Solar subsidies penalise the poor THE solar industry claims it is a myth that green schemes help the rich buy solar at the expense of the poor. According to the Clean Energy Council lower and fixed income households are driving the solar installation boom. This is wrong. The poorest renters miss out on solar and suffer higher electricity costs from green levies, while the benefit of solar subsidies goes mainly to middle and higher income homeowners. Using ABS data there are 5 million people living in the lowest resource households with both low incomes and wealth and 68 per cent live in rented accommodation. In upper income households only 20 per cent rent and 80 per cent are homeowners. While under four per cent of renters have solar electricity or hot water systems, over 20 per cent of homeowners have solar. So most poor renters miss out on solar subsidies, while mainly richer homeowners benefit. Most landlords do not install solar because they bear the upfront costs and their tenants benefit from lower electricity bills. ABS data shows solar subsidies lower electricity costs for households with solar. The Clean Energy Council claims the carbon tax, the renewable energy target and the high feed in tariff for solar raised energy prices by six per cent in 2012 and some argue the cost of green levies to households without solar is even larger. So poorer renters not only miss out on solar, they have higher electricity bills. The solar industry uses analysis by postcode of households with solar installed to argue there are more solar installations in lower and middle income suburbs. Analysis by postcode has the same flaw as the current school funding model, which provides pupil funding based on parent postcodes. In the case of solar, postcode analysis does not tell us who in a postcode has solar. Postcode analysis misses the fact poorer households mainly rent and very few access solar. The benefit of lower energy costs from solar accrues to owner occupiers and pushes up energy costs for renters, whose energy bills are a much higher proportion of their income. Nearly 20% of low income households cannot pay their utility bills on time and 13% had electricity or gas services disconnected in the last year. By comparison, only 5% of high income households could not pay bills on time and only two per cent were disconnected. It is not clear whether middle or higher income homeowners benefit most from solar subsidies at the expense of poorer renters. There are more households with solar in middle income than in higher income postcodes. However, upper income households have larger houses and electricity bills and are less cash constrained. They are likely to have larger solar systems and get a larger subsidy than just looking at connections suggests. Rather than denying solar subsidies penalise poorer renters and benefit higher income homeowners, the solar industry should try to encourage solar installations in rental housing. It has introduced leasing to reduce the upfront cost of installing solar, but it remains to be seen whether this is attractive to landlords and cash constrained owner occupiers. Dr Ed Shann is an independent economist.