How to bill out electricity when you have solar

Question

I am a property manager from Chico, CA.  I have a client who has solar panels that are paid for on his house.  There are two units, one is a main house and then a separate back house that will be rented out separately.  The way that the solar is set up is that at the end of the year there is either a credit or a bill depending on how much electricity the solar panels generated minus how much the units used. If the solar panels generated more electricity than was consumed by the two homes then there will be a credit, and if the inverse is true, then there will be a bill.  The two units are not separately metered.  So the question in this:  How to you bill for electricity?  Obviously, the thought is to just have it included in the rent, but the owner is afraid it will be abused and the bill will come at the end of the year and will be thousands of dollars.  We live in an area where the summers get over 100 degrees and you can rack up a large bill running the AC all the time.  Any help or suggestions on how to handle this would be appreciated.  Thank you BP!

Charlie MacPherson · Answer

The only legit way would be to separately meter each unit.  Otherwise, there's no way of knowing how much electricity was used by either party and no fair means of dividing the expense.

Kevin Sobilo · Answer

@Brent Silberbauer, month to month rental agreements would be my suggestion because then if the electricity starts to exceed your projected amounts you can increase the rent before it gets out of hand.

Also, keep in mind the landlord would NOT get stuck with large electric bills anyways since they OWN the panels which would largely offset the electric bill. They would incur an "opportunity cost" for the lost revenue on the solar generation from the excess usage but that is slightly different than being concerned about getting stuck with a large bill and having negative cash-flow.

Jonathan Quilon · Answer

If the true up bill is a credit should it go to the owner for compensation for buying the solar system?  The renters are already benefiting by having a "cheaper" electric bill than renting a home without solar.

Grigory Pekarsky · Answer

Billing out electricity when you have solar panels is not as easy as it sounds. There are many things that go into billing out your electricity, which can be difficult to keep up with if you don't know what exactly needs to happen. This blog post will help you understand how to bill out your electricity after having solar panels installed on your home so that everything runs smoothly and there are no misunderstandings between yourself and the utility company.

There are three different ways that your solar panels can generate electricity, which all work very differently. Those three different methods are the direct current method, the alternating current method, and the grid intertie inverter method. Most homes will be using one of these three methods to bill out their electricity so it's helpful to understand how each one works individually.

The Direct Current Method: This method is also known as stand-alone mode or net metering mode. This means that you have no backup power source other than what your solar panels provide for your home. The meter on this house essentially runs in reverse during daylight hours when there is no need for power from the utility company; running backward at roughly four watts per hour.

The alternating current method is another type of electricity.  This is also known as grid-tied mode. This method sends the excess solar power to the utility company through your meter; turning it in a forward motion, generating credits for home.

The third and final type of electricity is the most common among homeowners. It's called the two-way power method. This system works by sending any extra energy that is produced from your solar panels directly to your appliances at home during daylight hours while receiving new energy from the utility company when needed. When you reach that point where you are using more electricity than what your solar panels are providing, only then will the electric utility company come in with their own source of power to feed you until there is more sunlight being produced by solar panels throughout your home again.

Brent Silberbauer · Answer

i figured this out.  PGE will just do a true up at the end of each lease.  Problem solved.

Brent Silberbauer · Answer

Ok, that makes sense. I am a property manager from Northern California.  It just creates a little more work for us to manage the kwh those tenants use. Also, the way it is billed out is that there is one big bill (or credit) at the end of the year.  No monthly bills, which is crazy.  It's so hard to manage this because there can be more than one resident that used electricity during the year.  It looks like we will have to create some kind of account to bill the resident to save up to pay the end of the year bill when it comes.

Jake Thompson · Answer

So essentially the flat fee covers the solar usage. If they use more than the solar panels can provide and tap into the grid that's on them to pay electric company. If they use less than the panels produce they can get a credit from the electric company.

Jake Thompson · Answer

I think I'll let them know how many kWh they have for each month and anything above that they have to pay to the local utility, which will be in their name. So they will never pay me electric. They pay an increased rent for the base electricicity they get from solar panels and anything extra goes directly to utility company. At least that's what I'm thinking I'll do. I am about to rent it out so I haven't actually done it yet. I'm open to better ideas as well.

As far as advertising I'm thinking of letting them know they will only pay for electricity they aren't producing basically. Still not sure on that one.

Brent Silberbauer · Answer

So @Jacob Thompson, are you going to advertise that the higher rent is because the electric is included?  In that case what if they run the AC all Summer long carelessly and rack up a large bill that is $300/mo?  How do you handle that when charging a flat fee rent increase for electricity?

How to bill out electricity when you have solar

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