ways and the relatively low power production potential (i.e., 20% of current usage). Option 2 (Individual Solar + Battery) and Option 4 (Communal Solar + Battery) have already been dismissed as ineffective due to their financial business case (i.e., high cost of small batteries). Option 5 (Common Area power only) was dismissed due the relatively low power consumption and the protracted breakeven payback period.
Option 3 Communal Solar (with future battery compatibility) offers the best potential of maximising the use of the communal roof space. Targeting a 50% reduction in grid usage and is the only option that maximises our solar savings.
Recommendation — Start a strata committee discussion, include on agenda of upcoming AGM and consider including communal solar in the 10-year capital works planning process.
Battery Storage (Combined Saving Potential $52,200 over 10 Years)
In addition to solar power (above) communal battery storage was also considered with the aim of providing an additional source of power in the evening peak once the sun has gone down or on poor solar production days (in winter or heavy cloud days).
Our installation would operate the batteries combined with the communal solar solution as shared infrastructure. The preliminary assessment suggested we would need 3x 10–13kW batteries negating the need to purchase individual batteries per townhouse.
At the time of writing the expected service life of home batteries and their 10-year product warranty do not make them a viable option. This will be one to watch overtime and maybe worth revisiting once electric vehicles are more common on site (when power demands are higher) and alternative offerings in the vehicle to home/grid space have matured.
Other Learnings of Note
Green Finance — Major Australian banks are starting to offer new loan products to help homeowners with the transition to energy efficient homes and to retrofit existing homes with energy efficient devices and sustainability solutions. These loans help homeowners purchase and install energy efficient devices in their home such as heat pumps, Electric Vehicle charging infrastructure and solar power & batteries.
Green bank loans of up to $20k with ultra low interest from 0.99% fixed for 10 years help Aussie home owners transition and access benefits faster.
Rates as low as 0.99% fixed for 10 years means a $20,000 green loan costs just $200 per year to service over the 10 years (min loan $5k and max loan $20k). This investment in turn helps an owner in our strata example access over $120,000 in benefits over the same 10-year period. This benefit is made up of an increased property premium of $72,750 and $47,394 savings from installing a Heat Pump ($5,523), Home EV Charger ($19,500), Communal Solar power ($14,914) and Batteries ($7,457). Where else can you make almost a +20% return on an investment of similar size?
Useful References
Rewiring Australia — www.rewiringaustralia.org
Sharing Solar Energy (SolShare) — https://allumeenergy.com/au/
Solar PV for apartments — residents share energy from their building’s solar system (Video) https://youtu.be/502ei3OVBGw
To be continued….
Author Tim Prosser, reprinted with permission, from Medium.com