Response and Submission to Federal and ACT Government Initiative to Support Solar in Multi Unit Residential Developments
The OCN (ACT) welcomes any initiative that is designed to boost the deployment of solar generation capacity in the residential strata sector, including the ACT Government’s consideration of support for residents and owners. Over the past 15 to 20 years, owners – many of them being retired seniors and first home buyers looking for affordable homes – have often been disappointed with their decision to move to these types of homes in response to strong encouragement by government and the marketing efforts of the property development and real estate sector. High unanticipated costs for defect rectification (including combustible cladding replacement), high body corporate levies, significant maintenance expenses and high rates and land taxes following the new calculation method have fuelled this disappointment. These costs carried by owners are generally passed on as increased rents to tenants. Ongoing cost of living increases are born by all owners and renters and they have a significant impact on home affordability.
Many strata property owners are personally keen to contribute to environmental sustainability efforts in the ACT. However, other cost pressures and current UTMA legislation could be inhibiting their ability to do so.
We note that the current proposal is based around owners taking up the ACT/Federal Government’s program with a substantial proportion of the benefits intended to flow to residents (including rental tenants). For Class A structures it is simply not practical from a technical perspective to distribute the solar-generated electricity to individual apartments to deliver a reduction in electricity bills. Any distribution of benefits can only be done on the basis of a calculation – for example, to owners by unit entitlement. Further, ensuring that any savings accruing to an owner are passed on to their rental tenants is difficult if not impractical for the Owners Corporation (OC) or its Strata Manager (SM) to implement. Although the UTMA stipulates that OCs/SMs must keep track of rental tenancies (Clause 114 (1) (f)), compliance with this provision is poor – in part due to the frequency with which tenancies can change.
To prepare an application to the proposed Government program, the Executive Committee of an Owners Corporation (all unpaid volunteers!) would need to undertake substantial work – including convening a General Meeting and convincing a 75% majority of owners to support the application. Gaining 75% majority support from owners when additional costs/investment are involved is difficult at the best of times. In addition, rarely do such meetings attract a quorum, resulting in many reduced quorum decisions that can only become effective 28 days after the meeting. Further, if the benefits are biased towards residents, non-resident owners (who typically make up a substantial proportion of the ownership base in many buildings) are unlikely to be supportive.
The effort involved in preparing an application is additional to the other priorities OCs and ECs are addressing. They will need encouragement and potentially other forms of assistance from Government to do this. Some ideas that might help in promoting this initiative include:
Moderate the requirement for benefits to be passed on directly to residents. Some complexes have already ascertained that an investment in rooftop solar to offset communal power use makes commercial sense and can be justified by electricity savings with little or no Government support. In terms of the ACT Government’s progress towards net-zero, it makes no difference whether the value of energy generated accrues to the body corporate or more directly to residents. Complicating the scheme by introducing social objectives may simply serve to erode uptake.
Provide details of the Gungahlin case study that met both Federal and ACT Government criteria and which has been cited to illustrate the concept. A broader range of case studies spanning different types of complexes would be of even greater value to inform the OCs/ECs faced with the decision whether to pursue the opportunity.
The revised calculation method for strata units significantly increased rates and land taxes, especially for the smaller less expensive units in a complex. For some units, the increase was almost 100% in the first year of the change. Reinstating the original method of calculation could help encourage the owners to apply and is consistent with the Government’s desire to create more affordable housing options. In addition investor/owners receiving the resulting reduced rates and land taxes for these more affordable homes could pass this benefit to tenants as reduced rents.
Potential applicants are likely to need direct support from experienced Government staff as well as the Solar Providers and the financier Brighte. Without adequate support and encouragement, the number of applicants may be smaller than expected.
We are also delighted to see the ACT Government announcing funding for several feasibility studies and potentially two pilot implementations of EV charging infrastructure within strata complexes. ‘In-building’ charging options are vital to sustain the uptake of EVs, avoiding the inconvenience, uncertainty and wait times of relying only on public charging stations – already coming under pressure as the EV fleet grows.
Notwithstanding this, it will be quite some time before in-situ charging options are widely available in strata complexes, and accordingly we urge the ACT Government to accelerate the rollout to public charging stations in “densification” hot spots so that EV uptake does not stall in the interim. In addition to buying time on the apartment challenge, it will provide essential infrastructure to support tourists and visitors to the ACT in the longer term.
As in our submission on the Integrated Energy Plan, the most difficult challenge that many complexes are facing is the phasing out of gas-fired communal hot water systems. The planned discontinuation of gas supply in 2045 sets an absolute deadline, but the change to electrified alternatives needs to be completed well before this. Finding viable alternatives requires a complex blend of expertise including structural, electrical, plumbing, technical, costing, legal and logistics. The complexities of mapping out a solution dwarf any involved in solar installations since the loss of instant heating capability necessitates the integration of a sizeable hot water storage capability into the building.
We look forward to hearing the Government’s approach to assisting with this most difficult of challenges. As with the EV challenge, the provision of funding for a number of feasibility studies covering different scenarios (at a total budget cost of say $250K) would provide uniquely valuable insights to inform the Government as well as OCs on the way(s) forward.
We look forward to discussing additional ideas presented in the OCN submission on the ACT Government Integrated Energy Plan at the appropriate time.
Yours sincerely,
Gary Petherbridge
President Owners Corporation Network (ACT)