Solar power is a viable way of generating additional income on both rental properties and leased commercial premises. There are two ways this can be achieved. The solar can either be installed with rent increased to compensate, or it can be setup as a power purchase agreement with the tenant charged for their exact usage.
Ecoelectric can recommend a system suitable for the size of property and apply to Energex on the landlord’s behalf. We then contact the tenants through your agent to arrange for a suitable installation time. The installation takes place over 2 or more days. During this time we install panels, inverter and a logging system.
SOLAR RENTAL RETURNS
SOLAR LEASING SYSTEMS
The logging system involves a small router installed into the electrical meter box. This router talks to the inverter and also monitors usage from the grid. The output is then connected to either an existing private network, or via a USB 3G card. There are now specific plans available with telecommunications utilities for monitoring, which can cost as little as $10 per year. This situation is ideal for a rental property where it is not possible to connect to the customer’s router and use their bandwidth.
Ecoelectric can advise on a suitable rent increase, which is usually aimed at just below average day time usage. With this method the tenant receives a small bonus while the landlord makes a significant return that is well above rental yields. The logging system then verifies usage and monitors production values. If an error occurs both the landlord and or their agent will be notified, as well as Ecoelectric.
Alternatively the logging system can be used to produce and verify actual billing. This will be more accurate and produce higher returns, however may not be worth the hassle on smaller domestic properties. In all cases the system can be accessed by all parties, or restricted to one or more entities via a password.
Ecoelectric have all the experience necessary to make your installation experience a smooth one. We can list the specific address and other details required for account and supply authority applications and then take care of them on your behalf.
HOW DOES IT WORK?
Lets look at a simple scenario. You own a 3 bedroom rental property occupied by one or more tenants. Ecoelectric is engaged to analyze the property at which time we recommend a system size of 3kW and provide a detailed quote. Upon approval we confirm the design and request account details.
Ecoelectric then obtain approval from Energex. At this stage there is no input required from the tenants.
After receiving approval we ask for an installation date and complete the system. Our system notifies you or the agent when we attend and leave site and all photos and test results are available upon completion. At this point the logging system is functional and available online if the 3G service has been activated.
Ecoelectric then apply for a meter upgrade with Energex. If the electricity account is in the tenants name we require their name and account details for it to proceed.
Energex attend within 1-3 weeks and perform the meter changeover. At this stage the process is complete and the tenants can be charged additional rent.
WHAT IS THE FINANCIAL INCENTIVE?
If we look at the example above a 3kW system with both import and export monitoring using quality components will cost approximately $1.90 per watt fully installed.
This comes to $5700 INC GST
The system will produce on average 12kWhr per day – 10kWhr of which could reasonably be charged to the tenant. This is equivalent to $21 per week or $1092 per year.
This means the system is returning 20% p.a and has a pay back period of 5.2 years.
Since we are giving the tenant on average 2kWhr per day they save another $54 per quarter off their electricity bill providing additional incentive to rent and hold the property. The total saving from their bill is $324 per quarter.
Depending on day time usage some properties may require a 2kW system, some may require a 5kW system. The returns and pay back periods will be roughly the same. Any property which has an electric storage hot water system makes an excellent candidate as the solar PV can be used to drive it’s entire energy consumption.
Today’s rental market is increasingly tough with owners facing low yields and high repair costs. With many properties returning sub ten or even five percent solar PV makes an excellent case for higher returns and will also beat the share market. Once one factors in a modest capital gain of 50% of the system cost onto the property the system becomes even more attractive.
Why not contact us for a free estimate? There is nothing to lose and only a 20% return to gain!