With spring right around the corner, I would like to lower my electricity bills by adding solar. Can anyone inform me on what I can expect? How does the billing work? What are people's general opinions on this? I have a couple of 10+ unit buildings in New Hampshire if that's important.
@Eric Hathway A lot will depend on what tax credits you can get.
I purchased and installed a 48 panel farm on one of our barns. It's not one of the "leased" systems from Solar City and similar. Those get you somewhat cheaper power, but put a lien on the property, making it harder to sell when the time comes.
We have a "net meter", meaning that the power we generate spins the meter backwards. We build up a credit in the summer and burn it off (baseboard electric heat!!) in the winter.
Between the amount we don't pay to the utility and the SRECs (credits), we come out ahead right away and stay ahead for 10 years.
At that point, the SRECs go away, but the system is paid off and we have very cheap power.
I had our system installed by Boston Solar and was happy with the job they did.
So you were paying for all the power prior to switching to solar?
I'd be very interested in hearing how landlords are recovering costs from tenants who have the electricity bills in their name.
We have a SFR with a long-term tenant who would agree to pay us the same amount (based on historical usage) if we switched to solar, but it seems pretty messy.
In other words, how are landlords not subsidizing tenants utility usage by installing solar?
Great topic, @Eric Hathway
@William Hochstedler This is for our personal residence, so yes. We paid for all electric costs prior - but we moved in February 2017 and went live late July, so we don't have a lot of historical experience. We also have a wood stove going, so that skews data as well.
As to how landlords recovering costs / profiting from tenants who benefit from solar, I have no idea. That does seem like a messy one, unless the bills come in the landlord's name and he charges the tenant based on that.
I would definitely get solar don’t know how anyone uses t strategically. But I use it in my multi family homes attached to the common area since I pay for tenants utilities it is well worth the investement, low down payment, low payment option and it basically pays itself off and in the end its an added value..
Thanks for the information!
So would the landlord pay a monthly lease payment on the panels and the difference, if any, in used electricity from what was brought in through solar energy? And the idea is that those payments would still be less that a regular electric bill?
I'm not in a position to purchase the panels up front.
There are several models running around for solar. Obviously there's a straight cash purchase and you own them outright.
On our personal residence, we elected to use a company that installed them and offered us 100% financing at something like 2.9% amortized over 15 years. I think they had an option for 25 years with a bit higher rate as well. Their model was to match the monthly payment with existing usage and build a system that netted down to zero consumption cost from the power company. The loan is secured like trade fixtures with a UCC filing.
The other model is leased panels which is kind of interesting as well. The installation company becomes the utility, they own the equipment and lease it to you like your internet provider with the router. They too try to structure it so your monthly payment stays the same or may be a bit lower. Just like leasing a car, this works well for customers who want this the latest technology with only monthly costs and without maintenance issues. As investors who like to build equity, this model seems less attractive.
Energy efficiency rebate programs tend to hate landlords. There are terrific incentives for home owners but they don't translate to us which is very strange and probably political. But there are massive federal rebates which are included in the ownership models but aren't available to us investors unless we can work a very intimate deal with a tenant having them share a portion of their tax refund with us. Pretty unlikely!
I've been tempted to put panels on some of my single families despite not having the tax incentive just because the financing is so attractive. But I'm nervous that it's going to be a hard sell to a tenant to pay me $50-$75 a month for the electricity that they're using that I'm not paying for directly.
Tenants will still have base charges (which is a whole other topic) and have to put the bills in there name with net meters. This means they will get a $10-25 bill from the utility company and then an additional bill from me?
Obviously, in markets where tenants will pay a premium for renewable energy the calculus is different and can be included in higher rents. I would love to hear what experience people have with that.
I don't know if it's related, but a friend of mine at the Rocky Mountain Institute has been working on "MPG for Homes". Is there a future where our properties will be harder to rent if we are using conventional energy?
Make sure before you jump into solar you consult with a local real estate agent. There are some parts of the country where solar might raise your value, other parts where it can signifgiantly decrease your value, and other parts where it has zero effect. You want to make sure you dont spend all this money to save yourself $50 a month then drop your property value by $25-$50k.
All good points. Thank you everyone.
As a landlord the bottom line is return on investment. You would not upgrade to marble in the kitchen if the rents did not justify it and the increased rents provided a reasonable return.
At the end of the day, I would suggest you look at what you would be out of pocket after all rebates / incentives and what the benefit (cost savings) are. As most systems I have seen advertised have a payback period of at least 10 years (if not 15 years or 20 years), most landlords are not willing to forecast out that far. It just creates another possible CAPEX responsibility (in my experience nothing is completely passive forever) and may not increase the value of the property (a bad combination).
Other considerations are if it helps justify a rent increases, attract a different desirable tenant base and as mentioned above, if financed and registered on title, possible selling issues.
If you plan on holding forever (or at least well past the breakeven point) perhaps something to consider (e.g. personal residence) but until they bring in the breakeven point inside of most holding times (3 - 7 years), a long shot in terms of actually seeing a return.
Hi @Eric Hathway ,
The Federal Tax Credit of 30% obviously applies in every State. There were additional rebates that were suspended last year as the take up of solar has been relatively high in NH.
Solar installations are "snowflakes" - they all look similar but each has differences depending on what you are looking to accomplish and what is available. If you have no tax liability, leases are lower monthly cost that will likely be better for monthly cashflow. Purchasing adds the asset and is better ROI. If you'd like to connect I can look at the specifics and at least get you some numbers that you can analyse.
I have a flat-top, 11 unit building in Manchester for which I pay the entire electric bill. Last year, I paid $5200 to Eversource. I would love to shrink that number. Any ideas?
@Eric Hathway , A friend of mine, Kim Quirk, has a business in Enfield, NH called the Energy Emporium www.energyemp.com. She is really good at working through various scenarios with customers and will help you arrange it in a way that makes the most sense for you. Kim and I went to High School together. She's not affiliated with any particular companies, just knows a lot about renewable energy.
Updated about 2 months ago
Here's a column from the Energy Emporium I mentioned that addresses a point from above- a realtor's opinion on home values with solar in New Hampshire: http://www.energyemp.com/will-a-solar-array-increase-my-homes-value/
Following- we have an owner from Europe that wants to do this on 15 buildings this summer. Very interested. Feel free to reach out.
If you own you get all the tax advantages. If you lease no tax cut.
Plus purchasing you will pay a lesser down payment and monthly payments are peanuts compared to the savings. Another added value is most banks will negotiate a better mortgage payment Incase you want to refinance out. Added value
Eric, I'd love to connect and talk on this topic. I have experience with multifamily solar projects and how to implement it in a way to be both profitable and pass a savings to tenants (regardless if the building is master metered or individually metered).
Sent you a connect.
Hope to talk more soon!
Very interesting discussion. It is something I have considered for an office building where my electric bill is over $20k/year in sunny NC.
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