In the first of our three-part series on monetizing solar code requirements, we highlighted how to double NOI by offsetting residential meters with solar tenant billing rather than allocating solar production to offset common area/owner-paid meters.
In this part-two of our three part series, we explore how you can quadruple NOI by not only billing tenants for solar but also by sizing the system beyond code requirements. While Title 24 sizes systems to 60% of the expected usage, the owner can elect to increase the system size up to 100% of the expected usage in order to maximize solar tenant billing revenue.
With strong financials associated with tenant billing, the developer of this 320-unit multifamily project evaluated a 100% offset system – meaning sizing the system to fit as much solar on the project as possible – to assess the value of going larger. The cost of the required carports that have solar is included in this analysis for both scenarios. Below is the code system with tenant billing vs. the larger system with tenant billing.
As you can see from the table above, strategically increasing system size increases annual revenue by $235k and more than doubles NOI per unit per year. Owners also get to take advantage of the 30% federal investment tax credit (ITC) and bonus depreciation.
While the returns are very significant, we understand that capex can be a constraint. Therefore in the final part of this three blog series, we will explore applying no-capital cost financing solutions to enable these larger systems without incurring any upfront capital costs.
At Cal Solar Inc, we are committed to collaborating with our partners to determine the best fit for every developer. If you are interested in exploring system size optimization, tenant billing, or financing options, please email info@calsolarinc.com or call 800-784-7612.
