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Who’s more likely to be hit by rising energy costs?

With the continued push to renewable energy and the United Nations Climate Change Summit (COP27) now on, this week we take a look at where households source energy for their homes.

Overwhelmingly, you are more likely to be using renewable energy if you are older, wealthier and own your own home.

Rising energy costs are set to hit lower income households more, not just in terms of a proportion of their total incomes but in percentage increases in costs.

This has implications for policy makers as we make the transition and will influence how new houses and apartments are built. 

The Survey of Income and Housing is conducted by the Australian Bureau of Statistics (ABS) every 12 years and provides an in depth look at how people live.

As part of the most recent study, where households source their energy by demographic characteristics was provided.

Not surprisingly, solar energy is most popular in sunnier climates.

But it is also dependent on how generous various state governments are with incentives to switch to solar.

Tasmania, which has the lowest proportion of homes on solar energy, does not have weather on its side when it comes to solar but also offers limited solar rebates.

Western Australia also offers limited solar rebates but does have the weather to support solar energy. 

Looking more closely at demographics of households that use solar, it is apparent that there is a divide between who is using it.

Despite significant government incentives available to them, low income households are the least likely to be using solar energy.

About 18 per cent of households on the lowest quintile use solar energy compared to 23 per cent on the highest quintile. 

Younger households are also less likely to use solar, with 11 per cent of households aged under 34 years with solar compared to almost 30 per cent of those aged between 55 and 74 years.

In comparison, younger households are far more likely to be connected to mains gas.

Renters are also far less likely to have access to solar energy than those that own their own home – only six per cent of rental homes have solar energy compared to 30 per cent of owner-occupied housing. 

There are a wide range of incentives and rebates available both federally and at a state government level.

They are, however, complicated and subject to change, making it difficult for many households to make the decision to make the outlay for solar, or to then take the next step to invest in a battery to store this energy.

More problematic are the low levels of incentives to provide rental housing with solar energy.

If you own your own home, you are five times more likely to be benefiting from lower energy prices than someone who rents. 

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Nerida Conisbee

Nerida Conisbee is the Chief Economist at Ray White.