Professional · Chico, CA · Member since 2016 · 15 posts · 0 votes
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!
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
9y
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.
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
9y
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.
Professional · Chico, CA · Member since 2016 · 15 posts · 0 votes
9y
Ok good. And for future. What if you have the exact situation with an individually metered home. Do you count the kw's every month and bill out the extra putting it in an account to pay the bill at the end of the year? Often times the solar bill comes at the end of the year, while people move and sign leases in the Summer.
Camas, WA · Member since 2017 · 52 posts · 8 votes
9y
+1 with Charlie-- definitely need those separate meters.
BTW which solar company did you use? I think awhile back I contacted AES....I am looking into Solar incidentally for my SFR...(are you ready for the 106+ temps this weekend!!)
All the best.
Aaron-- fee free to PM me if you want to not post publically.
Rental Property Investor · Ithaca, NY · Member since 2014 · 180 posts · 80 votes
9y
@Brent Silberbauer Are you suggesting that the owner only bill for the "extra" electricity used? Why not just bill for all the electricity used by the tenants? The benefit of adding the solar panels, to me, is to benefit the owner, since the owner paid for panels, not the tenant.
There may be legal issues with going this route that I'm not aware of - for instance you may not be allowed to charge "extra" for electricity since you would be considered a utility provider. However, I think if you charged the same rate as the electric company or less - you would not be "making" any money until the amount earned equals the amount of the solar panels.
Curious what is legally allowed - could you charge a flat fee for usage up to a certain amount then charge extra for above that?
Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
9y
Separate meters are the way to go, but before doing that, if you want to get an idea for a couple of months and then roll that into the rent, you can monitor each building's usage (assuming they run on separate circuits in the panel) using a TED unit such as one of these: (I got mine on eBay for $100)
We include in the lease for one unit (where electricity is included) that the amount included is $45 per month, based on years of record keeping for that unit. The other unit pays an amount equal to (the actual bill minus $45) each month. That has varied quite a bit. We will continue that for another year, but will eventually come up with an average usage (per unit, using the TED) and roll that into the rent.
Professional · Chico, CA · Member since 2016 · 15 posts · 0 votes
9y
Hi guys, wow thank you so much for the feedback! @Tanya F., those look like great tools. Thank you so much for the tip. @Ceril S. I think monitoring the kw's and just adding more rent into the equation will be the way to go. We will just have to individually monitor the kw's every month which is a pain, but probably just part of having solar on a rental unit. The home was purchased by an investor, but was previously owner occupied, hence the solar. If someone could come up with an app or some kind of monthly billing platform for solar rental units that would be amazing. The whole yearly billing/credit for energy just is not ideal for investment properties.
Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
9y
I have solar in my home and am getting ready to rent it out. I am in the process of finding out if the tenant can place the local utility in their name, while I have the solar in my name. If so, I'm planning to increase the rent to match what I pay the solar company every month ($55 flat rate) then anything the tenants use above and beyond that they have to pay to the local utility. If they are conservative they can actually make money back. This keeps things easiest in my opinion.
If I have to keep the electric in my name I may increase the rent more than $55 to make up for the possibility of high usage or just collect payment on whatever the actual usage is. The problem with that is that it's more of a pain for me to deal with.
Professional · Chico, CA · Member since 2016 · 15 posts · 0 votes
9y
So @Jake 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?
Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
9y
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.
Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
9y
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.
Professional · Chico, CA · Member since 2016 · 15 posts · 0 votes
9y
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.
Real Estate Broker · Chicago · Member since 2021 · 108 posts · 23 votes
4y
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.
i figured this out. PGE will just do a true up at the end of each lease. Problem solved.
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.
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
@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.