{"id":21785,"date":"2018-06-04T16:32:15","date_gmt":"2018-06-04T06:02:15","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=21785"},"modified":"2021-02-10T13:33:30","modified_gmt":"2021-02-10T03:03:30","slug":"landlord-energy-commercial-solar","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/landlord-energy-commercial-solar\/","title":{"rendered":"Landlord Energy — Providing Solar For Commercial Tenants"},"content":{"rendered":"

\"Landlord<\/p>\n

If you are a business owner there’s an excellent chance you’re not happy with cost of grid electricity and would love to lower your bills with rooftop solar.\u00a0 Unfortunately, there’s also an excellent chance you rent your business premises and so don’t have much of an incentive to install solar. After all you can’t take it with you when you leave.<\/p>\n

While there are a few enlightened landlords who have installed solar on the roofs of residential properties – with no strings attached other than perhaps a modest increase in weekly rent – these solar saints are very rare in the business world.\u00a0 In my personal experience, landlords tend to be very reluctant to invest in their properties unless they are certain of getting a decent return on their money.\u00a0 I’m not saying all landlords are tight-fisted, but I’ve met a few who could probably crush coal into diamonds in the palms of their hands.<\/p>\n

To get solar power onto rented commercial roofs will require a service that gives business tenants some of the benefits of solar while making sure landlords get the high rate of return they crave.\u00a0 It’s a difficult balancing act, but one new company that is ready to have a go at threading that needle is Landlord Energy<\/a>.\u00a0 They will install solar panels on business premises and work with their electricity retailer partner, Diamond Energy<\/a>, so the tenant is charged 22 cents1<\/a><\/sup> per kilowatt-hour<\/a> of solar electricity they use.\u00a0 This is less than the cost of grid electricity for many small and medium sized businesses.\u00a0 The landlord receives a 20 cent payment for each kilowatt-hour of solar electricity the the tenant uses (22 cents less 2 cents GST) and any solar feed-in tariff received for sending electricity into the grid.\u00a0 Landlord Energy subtracts their fee from this amount, which is 2 cents per solar kilowatt-hour produced, regardless of if the tenant uses it or it receives a feed-in tariff.<\/p>\n

While most tenants are only likely to see their electricity bills reduced by a modest amount, the good news is this service costs them nothing.\u00a0 Even if they only save a relatively small amount of money the deal is still full of win for them.\u00a0 They will pay less, the environment will benefit, and the solar panels on the roof should even make the building slightly cooler<\/a> in summer.<\/p>\n

Landlord Energy is part of the international solar installation company PowerVault<\/a> and is now ready to roll in NSW, Victoria and South East Queensland.\u00a0 They’re also planning to become available in South Australia in the future.<\/p>\n

How Landlord Energy Works<\/h2>\n

Here’s a quick list outlining how Landlord Energy works and I’ll go into more detail below.\u00a0 But first I will engage in something I very rarely do and abbreviate2<\/a><\/sup>.\u00a0 Instead of writing Landlord Energy I am just going to refer to them as LE.<\/p>\n

How LE works:<\/p>\n

    \n
  1. The tenant and landlord agree to use LE’s service.<\/li>\n
  2. The landlord purchases rooftop solar from LE.<\/li>\n
  3. The tenant signs up with Diamond Energy.<\/li>\n
  4. Diamond Energy installs a smart meter and also installs a small additional meter that monitors the tenant’s solar electricity consumption.<\/li>\n
  5. Diamond Energy charges the tenant for the grid electricity they use and 22 cents for each kilowatt-hour of solar electricity.<\/li>\n
  6. Diamond Energy forwards the solar electricity payment and feed-in tariff to LE who pass it onto the landlord.<\/li>\n<\/ol>\n

    Tenants And Landlords Have To Agree To Use LE<\/h2>\n

    LE’s service is worthwhile for any tenant paying more than 22 cents per kilowatt-hour for grid electricity.\u00a0 There’s no downside I can see unless you think the price of grid electricity is likely to fall below 22 cents a kilowatt-hour or you only operate at night.\u00a0 So while the tenant has to agree to use LE’s service they’re usually not the one who needs convincing.\u00a0 It’s the landlord who has to shell out for the solar power system and they will only do so if they think the rate of return on their investment will be high enough.<\/p>\n

    Some Small Businesses May Be Too Small<\/h2>\n

    The landlord receives more money when the tenant self-consumes solar electricity then when it is exported for a feed-in tariff.\u00a0 This means unless the tenant’s business looks likely to consume plenty of solar energy the landlord may not be interested.<\/p>\n

    LE says the sweet spot is for businesses that use an average of 60 to 280 kilowatt-hours a day. This allows LE to install a rooftop solar system from 15 to 70 kilowatts in capacity.\u00a0 The more closely consumption matches solar output through the day, the better.<\/p>\n

    Demand Tariffs May Be Unsuitable<\/h2>\n

    Businesses with demand tariffs are less likely to benefit from LE as they pay less per kilowatt-hour but have to pay demand charges based upon their maximum power use.\u00a0 Businesses that pay a flat rate for grid electricity on a standard tariff will generally benefit, as can those on a time-of-use tariff, especially if the time-of-use tariff has a peak period that lasts for most of the day.<\/p>\n

    Large businesses with very high electricity consumption will often pay less than 22 cents a kilowatt-hour as big business gets extra low rates, so getting solar electricity through LE may not be attractive.\u00a0 But LE says their parent company, PowerVault, has products that can help them.<\/p>\n

    LE Uses Quality Hardware<\/h2>\n

    If the landlord decides to go ahead LE will install the solar system themselves or through a trusted contractor.\u00a0 Fortunately for the long term value of their investment, LE uses solar hardware that ranges in quality from good to excellent.\u00a0 Currently they use Jinko<\/a>, LG<\/a>, and SunPower<\/a> solar panels.\u00a0 But not all at once.\u00a0 Just one brand per installation.\u00a0 Jinko panels have a 10 year product warranty while LG and SunPower have 25 year full replacement warranties but cost considerably more.\u00a0 LE uses Fronius<\/a> inverters, which are a quality brand.<\/p>\n

    Diamond Energy Meter Installation<\/h2>\n

    After the solar panel system is in place Diamond Energy will install a smart meter.\u00a0 This is a normal part of having a solar installed these days and is now the responsibility of retailers<\/a> where LE operates.\u00a0 In addition to the smart meter, Diamond Energy will also install another small meter that will measure the how much solar electricity the business uses.\u00a0 Unlike some schemes that have very expensive monitoring equipment, this additional meter only adds around $100 to the cost of a new smart meter installation.\u00a0 It will communicate with the smart meter, which will transmit its data to Diamond Energy, so no one will ever have to physically read it.<\/p>\n

    How Much Can Tenants Save?<\/h2>\n

    Tenants are charged a flat rate of 22 cents for every kilowatt-hour of solar electricity they use so the amount of money they save will depend upon the what they currently pay for grid electricity.<\/p>\n

    Origin Energy is Australia’s largest electricity retailer so I looked up their Business Saver plans<\/a> and saw in Brisbane and Sydney tenants on these plans could be certain of saving money, but in Melbourne business tariffs after discounts ranged from 36.9 cents to as little as 20.8 cents for a demand tariff.\u00a0 Obviously, if you are paying 20.8 cents for grid electricity the prospect of losing 1.2 cents for each kilowatt-hour of solar electricity used is not going to be much of a thrill.\u00a0 Clearly it’s important to check just how much you are paying for grid electricity and compare the total cost, including supply charges, with what Diamond Energy offers you to determine just how much you’ll come out ahead.\u00a0 But even if nothing is saved, getting rooftop solar will still help the environment and that is all the motivation some people need.<\/p>\n

    How LE Gets Paid<\/h2>\n

    In our society it is standard practice for businesses to charge money for the services they provide.\u00a0 LE is not an exception and they get their piece of the action by charging an administrative fee for processing the tenant payments and feed-in tariff they forward to the landlord.\u00a0 It comes to 2 cents per kilowatt-hour generated by the solar system regardless of whether the tenant pays for it or a feed-in tariff is received.\u00a0 An advantage of this method is LE has a clear incentive to install solar systems that produce as much energy as possible and suffer very little downtime.\u00a0 And since well-installed rooftop solar is very reliable, the average amount of downtime should be extremely little.<\/p>\n

    Return On Investment For Landlords<\/h2>\n

    Landlords receive 20 cents for each kilowatt-hour of solar power the tenant uses3<\/a><\/sup> and the feed-in tariff for any solar electricity that is sent into the grid.\u00a0 LE says it is possible for the landlord’s investment in solar energy to pay itself back in as little as three and a half years, but this is only possible under very optimistic conditions that involve the following assumptions:<\/p>\n