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Solar: Now for renters, too

California regulators have approved a policy for residents who, until now, have been under-served by the state’s popular solar incentive program: renters.

The California Public Utilities Commission voted on Thursday to give renters of apartments or other multi-tenant housing access to a program that previously targeted only low-income residents. The program, so-called virtual net metering, allows renters to get credits on their utility bills for the electricity produced by a communal solar system on their complex.

The solar electricity won’t go to any tenant but will instead be fed to the grid and sold to the utility. The new program will be available to business tenants as well.

Virtual net metering bridges a gap between the more affluent and the low-income, as well as the home-owner and the renter, so people in the middle can benefit from clean power. It also creates new business opportunities for solar service providers and their equipment suppliers.

Since 2006, California has offered rebates to help homeowners offset the cost of putting solar panels on their roofs. It’s the much celebrated California Solar Initiative (CSI) program, which has helped to turn California into the largest solar market in the country.

Except for a special program for low-income residents, the main portion of the CSI program has served mostly the well-off even though there is no income restrictions and the program’s funding comes from all electricity customers. That’s because solar systems can be as expensive as a new car even after applying the rebate (and even after factoring in a federal incentive for solar). The tanking of the economy in recent years also has made solar a luxury for many people.

Many solar service providers have cropped up in the last few years to offer more financing options, like leases to make solar more affordable. Their customers don’t own the equipment even though the panels sit on their rooftops. Instead, they sign long-term contracts to pay a monthly fee to use the solar electricity. The contracts are supposed to guarantee they will pay less money for solar electricity than they do for the same amount of power from their utilities.

But critics say even these new financing options still tend to serve people who are well-to-do. Guess who are more likely to get financing? An applicant who owns a home and has a large bank balance. And certainly, the preference is to serve people who own single-family homes simply because renters aren’t likely to get their landlords to agree to put solar panels on an apartment building. The same is true for tenants of office buildings. If the solar electricity is used on site, there is the sticky problem of distributing the power equitably among tenants.

The CPUC decision on Thursday kick-starts a 60-day process for the state’s three major utilities to come up with rate plans they will use to pay for solar electricity from multi-tenant properties. The new program should be in place after that unless there is dispute over the rate plans. The utilities will be able to pass on some of the costs of setting up this program to ratepayers, but they will need the CPUC’s approval.

6 Responses to “Solar: Now for renters, too”

  1. @ArtK: I don’t think net metering is meant to be a money-making proposition to start with. You are right that adding a solar equipment is a liability. If you are building new rental properties and want to attract tenants, then solar net metering could be an option, just as some home builders offer solar as an option and use solar to attract certain types of buyers. I can see solar net metering being more attractive to commercial properties.

  2. I’m sorry, although I support going “green”, this article is not helpful and raises more questions than answers.

    The teaser title touts tenant credits but the article fails to address how that is to happen. In fact the idea does not even make sense. Tenants are not going to fund or finance solar infrastructure, even if they had the landlord’s permission (which would not be forthcoming). Why would a landlord allow such a project, dedicate assets and expose himself to liability only to turn the credits over to the tenants?

    If the landlord funds the project the same holds true. He is incurring the financial risk, liability risk and operating costs. What is his motivation?

    What is being left out?

    BTW – Solar energy is not “Free”. There is a huge environmental cost incurred in the manufacture of the solar panels.

    • Sorry for not making it clear, but both landlords and tenants can share the credits from the solar electricity sale. Landlords pay for electricity to light up the garage, hallways, etc. In net metering, electricity is sold to utilities at retail rates, so that can take a big chunk out of a landlord’s/tenants’ bills. There are state/fed incentives for installing solar and private service plans in which the landlord/tenants pay service providers (who own and operate the system) a monthly fixed fee that will be lower the what they get from the electricity sale to utilities.

      • That still doesn’t make any business sense. The landlord is doing all the financing and taking all the risks. What motivation is there for giving away any accrued credits to the tenants? If he wants to give gifts from the goodness of his heart, he can simply lower their rent.

        Speaking as a landlord, I see no benefit to me from your description of this program.