Solar Panels, Multi-Family, & Charging/Collecting Utilities: How To?

Question

Good Morning my BP Peeps!

I read a post by Joe Bertolino that piqued my interest.  He had just installed solar panels on his property and was awaiting the outcome.

I then searched BP to see if this question was already answered:  If you install solar technology on your properties, how do you uncouple the separate fees your tenant pays and have them start paying you for the electricity?

How also, if you store energy in batteries, sell it back to the utility company?

Solar technology is the new holy grail, and if we can find a way to harness it, we will be the innovators. . .so how to?

As a mindtrust for my bretheren and sistren, here are some articles that I have gleaned from the superhighway:

Honda giving no to low cost financing:

http://www.clarkhoward.com/news/clark-howard/environment-energy/honda-rolls-out-home-solar-installation-initiative/nWsjD/

http://www.nytimes.com/2013/02/20/business/honda-to-offer-customers-a-home-solar-system-option.html

First Complex of 114 Apartments 100% Solar Building in San Diego:

http://www.cleanenergyauthority.com/solar-energy-news/san-diegos-first-100-pv-apartment-community-032913

California changing the law for COMMERCIAL applications:

http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M055/K434/55434149.PDF

While this press release is convoluted, perhaps another thread can discuss what the state of CA is actually doing with commercial applications and getting paid to create power for the grid, but I digress. . .

So back to my central question, how do you step up to solar efficiently & economically, then become the power company for your tenants?

I hopefully assume you are generating wholesale power and selling it retail to our tenants. . .

That would make us the big boys (and gurls)!

And also a lucrative cash cow.

So I turn to my learned brothers and sisters, what am I missing?

Is this a great idea, and before it's time?

. . . or is the future, now?

I stand on the shoulders of giants,

Tevis

Al Williamson · Answer

Watching this tread closely. I like what Michael Begley did - the increased rent would actually increase the NOI for a multifamily and translate into an arguably higher appraisal value.

Steve K · Answer

Strictly from a fiscal perspective it's not really worth the effort and expense to go this route with multifamily.  You'll never have a system large enough to offset all of your tenants consumption and even if you did you would have significant issues assessing usage by meter.

That being said there are some other ways to deploy solar in a multifamily situation.  The most profitable is creating a new revenue stream by building covered parking out of solar panels and using the generation to offset your common area loads.  Win / win with a new income stream and lower landlord utility expenses.

If you can use the tax credits the solar carport avenue has an enormous return on investment if you can charge a decent rent for covered parking.  I don't understand why this isn't on every single airport parking lot in areas that allow and compensate net metering.

Joe Bertolino · Answer

The savings comes from them selling you energy at a discounted rate.  I will need to see the final contract to know how discounted it is.

I do know several people in El Dorado Hills that purchased the solar system outright for approx $20k and it cut their bills from $600-700 a month down to around $100.   EDH is a upperclass suburb about 25 miles NW of Sacramento that is only serviced by PG&E and they get gauged as there is no competition.

Michael Begley · Answer

Multifamily would be complicated, but I am installing a 3.5 kw system on one of my rental houses.  It will produce $500 worth of electricity a year and my tenant will see those savings on his electric bill, but I will raise the rent to cover the cost of the solar system, which runs me $38 per month.

Dave Taylor · Answer

I've had solar on the roof of my rental since May 2011.  I charge the tenants slightly more for rent and the panels make about $600 of electricity per year at current rates of 12 cents per kWh.  I get that back in increased rent and it's a roughly $20K solar panel system on my roof.  Home value has risen to reflect that and even in rainy Oregon (my property is in the Portland Area) the panels produce very well.  Of course it would be better in AZ or NV but they do produce over 5000 kWh per year.

I have NEVER had to clean the panels.  Repair the panels.  Replace anything.  Rain cleans them sufficiently and there are no moving parts.  In most parts of the world this is the case, however I don't have any nearby trees or dust storms to worry about.

The carport idea is a winner.  I may try that as it's a cheap metal structure and provides added value.  Just bought a place in Reno and although the state rebates are crap, the math still pens out in the long run and adds significant value.  Problem with a roof is you need a new roof, because one day those panels will have to be removed and on my Portland rental this is costing me $2850 as I put on a new roof.  Really wipes out a lot of savings :(

Do your homework!  Solarpowerrocks.com is a GREAT resource.  IRR in Massachusetts is over 28% on solar making it a 4 year payback.  That's killer!

Joe Fairless · Answer

@Steve K - great tip.

Does anyone know of a good company that does solar installations in Cincinnati? I'm interested in getting them installed then selling the energy back to the electric company. Based on this thread, I'm probably not going to get into billing back tenants but would like to look at other income opps with it.

Tanya F. · Answer

Here's how we're doing this-

We installed solar in Dec 2011 on our 2-flat. It's a small system (1.92 kW), predicted to cover about half the use of one of the apartments. Our local utility requires the electric meter linked to the panels be in our name.

We monitor both gross and net generation. This means, we have the gross number of kWh the panels produce before any household usage, and also we know the net energy generated, the amount that we sell back to the grid.  The net metering keeps track of the usage by the tenants, about $45 per month on average, this takes into account electric use on sunny days (i.e. without solar, their use would be $60 per month or so). We include electricity in the rent,  raising it roughly $45 per month. We keep the credit for the leftover energy that we sell back to the grid (average of $20 per month, depending on the season). The tenant benefits some, and we benefit some.

Since we've only had the system for a couple of years, we may still tweak the amount we factor into the rent, and include a solar 'appeal' increase.  Not sure what the market will bear in the longer term.

Michael Begley · Answer

Here is the GoogleMaps view

Michael Begley · Answer

@Rafael Floresta, We have raised the rent $25/month on the current tenant, as he is month to month and working on buying his own home, so he will be leaving in a couple months.  Then we will increase the rent an additional $25 for the new tenants, just as the spring sun eliminates their electric bill.

Rafael Floresta · Answer

@Michael Begley did you succeed charging more rent for a solar?

I'd love to hear what your experience has been so far.

Solar Panels, Multi-Family, & Charging/Collecting Utilities: How To?

Most Popular Reply