Solar for Renters and Landlords - Does it Work?
By David Llorens

August 15, 2008

Invariably, when you see a solar array on a home, that house is owner occupied. Typically, when someone rents a home or an apartment, they pay for the electricity bill. That removes any incentive for the landlord to install solar.

If we want to open up a huge slice of pie for solar energy, this needs to change. For instance, about 40% of U.S. households rent their homes. There are about 130,000,000 households. So, we’re looking at an untapped market of roughly 52,000,000 homes! While this logistically isn’t easy, here are some of the big ways it could be possible:

1. Create a tenant/landlord relationship for solar so it becomes financially beneficial for both parties. We’re trying to pave the way for solar energy for renters here in San Francisco.

2. Put solar on a great big unshaded roof to power some of the neighbors with worse exposure.

3. Create incentives for people to install solar arrays larger than their power bill requires. This will require both a feed-in tariff (or some similar incentive) and upgrades to the grid infrastructure (if you have all the houses on the block generating more than they use, you’re gonna blow some transformers. We didn’t really build this grid thing to go both ways).

Anyway, I digress. Back to renters and landlords:

Solar energy, ironically, is way more lucrative for landlords than homeowners (at least until the end of the year). Why? The Federal Tax Credit for Solar Energy is capped for personal residences at $2000, but is uncapped if the property is an “investment” property. In addition, landlords can depreciate the value of the solar array over a shortened period of 5 years. Finally, landlords can take a 50% bonus depreciation for items purchased and placed in service during 08? (the economic stimulus package). When you see this all on paper, it’s pretty mind blowing.

However, unless they’re into green charity, landlords are not going to put solar on their “business” unless they are saving money on energy somehow too. So, you need to be able to work that energy savings into the lease of the tenant, so that the tenant receives comparable or even cheaper energy costs with clean renewable energy instead of 100% grid power.

This requires a few ground breaking moves on the tenant law side. The tax law is pretty well covered, and we’ve gotten a recent opinion from a professional on this. In addition, I’ve sold a few systems to landowners with tenants recently, and some of them have some intelligent CPAs who have backed this up.

Surprisingly, with respect to the tenant/landlord lease arrangement side of things, we’re getting help from our utility, PG&E. They have offered some legal resources to help figure this out. They routinely surprise me with their facilitation of the solar industry. They understand that the future is distributed power generation. They’re not fighting it, they’re working with it. They are a unique utility.

So the bottom line is, if you rent and you want solar, talk to your landlord and have them contact a solar systems integrator. They may not have all the answers on this, but at least they can size a system correctly and you can present them with the documents in this post as well.

Also, of course, if you live in San Francisco and you rent or own investment property, I’ll be happy to answer your questions about solar and whether it works in your situation.

For more info:

http://www.solarpowerrocks.com/solar-trends/solar-for-renters-does-it-work/