Rental Rooftops: A Missed Opportunity for Solar Energy

Rooftop solar is a good thing. It’s emission-free. It doesn’t require fracking or pipelines. It’s local. It’s also cheaper and easier than ever.

So naturally, I would like solar panels of my own. But right now, I don’t have them, and there’s one big reason why: I rent.

As a renter, going solar can be pretty tough. As anyone who has rented knows, just getting a landlord to fix a broken sink can be difficult, let alone take on a major rooftop installation. It’s also not hard to see why a landlord – particularly one who lives offsite – would be hesitant to install solar panels. Under a typical landlord/tenant relationship, the landlord would miss out on one of the biggest benefits of going solar: energy cost savings. That’s because in most cases the tenant pays his or her own energy bill.

The energy cost savings of solar power are nothing to sneeze at. According to Google Sunroof, solar panels on my house would reduce energy costs by $39,000 over 20 years, a $22,000 net benefit after accounting for the upfront installation cost of $17,000. Despite such impressive savings, the upfront cost of going solar is tough to justify for most landlords. Sure, raising rent is a viable option, with rent increases for tenants offset by lower utility bills over time– but it can be tricky nonetheless.

Solar analysis of my roof, from Google Sunroof.

This problem of “split incentives” – where the economic benefit of solar panels goes to the renter, but the cost falls on the landlord – is a serious barrier to getting solar (and other energy) upgrades on rental properties, both residential and commercial. It is a problem that is likely responsible for lower rates of solar energy adoption in areas with greater shares of renting, a finding that holds true “even after controlling for socioeconomic, demographic, and political affiliation variables (among others).”[pdf] And I’ve seen it myself: Many of the homeowners I know have gone solar, but I can’t think of a single renter I know who has solar panels.

Finding a solution for getting more solar to more renters would be a big deal. Nationwide, 37 percent of households are renter-occupied, a percentage that’s even higher in many cities. Using those rented households for rooftop space would unlock a lot of solar energy in cities. Here in Cambridge, Massachusetts, rooftop solar could generate 252 GWh of electricity per year – enough to supply more than a quarter of our electricity needs. Getting solar from local rooftops has some big benefits on top of cleaner air and reduced emissions, including more resiliency against extreme weather, and lower energy losses from transmitting electricity long distances.

Fortunately, overcoming the split incentives problem is possible, including using solutions suggested by both the U.S. Department of Energy [pdf] and the NC Clean Energy Center.[pdf] For example, policies that let landlords sell electricity generated on their properties (either back to the utility, to the community, or directly to their tenants) shift the economic benefit of solar panels to the property owner that pays for them. Cities can also take on relatively low hanging fruit, with local actions that bypass the split-incentive problem altogether, like installing solar panels on city-owned housing or requiring new developments to include solar panels. Finally, every city can simply provide assistance and resources for landlords that already want to go solar (like this guide for Cambridge landlords).

Over the last decade, the U.S. has taken enormous leaps toward a clean energy future. But right now, going solar for landlords and renters is far too tricky. By making it easier to put solar panels on rental properties, cities can expand the number of people able to take part in the clean energy revolution, while achieving local clean energy goals.