Housing affordability in the renewable energy transition: Evidence from the domestic rooftop solar panel uptake in Sydney, Australia

Abstract

This study investigates the factors influencing household solar panel uptake in the Sydney metropolitan area from 2013 to 2024, using a panel dataset and postcode-level solar installation data. Employing fixed effects panel regression, along with Poisson and negative binomial models for installation counts and Tobit and ordinary least squares models for system capacity, we find that market factors—such as solar system costs and electricity prices—significantly affect solar adoption and capacity. In contrast, feed-in tariffs have a negligible impact. A notable contribution of our research is the incorporation of housing and rental affordability into the analysis. We show that housing affordability, measured by the price-to-income and price-to-rent ratios, plays a significant role in influencing solar uptake. However, rental affordability, as measured by the rent-to-income ratio, has minimal effect. This study highlights housing affordability as a key barrier to solar adoption for property owners and underscores the structural barriers renters face in the clean energy transition. We recommend the implementation of a “Use It or Lend It” solar program, where the government could install solar panels on the rooftops of suitable buildings where the property owners opt not to do so themselves, offering a more effective policy alternative to traditional rebates in accelerating the clean energy transition.