Installing a solar system is a great way to increase the income on your commercial building, and is being done more often. However, is it legal to sell power to your tenant? Do you have to become a utility company and perform all types of complicated billing practices and licensing requirement?
Can a landlord sell power to a tenant? The quick answer is yes you can sell power to your tenant. The important words are in that sentence, though. The landlord can sell power to their tenant as a function of their lease payment. It is done all the time.
If you already have negotiated a lease rate based on the tenant buying the electricity, then what do you do? You make a lease addendum based on the amount of electricity they use averaged out over a long period, then make periodic adjustments up or down that keeps things even. You can charge as much as the utility company, but no more. They will keep their account with the utility company, but they will also get a bill from the landlord. If you charge the same as the utility company, their net bill is the same amount. If you give them a 10% to 20% discount, then they will be saving money and you will have a loyal tenant.
The lease addendum must have a certain format that CitiGreen can provide for you. The tenant must agree to purchase this electricity from you; you cannot make it a requirement on a lease addendum although you can certainly make it a requirement on a new lease. Since there is no negatives associated with solar power, there should be no reason any tenant should not want pure clean power that is generated on site. If it comes with a discount, then for sure there will be no reason. However, it shouldn’t take a discount to get approval.
In order to know how much to bill, you will need a revenue grade monitoring system installed along with your solar system that will measure the amount of electric power that is consumed by your tenant. These systems are not expensive and come with every system CitiGreen installs. They are on line and you can put in the start and stop dates and read out directly the kiloWatt hours (kWh) that was used. This number is multiplied by the amount you are charging for each kWh and you get an amount to bill your tenant. CitiGreen can develop a template invoice for you or any bookkeeping program can do the same.
You cannot bill for more than the utility charges, for a monthly meter charge, or for demand charges (since this would double bill for this). In order to calculate the kWh rate, simply divide the usage charge by the number of kWh on their utility bill. You should get a number between $.10 and $.30 per kWh depending on the rate and utility.
Follow these few simple rules and increase the income and value of your buildings by selling electricity to your tenants.