The “new normal” and “now more than ever” have been buzzwords since 2020, but the only normal thing seems to change. While society, business operations, supply chain, and everything in between have changed due to the pandemic, we’re talking about a different kind of change, set in motion seven years ago. The multifamily real estate industry is undergoing a massive energy revolution around the source and usage of energy. Multifamily solar is no longer just a nice thing to do to help the environment. Multifamily residents are looking for housing with sustainability and clean energy as necessary a feature as the property’s amenities. Additionally, multifamily investors, policy enforcers, and states are expecting it. Luckily, there are several technology innovations and public policy improvements to finally make multifamily solar profitable for property owners and their residents.
Due to advancements in technology, the overall cost of solar has decreased. While there haven’t been significant changes in the hardware price over the years, there has been a notable reduction in the soft costs (non-hardware costs). Solar photovoltaic, or PV, panels are more efficient now than before. As solar panel technology continues to improve, the cost of solar energy is expected to drop even further by 2025.
Solar on single-family homes makes sense financially due to net energy metering (NEM) policies. NEM allows homeowners with solar panels to receive credits on their utility bills for exporting their excess solar power to the grid. However, until California introduced Virtual Net Energy Metering, multifamily solar couldn’t reap these same benefits. VNEM grants permission to generate energy from rooftop solar panels, export excess power, collect utility credits and share the credits and clean energy with individual units of residence–not just have solar to power common areas. The grid is also able to help distribute electricity during peak times. Thanks to VNEM, multifamily property owners can use Ivy’s solar billing software for fair and efficient distribution of the benefits of onsite solar, cutting back on costs for all parties involved.
Ivy’s solar billing solution, Virtual Grid, solves the split incentive issue for multifamily solar. VNEM policies have been around for years, but there has been a slow adoption of multifamily solar because residents would receive savings. Yet, property owners carrying the cost of solar installation would have few benefits. Our Virtual Grid software uses a proprietary algorithm to take the headache out of apartment solar billing and share the benefits equitably between residents and property owners. This is essential for multifamily real estate developers because the billing is based on residents’ real-time energy usage, solar availability, and avoided utility costs. With a solar billing solution, you can legally monetize your solar panel investment by generating an additional net operating income while still sharing onsite solar savings with your residents. Ivy’s Virtual Grid software is a turnkey solution that provides safe, simple, and accurate solar energy billing that is easy for your property managers to maintain.
California is highly committed to making the state more sustainable, but they had not mandated solar until very recently. Section 6 of Title 24 of California’s building standard code is the first solar mandate in the US. In an effort to reach the state goal of 100% renewable energy by 2045, the 2019 Title 24 update required new residential construction to have solar energy provisions. However, 2023 will bring this mandate to more residential and commercial structures, even applying to existing buildings. The Ivy Energy team has the knowledge and experience in this space to guide you through bringing your multifamily property into compliance with California’s Title 24 solar requirements.
With retail energy prices soaring, multifamily solar offers residents and occupants of other multi-unit buildings another affordable energy source. Extreme energy cost inflation means that power isn’t cheap, making a solid case for generating power from your own onsite solar. Electricity costs impact multifamily property owners covering the cost of powering community areas and dramatically affecting your residents as they budget for rent and utilities. Solar apartments offer power at a lower price than utility rates with the added bonus that it comes from a renewable source.
With Ivy's Virtual Grid software, your residents can directly see their savings from onsite solar. They receive a simple monthly solar bill that shows their energy consumption and a comparison of their bill with solar and without solar. This transparent, straightforward apartment solar billing creates a community savings ledger. A portion of the savings is distributed to your residents and then a portion is reserved for you, the property owner. Not only does this save you and your residents from retail energy economics, but also it can result in $650 to $1000 per unit in additional NOI (depending on your location).
Investing in solar energy is an excellent way to diversify your energy sources and position you as a sustainable housing leader. Adopting solar or other renewable energy can help reduce the dependency on fossil fuels, reduce our carbon footprint, and preserve our environment. People are looking for more significant ways to reduce their impact on the environment than simply remembering to take their reusable bags to the grocery store. Various products from beverages to clothing or personal care items are marketing themselves as “carbon-neutral certified”, and the multifamily housing industry is not immune to this trend.
Potential residents want, and often expect housing options with clean energy, energy-efficient appliances, electric vehicle charging, and more. Opting for sustainable solutions is a lifestyle for a growing number of Americans. According to a study by GreenPrint’s Business of Sustainability Index, more than 75% of Americans are willing to pay more for sustainable products. If you’re a multifamily property owner, convert your property into a green one! Make sure it comes with solar panels, and you’ll never lose out on potential residents again.
The adoption of solar and the other aspects of the solar-led apartment energy revolution is not a fad. Global warming and its effects can be slowed but never entirely avoided. The energy grid is evolving continually and will be a part of the solution that helps battle high energy prices and the ill effects of depending on fossil fuels. Stakeholders joining this energy revolution in the early stages get to be a part of the movement and benefit from it.
While many multifamily real estate developers see the push to adopt solar using state mandates as a negative, especially as a cost increase, there is more to the apartment energy revolution. As experts in this field, we know that the change to local, clean energy will only yield market value increases that present significant returns and very happy communities–if handled correctly with the proper support from trusted experts. Contact us to find out how much you could be earning on your property by distributing solar energy to residents.
CA has passed laws like AB802 and Title 24, mandating renewable energy on certain multi-family properties?
Click Here to learn more about how you can comply while turning a profit with Ivy’s Virtual Grid alternative to traditional Sub Metering.