Renewable energy and rental properties seem like a natural combination. Put solar panels on a roof, generate electricity and use that electricity to reduce reliance on the grid.
Simple, right?
Not always.
Solar panels can have a useful life measured in decades, while a residential tenancy may last a year or less. Batteries, switchboards and other electrical infrastructure can also represent significant capital investments, with ongoing requirements for maintenance, insurance, replacement and future upgrades.
This creates a fundamental question:
Who pays, who owns, who maintains, who controls and who ultimately benefits?
These are not questions created by embedded networks. They are broader issues that arise whenever long-lived renewable infrastructure is installed on property that is occupied by someone other than its owner.
Embedded networks can, however, introduce additional opportunities — and additional considerations — particularly where generation can be shared across multiple customers within a private network.
The mismatch between a lease and a long-lived asset
One of the fundamental challenges with renewable energy in rental properties is the mismatch between the life of the asset and the length of the tenancy.
A commercial lease may span 10 years or more, providing a relatively long period over which the benefits of a solar installation can be realised. A residential tenancy may be for one year, or even shorter.
Consider a tenant who contributes towards the cost of a solar system through their electricity charges. If they leave after two years, the solar system remains with the property. The next tenant may receive the benefit of an investment they did not contribute towards.
The reverse can also create issues. If the owner funds the system, they carry the capital cost while the tenant receives much of the immediate benefit through lower electricity costs.
Neither arrangement is inherently wrong. The important issue is that the commercial and contractual arrangements need to recognise the different interests of the parties.
This is fundamentally a question of cost allocation and ownership, not an embedded network problem.
Residential properties are not all the same
Residential renewable projects can involve very different property and ownership arrangements. The key distinction is whether the solar system is installed for an individual dwelling or as part of shared building or development infrastructure.
Individual houses and townhouses
For a standalone house or individually metered townhouse, the arrangement is relatively direct. The system is generally installed on the roof serving that dwelling, and the electricity is used by the occupants of that property.
However, the ownership and cost questions still matter.
If the landlord pays for the system, the landlord generally retains ownership of the equipment while the tenant may receive the immediate benefit through lower electricity bills. If the tenant pays for the system, the parties need to agree what happens when the tenancy ends, particularly because the equipment may be fixed to the property and difficult to remove.
The tenancy agreement may also need to address:
- who owns the system;
- who is responsible for maintenance and repairs;
- who pays for insurance;
- who receives the benefit of the electricity generated;
- what happens if the inverter or other equipment fails; and
- what happens when the tenancy ends.
The shorter the tenancy, the more difficult it may be to align the tenant's contribution with the period over which they receive the benefit.
Apartment buildings and other shared residential properties
Apartment buildings and other shared residential properties raise a different set of issues.
The available roof space may be limited compared with the number of dwellings. It may also be occupied by plant, communications equipment, lift infrastructure or other building services.
Even where solar can be installed, the system may generate electricity for common areas rather than directly offsetting the electricity consumption of individual apartments.
In that situation, the relevant decision-makers may include the owners corporation, body corporate, building manager, individual lot owners and landlords. The questions are not simply between a landlord and tenant.
They may include:
- whether the system is common property;
- who approves the installation;
- who pays for the system;
- who owns and maintains it;
- whether the generation is used for common areas or allocated to individual dwellings;
- how the benefits are distributed between owners; and
- how the system is treated when apartments are sold or rented.
These are shared-property and governance questions. They should not be confused with the separate question of whether the building operates an embedded network.
Larger residential developments
Larger residential developments may have more roof area across multiple buildings, community facilities or other shared assets. That can create greater potential for onsite generation, but it does not automatically resolve the ownership and allocation issues.
The generation may be distributed across several buildings, meters or ownership structures. The project may therefore need to consider how electricity is generated, measured, consumed and allocated across the development.
Some developments may operate through individual connections, while others may include an embedded network. Those are different infrastructure arrangements and should be analysed separately.
The important point is that residential renewable projects do not all involve the same parties, meters or ownership structure.
Commercial properties can be a different proposition
Commercial properties often have characteristics that make onsite generation particularly attractive.
- larger roof areas;
- the opportunity to enter into a rooftop rental agreement;
- substantial daytime electricity demand;
- more predictable consumption patterns;
- longer lease arrangements;
- larger electrical infrastructure; and
- greater opportunities to coordinate generation, storage and energy management.
Their substantial daytime electricity demand can provide a large and consistent load, well matched to onsite generation.
This is important because solar generation is generally strongest during the day — precisely when many commercial properties are operating.
A commercial property may therefore be able to consume a significant proportion of its generation onsite, reducing reliance on grid-supplied electricity and reducing the amount of energy that needs to be exported.
Longer commercial leases can also provide a better opportunity to align the period over which an investment is recovered with the period over which a tenant occupies the property.
This does not remove the need to consider ownership, cost allocation, insurance or maintenance. It simply means the commercial circumstances can be more favourable to long-lived infrastructure investment.
Where embedded networks come into the picture
An embedded network does not create the underlying ownership or investment issue.
Property owners already own and are responsible for significant electrical infrastructure within their sites, including switchboards, cabling, substations at many larger sites and associated equipment.
An embedded network can provide the property owner or operator with greater flexibility to manage, maintain and upgrade that privately owned infrastructure. It can also provide a framework through which some infrastructure and operating costs may be recovered, with revenue potentially reinvested into the building's electrical infrastructure and future energy requirements.
Renewable generation can form part of that broader energy strategy.
Within an embedded network, generation may be able to be used across the development rather than being limited to a single common-area load.
For example, generation from a commercial building's rooftop could potentially support common-area consumption as well as electricity demand from multiple tenants within the private network.
This can improve the utilisation of onsite generation and reduce reliance on exporting electricity to the distribution network.
It can also create opportunities to integrate batteries, load management and electric vehicle charging as part of a broader site energy strategy.
But there is an important qualification.
The private network must be capable of supporting the proposed generation.
You can't just put solar on the roof
An embedded network may have been designed primarily to import electricity from the wider electricity system.
Introducing a large amount of onsite generation can change the electrical characteristics of the network.
Before installing generation, consideration may need to be given to:
- transformer capacity;
- switchboard capacity;
- protection systems;
- reverse power flows;
- export limits;
- network configuration;
- metering arrangements;
- voltage management;
- battery operation; and
- the requirements of the relevant LNSP.
A network that is perfectly capable of supplying a building's peak demand is not necessarily designed to accommodate significant export back through the connection point.
This distinction is particularly important as commercial solar systems become larger and batteries increasingly form part of site energy strategies.
The question should therefore not simply be:
"How much solar can we fit on the roof?"
It should be:
"How much generation can the site safely and effectively accommodate, and how much of that generation can actually be used?"
What happens when there isn't enough solar?
Renewable generation does not remove the need for a reliable electricity supply.
Solar generation varies with weather, season and time of day. Even a building with substantial solar generation will have periods where onsite generation is insufficient to meet demand.
This means the relationship between onsite generation and the wider electricity system remains important.
Some connection arrangements may require a form of backup or "backstop" arrangement to ensure customers continue to have access to supply when onsite generation is unavailable or insufficient.
The principle should be no different simply because a customer is located within an embedded network.
Embedded network customers should not be subject to materially different reliability expectations simply because the distribution infrastructure between the customer and the LNSP is privately owned.
The technical and connection requirements need to ensure that renewable generation complements the electricity system rather than compromising supply reliability.
What happens when there is too much solar?
The opposite problem is also worth considering.
A large solar system combined with low daytime demand can result in excess generation.
There are several possible outcomes:
- The electricity is consumed onsite.
- Excess generation is stored in a battery.
- Generation is used by other customers within the private network, where the network arrangement permits this.
- Electricity is exported to the distribution network, where technically and commercially permitted.
- Generation is curtailed where necessary.
This is one area where commercial embedded networks can potentially provide significant flexibility.
A development with multiple customers may have a more diverse load profile than a single residence. One tenant's electricity consumption can occur at a time when another tenant's demand is lower, creating opportunities to use more of the site's generation internally.
The more generation that can be consumed onsite, the less dependent the project becomes on the economics and technical limitations of exporting excess electricity.
Batteries add another layer
Batteries can change the equation further.
Solar generation is strongest during the day, while electricity demand may continue into the afternoon and evening.
A battery can allow excess daytime generation to be stored and used later.
For a commercial property, this could mean:
Solar → tenant consumption → battery storage → later site demand
Within an embedded network, the potential application can be broader:
Solar → common area / Tenant A / Tenant B → battery → other site demand
Again, this is not automatically an advantage. Battery projects still require careful consideration of ownership, control, maintenance, insurance, safety, financing and the allocation of benefits.
But the embedded network can provide a framework within which these technologies can potentially be considered as part of a whole-of-site energy strategy.
Who pays for the infrastructure and maintenance?
This is perhaps the most important question.
Renewable infrastructure is not free simply because it is renewable.
Solar panels, batteries, inverters, switchboards, cabling and associated equipment all have capital costs. They also have operating, maintenance and eventual replacement costs.
Maintenance is not an optional extra. Solar systems need to be monitored and maintained to continue operating safely and efficiently. Panels can accumulate dust, dirt, leaves, bird droppings and other debris. Inverters, isolators, cabling, mounting systems and protection equipment can also deteriorate or fail.
If faults are not identified and addressed, a system may continue to appear operational while producing substantially less electricity than expected. In some cases, a system can lose a significant proportion of its output because of a single failed inverter, tripped protection device, damaged cable or heavily soiled section of panels.
The exact impact depends on the system, location, weather, equipment and fault. There is no single percentage that applies to every installation. However, research and industry experience indicate that soiling alone can reduce solar output by approximately 2% to 5% in many ordinary environments, with higher losses possible in dusty, agricultural, coastal or heavily polluted locations. A serious equipment fault or prolonged outage can reduce output from the affected part of the system by 50% or more, and a failed central inverter can potentially take the entire system offline until it is repaired.
These figures should not be treated as universal guarantees. They illustrate why monitoring, inspections, cleaning where necessary and timely repairs matter. A system that is not maintained may not deliver the generation assumed in the financial model, which can reduce savings for occupants and extend the period required to recover the original investment.
A sustainable model therefore needs to consider the relationship between:
Who pays → Who owns → Who controls → Who maintains → Who pays for repairs and replacement → Who benefits
That relationship can look very different in a residential rental property compared with a commercial development.
We would be cautious about a blanket approach under which residential tenants are effectively required to fund long-lived capital infrastructure and its ongoing maintenance through electricity charges where they may only occupy the property for a short period.
This does not mean residential renewable investment should be discouraged.
Rather, the funding, maintenance and benefit model needs to recognise the nature of residential tenure and the fact that the infrastructure may remain with the property long after an individual tenant has left.
The arrangements should also clearly identify:
- who schedules inspections and cleaning;
- who monitors system performance;
- who responds to faults and alarms;
- who pays for routine maintenance;
- who pays for major repairs;
- who pays for inverter, battery or panel replacement; and
- how maintenance costs are treated when tenants, owners or building managers change.
Insurance and responsibility cannot be overlooked
Renewable infrastructure also introduces practical questions that sit outside electricity pricing.
- Who insures the equipment?
- Who is responsible if a battery or solar installation is damaged?
- Who arranges maintenance?
- Who has access to the equipment?
- Who pays when an inverter fails?
- Who pays for replacement when the system reaches the end of its useful life?
- What happens when the property is sold?
- What happens when the tenant changes?
These are ordinary property, contractual, insurance and infrastructure questions.
They should not automatically become an embedded network regulatory issue simply because the electricity generated by the equipment is supplied through a private network.
The opportunity is bigger than solar
The conversation should also move beyond solar panels.
Commercial embedded networks can potentially form part of a broader energy ecosystem incorporating:
- solar generation;
- battery storage;
- electric vehicle charging;
- energy management systems;
- demand response;
- load control;
- smart metering; and
- future energy technologies.
The value of an embedded network is not necessarily the network itself.
It can be the ability to coordinate the infrastructure, generation and consumption already present within a development.
That flexibility can become increasingly valuable as electricity demand changes and buildings electrify.
So, whose solar is it anyway?
The answer depends on the property, the ownership structure, the tenancy arrangements, the infrastructure and the commercial model.
There is no single answer that works equally well for an individual rental house, an apartment building, a larger residential development, a shopping centre, an industrial facility or a mixed-use development.
What should be avoided is treating embedded networks as the source of a problem that actually exists much more broadly.
The fundamental questions remain the same:
Who pays?
Who owns?
Who maintains?
Who controls?
Who pays for repairs and replacement?
Who benefits?
And is the infrastructure capable of supporting the technology?
For individual residential properties, short tenancy periods can make it more difficult to align the cost of long-lived equipment and ongoing maintenance with the period over which a tenant receives the benefit.
For shared residential properties, the key issues may instead involve common property, owners corporation or body corporate approval, allocation of benefits and responsibility for ongoing maintenance.
For commercial properties, larger daytime loads, greater roof space and longer leases can provide a stronger alignment between investment and benefit.
For embedded networks, the opportunity is to provide greater flexibility in how generation, storage and consumption are managed across a development — provided the private network is technically capable of supporting it and appropriate reliability and connection requirements are maintained.
Renewables in rental properties are therefore not an "embedded network problem."
They are a property, infrastructure, commercial and energy-management challenge.
And if we want to encourage more renewable investment, the answer is probably not to apply one model to every property.
It is to design frameworks that recognise the very different circumstances of the people who own, occupy, operate and ultimately benefit from these assets.