Solar Panels PPA on a 3 unit multi-family rental property?

Question

Hi BP,

I own a 3 unit property in DC with each unit metered separately. One of the units is currently rented and the other 2 are vacant. Im thinking about installing solar panels on the roof. Since they are rental properties, I wont get the tax credit. I am thinking about doing a PPA, it costs me nothing ($0 upfront), and I would pay for the electricity at approx 50% discounted rate that will never increase (.075 per kWH) than the electric company (vs .11 per kWH and increases yearly).  I would have to pay for the electricity for 15 years and then they would donate the system for $1. They will own the SRECs the whole time (25 years) even after they give me the system. I plan on charging the tenants the monthly cost of the generation which is about $40 and if they use more electricity I would bill them as well. There is a moving clause where they would remove the system for free or transfer to the new owner. There is a one time temporary removal of system included for free. There is a buyout clause where I would pay for the rest of the months (40*number of months left on the 15 year agreement) upfront and own the system but the SRECs stay their property. There is no clause for removing it before the 15 years for any other reason, they said if I wanted to remove it, we would negotiate a price lower than the buyout clause.

I would only be able to connect it to one of the units, I will be connecting it to my biggest unit. The reason Im looking to do it is for the rent appeal. The property is in a gentrifying area and its not easy to find quality tenants that are qualified. Im doing everything I can to increase the appeal and entice good quality tenants. The units are fully renovated and very high end. Any reason why I should not install solar panels? Any reason why I would want to remove them before the 15 years are over?

Appreciate the insight.

Russell Brazil · Answer

There is absolutely zero rental appeal for a tenant. Tenants do not give things like that a single thought.

Jacob D Adamczak · Answer

@Zee Ayezain  The way you described it, it seems there really is no downside

Jacob D Adamczak · Answer

@Zee Ayezain  It would for sure increase the value of your property at that point when you own the system.  I really don't see a downside in doing this, it doesn't cost you and it can save money on the electricity while making your property valuable.  I would disagree with Russell, depending on the area that could be a huge plus.

Zee Ayezain · Answer

Thanks Russell, appreciate your feedback. Given that they would donate the system for $1 to me after 15 years. Do you think there is a play there for adding that to the value of the property if/when I intend to sell?

Solar Panels PPA on a 3 unit multi-family rental property?

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