Renting with Solar: A New Source of Cash Flow

The Proposition

You have a rental house with a tenant. The tenant has a fixed rental payment and also pays for all utilities, including electricity. It’s great you are getting money, but did you know there is a way to get even more, without increasing the cost to the tenant? 

If you install a solar system on that rental home, your tenant, instead of paying the electric company, can pay you for the electricity that your new system produces! Doing so introduces a new cashflow and can bring you thousands of dollars. 

A Practical Example:

Currently, the electricity price is determined by the utility. Let’s say that is 17 cents per kWh. If the renter uses around 2,000 kWh of electricity each month, they pay around $320 (this will change slightly depending on the electric company’s flat fees), which equates to $3,840 each year. 

Alternatively, you put solar on your rental property and effectivley replace the utility. The electric bill would then drop to $0, but instead of the electric company charging them for electricity, you will charge them the same amount. That means that you could be making an extra $3,840 per year, with no no additional expense to the tenant- they just pay you instead of the electric company! This new cash flow, paired with all the other incentives with going solar, can give an extremely profitable return on investment. Lastly, as the system is warrantied for 30 years, you can count on those savings well into the future!

A Brief Checklist:

Below are some key points to determine before setting up this new cash flow. 

  • Ensure the system is equipped to measure Production AND Consumption. 

    • This step is vital, as you will need to be able to know exactly what the solar system is producing each month and how much electricity the tenant is using as well. Reading the meter can give you a good idea, but exact measurements are highly recommended. It will save you a lot of headaches.

    • We use Enphase solar systems, which allow for monthly reports of both production and consumption.

    • Each month you will just see how much power was used that month (consumption) and charge them accordingly.

  • Make sure your tenant’s utilities are not already included in the rent

    • This is just sound business sense, since if it is included, it could be cutting into your bottom line! 

  • Determine a fair price per kWh to charge your tenant.

    • In Maryland, the average cost per kWh is around 17 cents, but this varies greatly depending on what utility you are in. Given these rates are rising quickly, make sure to check every so often to make sure you are not undercharging or overcharging them. 

    • It could be an added point in your favor if you charge them less, say 15 cents, if you are trying to get new tenants! 

  • Leave the electric bill in your name

    • This offers some safety, since if the system does not 100% offset the electricity they use that month, the tenant is not double charged. 

  • Check which incentives you qualify for.

    • There are many financial incentives involved with going solar, both at the state and federal levels. Make sure to know which ones you qualify for! 

    • Reach out to schedule an appointment with us to see your personalized system!

In conclusion, transitioning to a solar system for your rental property presents an opportunity to enhance your cash flow without increasing costs for your tenant. By effectively replacing the utility company’s charges with your own for the electricity produced, you stand to gain thousands of dollars annually. Moreover, with a system warrantied for 30 years, these savings are not just immediate but also long-term, ensuring a steady return on investment.

Contact us today to explore your personalized solar system options!