Charging Tenants for Solar Power
With the increasing electricity rates, solar power seems like a better and cheaper alternative for homeowners as well as landlords. But can a landlord charge their tenants for solar power?
Yes. Landlords can charge tenants for solar power, but the terms must be laid out in the property lease agreement. However, the landlord cannot charge more than the electricity retailer would charge. Additionally, the landlord and tenant must agree on how much the cost of solar power will be.
Charging tenants for solar power encourages landlords to install solar panels in their investment property.
Save on the electricity bill
The use of solar power reduces the use of grid electricity. With the high and rising electricity costs, other power sources to help reduce the costs are welcome.
The cost of solar is much lower than the cost of electricity. Therefore, tenants will have lower electricity bills when they use solar.
How much is paid is determined by both the landlord and tenant. Proper solar power usage monitoring must be done to arrive at the correct amount to charge.
Tenants stay longer in the property
Your tenants will stay longer where their regular expenses are lower. Solar electricity is cheaper than grid electricity. It will keep your tenants on your property for longer.
When tenants stay longer in a property, the landlord is assured of income. Landlords with a large tenant turnover have cash flow problems to maintain their properties in good condition.
Increase in landlord earnings
There are different ways in which tenants benefit from solar. Most times, the electricity account is in the landlord’s name. The bill comes to the landlord with an offset from the solar energy that they may be exporting to the grid. Therefore, the amount on the bill is quite low.
When the power bill is much lower than the cost of solar power, the landlord makes a profit which increases his rental income.
Additionally, landlords can raise rents on properties installed with solar panels.
Eco-friendly
Installing solar panels on rental property reduces the carbon footprint of the property and those that live in it.
Solar power reduces reliance on fossil-fuel-produced electricity. Therefore, the property is environmentally friendly.
Can tenants receive solar benefits
Besides lower electricity costs, property owners enjoy rebates and a feed-in tariff to benefit from solar panel installation.
As a tenant, you cannot enjoy the additional benefits that come with solar panels. You can only reduce your electricity bill from the use of the panels.
The rebate enables the owner of the property to purchase solar panels at lower costs.
Further, the feed-in tariff goes to lower the cost of electricity bills. Tenants can benefit from it with an agreement from the landlord.
Landlord and tenant agreement scenarios for solar power use
Besides the landlord charging their tenants for solar, there are other options for the use of solar power they can agree on.
These other options are necessary to ensure that either or both parties can get the maximum benefit from the installation of solar panels.
They include:
- The landlord allows the tenant to enjoy a government solar bonus. In this case, the electricity account is registered in the tenant’s name. Therefore, the tenant can enjoy the solar bonus. The landlord does not enjoy any benefit from the solar panels. However, the tenant is likely to stay longer in the property.
- The landlord maintains the account, pays the bill, and gets the solar bonus. The tenant will then reimburse the landlord the full amount of the bill. The landlord can make a profit by charging the full bill even when they enjoy a rebate.
- The landlord maintains the account and pays the bill. They will then ask the tenant to reimburse the amount of the bill less the rebate. Therefore, the tenant can enjoy lower electricity bills.
- The landlord can charge their tenant for electricity as part of the rent.
Factors to consider when charging tenants for solar power
Record solar power usage
To charge your tenants fairly, you must record how much electricity they have used. Modern solar panels have components that allow you to record how much electricity is produced and consumed.
Therefore, a landlord must record and monitor the usage. The recorded usage is multiplied by the rate charged per kWh.
Ensure that the recording device works correctly. It should also be easily accessible and easy to use.
Transparency
The landlord and the tenant must be clear on how much to charge for solar power. Solar power should not be charged at the same rate as grid electricity.
Your tenant must know the rate charged for solar and grid electricity.
Billing agreement
How often will you charge your tenant for the use of solar power? You could charge weekly, monthly, or quarterly.
Make sure that you agree with your tenant on a convenient billing period. It ensures that they will pay the solar electricity bill on time.
Can a tenant install solar panels
It is unusual for tenants to install solar panels on the house they live in. Solar panels are capital-intensive investments that are expensive to remove and carry once installed. Therefore, it will be difficult for the tenant to move with the panels.
A tenant who wants solar panels installed on the house they live in can request their landlord.
Landlords who allow their tenants to install solar panels must agree on the ownership and enjoyment benefits accrued from the solar panels.
Most government solar schemes require proof of ownership for the benefits to accrue. Tenants must have a letter of authority from their landlord to enjoy rebates or interest-free solar loans.
Depending on the landlord, tenants can get solar when:
- The landlord installs a system
- Use community solar or
- Install a portable solar system
Solar panel assistance for landlords who want to install solar panels in rental property
Assistance for landlords to install solar panels depends on where your property is located.
Currently, Victoria has a landlord assistance program. To be eligible, you must:
- Own a rental property that is currently occupied by a tenant.
- The annual household income for the tenant should be less than $180,000.
- The value of the property is less than $3 million.
- It does not have existing solar panels
- The property has not received a solar rebate before.
In other regions, landlords can access interest-free or low-interest loans to purchase and install solar panels in rental properties.
Benefits of solar power
Energy independence
Energy independence refers to the self-production of free energy.
With solar power, you can cut your reliance on expensive electricity retailers.
Live anywhere
Once you have installed solar power you can go off-grid. Therefore, you can live anywhere in Australia.
You can build a home away from the grid and solar panels will provide free electricity.
Save money
Depending on your electricity usage, you save money as soon as you install solar. It reduces your electricity bill and depending on your location, you may never have to pay for power again.
Durability
Solar panels last for about 25 years. It makes them a sustainable source of power over the long term.
You can recoup your investment in 5-7 years depending on your usage. Then, you can enjoy free electricity for the rest of the life of the solar system.
Little maintenance required
The most maintenance required for solar panels is cleaning. Wash the accumulated dust on the solar panels annually.
It improves their sunlight absorption and enhances their productive efficiency.
How to save money when buying solar panels for a rental property
Consider the size of the property
The larger the property, the larger the solar system you should install.
Large properties often have higher electricity needs. Only a large solar system can provide sufficient power to run it.
Small properties have low electricity consumption. A small solar system will be suitable for it.
Therefore, the larger the property, the larger the solar system you need and the more you pay. You will pay less to install a smaller solar system on a small property.
Buy an upgradeable system
When installing a solar system, consider the future. Depending on the size of the property, there may be an increase in power consumption.
Therefore, when purchasing a solar system discuss with your installer future needs and how you can get an easily upgradeable system.
Take advantage of government incentives
The government is hoping that all households will have transferred to solar use by 2050. It has come up with programs to lower the cost of solar acquisition and installation.
Landlords installing solar panels on rental properties can use these programs to lower the investment cost.
Ensure you purchase your solar panels from a Clean Energy Council-accredited installer.
You will get a rebate that reduces your purchase and installation price by about $3,000 depending on the size of your solar system.
The larger the solar system, the more the rebate.
You can also get low-interest loans to purchase and install solar panels in your home.
Compare price among different installers
Before you purchase solar panels, compare the cost of different solar panel installers. Also, compare the cost of different solar panel brands.
Hire a pro to install your solar system
Gosolarquotes.com. is a free tool that connects homeowners to accredited solar installers.
- At the top of the page, enter your zip code.
- Then, fill out the subsequent form and provide more information about your project. Your information is then sent to accredited installers near you.
- You will then receive three quotes and advice from three accredited installers. You can pick either of the three to handle the task of installing your off-grid battery storage.
Author: Ben McInerney is a renewable energy enthusiast with the goal of helping more Australians understand solar systems to make the best choice before they purchase. Having an accredited solar installer in the family helps give Ben access to the correct information, which allows him to break it down and make it easily understandable to the average homeowner.