Photovoltaic (PV) systems on owner-occupied homes are very common, but with the tenant electricity model, tenants and landlords of apartment buildings can also contribute to the energy transition. In this model electricity generated by a PV system is consumed inside the same apartment building. The electricity is distributed in the building behind the public grid connection point. Surplus electricity that is not used by the tenants directly can be fed into the grid and any additional electricity demand that is not covered by the PV system is supplied by the public grid. Since 2017, this form of electricity generation has been subsidized by the German government through a tenant electricity surcharge.
Key questions to implement this business concept
What is the goal? | Benefit of the project
The energy community generates clean and cheap electricity and sells it directly to tenants in an apartment building.
How do you achieve the goal? | Key activities
The energy community pays lease to landlords and sells electricity directly to tenants. The billing happens together with the payment of the ancillary rental costs.
What do you need to achieve the goal? | Key resources and capacities
You need the following main technical components: roof area at a multi-family house, PV system including modules, sub-construction, wiring and inverters, smart meters/suitable electricity meters, contracts with the landlords and tenants.
How is the service provided? | Sales and communication
The service is provided through direct supply contracts with tenants and landlords as well as through supplementary electricity contracts with green electricity suppliers.
Who should participate? | Co-owners
Energy communities, landlords, tenants, green electricity suppliers
What is the target group? | Customers
Tenants and landlords
What other stakeholders are needed? | Partners
Landlords, property management organisations, banks, tradesman, green electricity suppliers, insurance companies, electricians and installers
What are the expected profits? | Earnings
Income from direct supply of electricity to tenants, tenant electricity premium, EEG remuneration from feed-in, margins from green electricity supply
What are the expected costs? | Expenditures
Planning and projecting costs, costs for the technical components installation costs, leasing and financing costs, operating costs
Challenges & Solutions
Challenges
- Large administrative and billing efforts are needed, as residual electricity demand must also be covered.
- Modification of electricity meter technology is necessary to allocate PV electricity consumption to each tenant.
- If the plant is operated by the landlord, it may be that the trade tax reduction no longer applies.
- The rooftop of the building may not be suitable (statics, orientation, size) for the installation of a PV system.
- A critical mass of tenants needs to participate.
- Tenant model projects depend on service providers and associated costs.
- It must be ensured that the PV system is repaired in the case of a failure during its operation.
Solutions/Advantages
- Grid charges and taxes can be avoided often, since the power supply happens behind the grid connection point.
- The value of the property and the attractiveness of the apartment is increased.
- Available space is utilized more effectively.
- Citizens have already become aware of the importance of renewable and independent electricity generation and can be reached with communication material.
- Online solar cadastres and the municipality can help implement projects.
- Communicating and negotiating with the service provider can help increase your own margin.
- The use of model contracts can lower the costs for legal advice.
- An insurance can help decrease risks in case of damages.
Specific Q&A
Is there a roof available that is suitable (statics, age, orientation, size)?
Check online solar cadastres (if available) or roof area exchange platforms, examine potential buildings on their suitability, contact the municipality.
Is there a critical mass of participants that take part in the tenant model?
It is important to have the interest of tenants to participate, but it is even more important that a critical mass will also participate, once the project gets more concrete. Therefore, personal outreach, information events, use of different communication materials are needed.
Tenant model projects depend on service providers and associated costs
Persons in charge need communication and negotiation skills. Lower profit margins increase the probability of the project’s implementation.
Contracts need to be drafted and negotiated
A legal advice/lawyer may be required. Draft examples and model contracts could be adapted and used.
Once in operation, the electricity system (PV system) could be damaged
It is recommended to get an insurance for PV with comprehensive cover as well as an operator liability insurance.