Digital Solar for Landlords

Discussion in 'Renovation & Home Improvement' started by Goosehead, 21st Nov, 2019.

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  1. Goosehead

    Goosehead Well-Known Member

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    Has anyone had first hand experience with one of the digital solar suppliers for landlords? Companies such as Investor Solar Solutions and Solar Analytics that act as a intermediary between the property manager, tenant and power company. For a fee they agree to an increase in rent with the tenant, a cheaper power bill and an increased return to the landlord. I am interested to see how it compares to a property manager providing an agreement on how the system is managed.

    I have to say I'm a little cautious with one of the early players going belly up early, however they invested heavily and early into developing there own monitoring system without the cash flow to take that step.
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Electricity charges are something a tenant pays and its better to stay out of the concept of being a energy provider for your tenant as a National Law prohibits it (which a tribunal will consider). The capital cost of the solar system offers $0 payback under any arrangement without absolute tenant agreement which an also be withdrawn. There are some who offers deals like this but frankly it doesnt add to property value (as its a depreciable item) and just complicates matters.

    "For a fee"....A further cost.

    A Residential Tenancy Agreement cant include electricity supply and is always open to attack at a tribunal. A tenant is likely bound to a specific provider deal by your acts and could seek to terminate the deal in a tribunal. Then you have a expensive unit that produces no benefit for you. If any part breaks (or they claim it has) during the lease you may also be stuck with the tenants electricity bill !!

    You are also relying on the financial continuity of the whole arrangement for 10 years+

    There is a good paper on three legal issues from the NSW perspective
    Solar power and tenants
     
  3. Goosehead

    Goosehead Well-Known Member

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    That's interesting, so point one is a given really. I'd expect something like that to be raised if the owner was not reasonable and made effort to repair the fault. Any issues with the property may end up with a reduction in rent, granted made worse by the rebate of power.

    The second and third points are interesting. All management agreements where the LL receive the full rebate are illegal. I know a few people that have this setup, and hade my managers offer this as well. One point os they don't offer an answer to receiving extra credit, i.e. where the solar is providing more than the tenant uses and the tenant is given the credit to fully offset the usage however the residual is given to the landlord, i could be reading it incorrectly and is unlikely without a battery I would suggest

    Laslty does that mean these businesses are operating illegally? From my understanding they are only refunding the difference between what is left over after the tenants usage is paid for.

    They are really making it hard to make solar available to renters. And LL to make homes more attractive to renters and potential buyers.
     
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  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Illegally ? No but the involvement of a LL in a supply of energy may mean the arrangement isnt compliant with national law. So if it ends in a tribunal dont expect a good outcome since they will be bound to consider that law.

    The least number of players between you and the tenants powerpoint the better it will be. Even the REA will take 8.8% etc.....

    If I owned a solar system on a rental I would likely want a higher rent for the provision of the hardware and leave the whole supply matter for the tenant. It would help to demonstrate to a tenant what their energy savings may be so they are happy to pay extra rent knowing that value will be returned. You want that number to be as high as possible to offset your costs (eg depreciation and maintenance)

    Many LLs seem to be lured into the belief that they can take the feed-in and charge the tenant for use. Thats seem like sales bait for the solar providers to suggest this is legit. Hey if they can install a system and make some $$ and also clip the ticket for the next ten years its then like selling new cars - The profit is in the maintenance and service.
     
  5. Stoffo

    Stoffo Well-Known Member

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    With electricity smart meters being so much smaller these days, you could just have 2 in the meter box, one for the property and another for the solar system :p
    Sure the supplier will charge two supply charges though.

    Either way, if I was to rent out my PPOR the solar panels won't be listed on the lease and will be isolated/disconnected unless the tenant asks for them and agree to pay a sizable amount more in rent !
    Otherwise it is yet another costly maintenance item (worse than a hws)
     
  6. thatbum

    thatbum Well-Known Member

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    Maybe in the sense of misrepresenting what is lawful to get away with as a landlord, but otherwise I suspect no.

    How? Nothing is stopping a landlord from getting solar put in their IP and for the tenant to use it. The issue is a landlord trying to specific profit or benefit from solar above what they would get in rent.

    Otherwise why not apply that logic to pretty much any fitting normally provided with a rental? Have a special garage fee, because hey, landlords don't *have* to provide a garage, but for an increased fee, the landlord will unlock the garage for the tenant to use...

    Anyway I totally agree with @[email protected] about this - I wouldn't touch an arrangement like this with a ten foot pole. I used to see it occasionally in WA when I was advising tenants as a job - pretty much all the setups I saw did not work as the landlord thought it did and probably would have been rendered void in court.
     
  7. Goosehead

    Goosehead Well-Known Member

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    Hi Guys, thanks for the feedback. @Stoffo in regards to having a dual meters that was pretty much written out back in the late 2000's when I first started assessing fitting solar, in Qld anyway they put a stop to having dual meters on a single property. @thatbum, of course that logic works, you charge more for more rooms in a property, or a pool whatever, and yes I have rented a property where the rent paid didn't give access to the garage as the owner had personal stuff in there, apparently it is common here in Adelaide for some reason. Everything, well that I do for a property anyway, is for a profit or at the very least value maintaining i.e. maintenance.

    Anyway I asked both companies for feedback and this is what there response.

    In the SunTenants model, the landlord is not selling electricity to the tenant, they are rather providing a rental property with an additional feature (the solar panels) and charging an appropriate rent increase for that feature. The tenants energy retailer are still the ones selling the energy to the tenant.

    If the landlord were to charge the tenant for the solar that they use, ie measure the consumption of the tenant and charge based on usage, they would need to follow the conditions of the Exemption class D2.


    Having lived in rentals with and without solar, and been given excuses why it can't happen, and now apparently illegal contracts for tenants. At this point of maturity for solar power I am very surprised there is not a well developed system that provides the benefits to tenants and owners.
     
  8. bunkai

    bunkai Well-Known Member

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    Unless something has changed, without subsidy, the economic case for solar or solar+storage isn't there (except perhaps the edge case where you offset daytime power consumption - which some but not most households would fit)
     
  9. Goosehead

    Goosehead Well-Known Member

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  10. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Other cases in other jurisdiction has refused to address such claims as the National Energy Guidelines dont permit a owner to be a energy provider. eg In NSW cases

    Solar power and tenants

    There appears no consistency. Even within one state.
     
  11. Eid

    Eid New Member

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  12. Scott No Mates

    Scott No Mates Well-Known Member

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    I deal with several sites which act as the energy provider. How can they do this? They are commercial buildings with an embedded power network. >100KVA supply from substation kiosk in the building, metered at the main switch board.

    All sub-meters are on the tenant board (sub-board) and monitored through the BMS, read by a third party.

    This setup is common on Qld gated communities or larger blocks of units as well. There was a recent change in NSW which allowed the BC or developer could enter into sa supply agreement in the same fashion with Ausgrid.
     
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