Making Solar Power Viable in Rented Properties
22nd May 18
Cameron Quin

Although rooftop solar power has experienced massive growth in Australia in recent years, one market sector has been very challenging – electricity consumers who rent the property they use. This applies for both residential and commercial tenants.

The high electricity tariffs in Australia affect both residential and commercial consumers, and paying less for electricity is an attractive proposition for anyone. However, solar power in rented properties has experienced slow growth, since it is difficult to make it work for both owners and tenants.

  • Owners have no incentive to assume the financing and maintenance costs of commercial solar power, since someone else will get the benefits.
  • On the other hand, most tenants are reluctant to install a solar power system in a property that does not belong to them. They need authorisation from the owner, and even in that case, they are tied to the property – dismounting a solar array to reinstall it somewhere else is impractical and expensive.

A viable approach to make solar power work in rented properties is splitting the benefits and outsourcing the part that is technically demanding: installation and maintenance. This is possible with the concept of solar as a service, combined with an embedded network.

Solar as a Service Eliminates Capital Expenses and Maintenance

Solar as a service is a business model where the PV system provider remains the owner, but the installation is located at client premises and the energy output is available for their use.

The commercial solar system provider is responsible for financing and maintenance, and in exchange the user signs a contract called a Power Purchase Agreement (PPA):

  • They agree to pay for the electricity supplied by the solar PV system during a specified period, typically 10-15 years.
  • The kWh price in the PPA is lower than the electric utility tariff to make the deal attractive.

Real estate developers can adopt “solar as a service” to eliminate the financing and maintenance expenses associated with solar power. In order to split the benefit with their tenants, an embedded network can be deployed.

How Does an Embedded Network Operate?

Normally, each tenant has a power meter and pays directly to the utility company. However, this involves having a dedicated power supply for each commercial space. With an embedded network, property owners are billed for all the electricity consumed by their facility, but in turn they sub-meter and bill their tenants.

If the property owner deploys solar as a service, their average kWh price can be expected to drop, and this can be reflected as a lower price for tenants.

What Does Each Party Gain?

The combination of a solar PPA with an embedded network works for both tenants and property owners. While tenants gains access to an electricity price lower than the normal utility tariff, property owners can keep some of the savings by paying a unified power bill and then charging their tenants. There is also a marketing benefit for developers, since they can offer a lower electricity price than commercial spaces without solar power.

 

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Cameron Quin

22nd May 18
Cameron Quin

Cameron Quin has been heavily involved in business development from an early age. After founding and selling two online companies, Cameron found a strong passion for renewables and the opportunities it brings for the commercial and industrial sector. Sharing the possibilities of solar and the knowledge from the Solar Bay team is his favourite pastime.