Article by:
Austin Young
August 21, 2023
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How Building Owners Can Prepare for a Solar Power Transition

As California continues to push for a transition to renewable energy sources, building owners in the state are faced with the task of preparing their properties for solar power. Transitioning a multi-unit building to solar power can be a complex process. However, with careful planning and the right team in place, building owners in California can successfully prepare their properties for this transition and start reaping the benefits of clean, renewable energy.

Title 24 California Solar Mandate

Title 24 of California’s building standard code is a section that regulates the Building Energy Efficiency Standards for new construction and existing properties. Its primary goal is to provide the standards and requirements to help California reach its goal of 100% renewable energy by 2045. The last updates to Title 24 added a solar mandate for California buildings, the first of its kind in the US. Building owners must be aware of the requirements and make a plan for their adoption of solar energy for commercial and multifamily properties.

VNEM Utility Rate Tariff

VNEM or VNM stands for Virtual Net Energy Metering or Virtual Net Metering, respectively. If you’re a California building owner, VNEM presents a valuable opportunity for you. It is the utility rate tariff that allows your property to share a solar system’s energy credits with multiple meters, such as multifamily residents or tenants of a commercial building. What that boils down to is you can monetize your solar asset to secure a return on your investment, introduce additional net operating income, and share some of the savings and benefits of renewable energy. It’s a win-win for everyone.

Benefits of Solar for Shared Buildings

While it’s natural for building owners to see the solar mandate as an expense they didn’t plan on, there are several benefits of going solar:

  • Increases Clean Energy Accessibility
  • Reduces Electricity Costs for Building Owners and Residents
  • Additional NOI Opportunity (Depending on factors, $500 to $1200 per unit per year)
  • Adds a Marketable Amenity for your Property
  • Higher Resident Retention Rate
  • Increases Property Value
  • Locks in Energy Rates to Protect from Rising Costs
  • Ensures Title 24 and AB802 Compliance
  • Boosts ESG and LEED Scores

The Steps for California Buildings to Prepare for Solar

Step 1: Determine your Buildings total Energy Load

It’s difficult to make a transition plan without data to guide you. So, one of the first steps in the process is to conduct a thorough energy audit of your building. This serves multiple purposes, including providing a baseline for measuring the effectiveness of the solar installation.

Step 2: Determine the Ideal Solar System Size

Determining the ideal solar system size is important for several reasons when planning a transition to solar power:

  1. Efficiency: An appropriately sized solar system will produce the correct amount of power to meet your energy needs.
  2. Cost Savings: Installing a system that is too small will not meet your energy needs while installing one that is too large will result in unnecessary costs. By determining the ideal size, you can ensure that you are investing in a system that will provide the right amount of power at the most cost-effective price.
  3. Payback Period: The payback period is the time it takes for the savings and additional NOI to pay for the cost of your solar system. A correctly sized system will have a shorter payback period, resulting in a quicker return on investment.
  4. Government Incentives: There are many government incentives for solar power systems, and some may be based on the size of the system. Determining the ideal size will ensure you qualify for the maximum incentives available.

This step is essential to ensure that you are investing in a system that will be efficient, cost-effective, and can provide a return on investment in a shorter period for your building.

Step 3: Choose the Right Installer

As we mentioned earlier, with careful planning and the right team in place, your transition to solar can be smooth and simple. So, choosing the right installer for your property and system size is a critical step. While price is an important factor, there is far more to consider when choosing your solar installer. The additional details to consider include:

  • Warranties for equipment, your roof, and leak coverage
  • Performance Guarantees
  • Installer Experience
  • Certifications
  • Past Client Reviews or Complaints

For an in-depth guide to choosing the right solar installer, including a list of questions to ask, read our blog post: How to Pick the Right Solar Installer for Your Project.

Step 4: Decide How You Will Manage Solar Energy Distribution and Billing

Before Title 24’s solar mandate, the management of solar energy distribution and billing was one of the top obstacles keeping California buildings from going solar. Your property management team is busy enough without adding the complexity of VNEM and solar billing to residents. The only other option was a flat-rate discount to residents, which didn’t make solar pencil out for building owners.

The great news is that you don’t have to figure this out on your own. With Ivy Energy’s solar billing solution, Virtual Grid, we handle every step of the distribution of benefits and billing process. Our team handles the onboarding of residents, uses utility-grade monitoring to track energy usage and share benefits, and generates an easy-to-understand solar electricity bill for residents. It is a turnkey solution that makes this step a no-brainer. If you want a streamlined, stress-free way to manage your building’s solar, then Ivy is the way to go.

Transition to Solar Now for the Biggest Benefits

The California Public Utilities Commission (CPUC) recently made some changes to Net Energy Metering (NEM) and the VNEM tariff. While the major changes to VNEM are about to be voted on September 21,2023, property owners still have time to grandfather in the current favorable VNEM tariff. If you begin your building’s transition to solar and apply for VNEM before December 20, 2023, you are locked into the current VNEM tariff. However, if you apply after December 20, 2023, you will miss out on the most favorable multifamily solar tariff. While you don’t want to rush your decisions for any of the steps above, there is a sense of urgency for building owners who want to get the biggest benefit and ROI from their solar assets. No matter where you are in the solar transition process, we’re here to help.