Article by:
Austin Young
June 16, 2021
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Can I Charge Tenants for Solar Power? | Ivy Energy

Can I Charge Tenants for Solar Power? New Clean Energy Income for Property Owners

Selling solar energy to tenants is a lucrative opportunity that a growing number of California property owners are making the most of. It creates a new stream of income for landlords and a new opportunity for energy savings for tenants who do not have to figure out how to get access to clean energy on their own.

Advantages of Selling Solar Energy to Tenants

  • You get to contribute towards creating environment-friendly homes and practices without much effort.
  • A study by Willow showed that homes that offer clean energy options have seen an increase in value. Homes with power efficiency are becoming increasingly popular with potential buyers.
  • Creates a win-win situation for both tenants and landlords. The latter can generate a side income and tenants pay less for utility. Homes offering convenience and savings in the form of clean energy are more attractive.
  • For property owners with buildings installed with solar panels, clean energy distribution can help with ESG goals and related incentives. 

What are your options?

Landlords and property owners can choose to set up solar panels on the property for providing common electricity or opt for a shared solar system with virtual net metering (VNM). The latter involves the tenants paying for their solar utilization. With VNEM you are provided flexibility around enrollment and allocation to tenants, this means that if you need to change tenant participation it can be done via administrative process without moving physical solar components. Ivy’s managed service handles all of this for you if you opt to use our Virtual Grid platform and solar billing service offering.

How many solar panels does a building need?

As it can be difficult to ascertain the total energy consumption of a building as such, property owners can take into account an average figure based on the area of the floor plan. A general rule followed is 2 watts per square foot. For example, a property that is 4000 square feet in area will call for 8000 watts of solar power. However, there are a lot of other factors including the number of rooms and the shape of the building and the type of appliances that must also be considered.

Ensure that the lease terms are clear

Landlords can sell solar energy as a part of the rental agreement. A lease addendum mentioning key things like pricing, system obligations, and other required consumer protections listed in the CPUC code 2868 needs to be part of the agreement. One of the options would be to analyze energy consumption(averaged over a long period) for a given unit and estimate this pricing structure. Landlords are not allowed to charge more than the utility company according to prevailing utility billing code, so its best practice to make sure this pricing structure is clear and doesn’t come in conflict with that rule. However, it is ideal to provide a pass through discount to make sure that the utility expenses are verifiably lower. Ivy’s Virtual Grid software can help you take the pain out of billing for solar energy across multiple units. 

Here are some other factors that you can keep in mind while selling solar energy to tenants:

  • Ensure transparency in the process by explaining how the system would work to tenants. Explain everything from cost per kWh to the equipment or software that would be used. This would include information on how usage will be monitored, and more importantly how much they could potentially save.
  • Ensure that the household unit would be sharing the benefits in an equitable manner with equal accessibility logic.. 
  • Make sure that the billing agreement is clearly understood by the tenant. This would include billing schedules and what they can expect to see every month.

The most important thing to keep in mind when selling solar energy to tenants is that both parties need to be on the same page right from the beginning. This is one of the key reasons clients use Ivy’s Virtual Grid platform to handle solar billing. We have created the easy button to transact with tenants for solar utilization, this is done through our friendly consumer agreement structure that uses dynamic data to guarantee net savings to users. If you choose to generate solar power on site and create a profit margin or opt for community solar that mainly benefits your tenants from an off-site source, you're helping to increase market value for your community. This is the only solar billing option available that guarantees savings to tenants while providing a clear return on investment for the owner.