Solar
Fast Facts
As of Summer 2019, there were 90,000 photovoltaic systems in Massachusetts, with 94% of systems on buildings. In Massachusetts, 30% of housing is renter occupied, 84% of housing is 1-4 family, and almost none of this had solar. The reason is the "split incentive" problem. Landlords would have to pay for the system, but renters would benefit. At least, this is the old situation.
We have worked to develop a system whereby landlords can monetize solar.
The cost of a common meter for solar is $2,400 to $3,000, according to the Clean Energy Center. This can be included in the amount borrowed for solar installations. Note that the Lawrence Berkeley Lab studied appraised values, and found that solar investment that is owned (as opposed to lease) does add value at resale. And under MA regulations, this must be taken into account during appraisals.
The state-wide utilities make connecting easy. Note that there are about 51 town-based electrical utilities (muni's) that will have their own complex regulations on connecting to the grid.
Related Article
- Can Massachusetts Landlords Charge for Solar? (Article - May 2019)
Sharing the Sun: Solar Solutions for Landlords and Tenants
Sharing the Sun: Solar Solutions for Landlords and Tenants Webinar
Panelists:
Sam Milton, Climate Resources Group – Sam
Doug Quattrochi, MassLandlords – Doug
Ben Mayer, Sunbug Solar - Ben
Moderator:
Elizabeth Youngblood, MassCEC, - Elizabeth
[Start 0:00:00]
Presentation
Elizabeth: Hello and welcome to Sharing the Sun: Solar Solutions for Landlords and Tenants. I’m Elizabeth Youngblood. I’m a senior program manager at the Mass Clean Energy Center, and we’re really happy to have you with us today to talk through the Solar Resource Toolkit Opportunity for Residential Landlords.
Just a couple of pieces of housekeeping. All participants will be muted during the webinar. If you have any questions, you can enter them into the panel to the right of your screen and we will be able to see them and talk to them as part of question and answer session.
We will also be recording this webinar and we will make it available on our MassCEC YouTube page, and we will send an email link likely sometime next week to participants with a link to the webinar as well as a PDF of the slides, so you will have access to what was said and will be available to you in the near future.
The speakers today are going to be myself, giving a brief introduction; Doug Quattrochi who is the executive director of MassLandlords; Sam Milton, who is our consultant for this project and the principal for Climate Resources Group; and Ben Mayer, who is the vice president of marketing and residential sales. His company is called SunBug Solar, and he’ll be talking about his perspective from the field.
To give just a little bit of background on why we created this toolkit, the genesis of it actually started several years ago. In Massachusetts, we’ve seen a tremendous uptake in adoption of solar over the past 10 years. Back in 2006, there were a couple of hundred systems installed in Massachusetts, maybe about 5 megawatts in capacity and currently there are over 90,000 solar PV systems installed across the state, and many of those are residential scale, so that’s kind of one family, maybe some multifamily, but quite a bit of is residential solar.
However, we’ve become aware that properties that are owned and managed by landlords face some very unique barriers to adoption. In many cases, landlords specially kind of the small one- to four-family units don’t have a strong understanding of what the value proposition might be for them to install solar whether they live onsite and they live in one of the units or if they are offsite and are remote.
And so we wanted to create these resources to offer kind of launchpad and opportunity for landlords to learn more, and even though there can be some additional complexity, which we will speak to a bit today, we thought that there would be a lot of interest and so we created these resources to work on.
With that, let me pass it over to Doug from MassLandlords who can give his perspective on the interest in solar in the landlord industry.
Doug: Sure! Thank you, Elizabeth. Doug here. MassLandlords is a 501(c) (6) nonprofit trade association for residential property owners and managers in Massachusetts. Our mission is to create better rental housing particularly by helping owners run profitable, compliant, quality businesses. It’s no good if you don’t make money as you can’t provide housing year-after-year, get to follow all the laws. We wanted to be proud to be associated with one another.
We offer a variety of services to members including contributions to this webinar, which we don’t own, but we’re very grateful to the Clean Energy Center for putting it together, so thank you, guys. We’ve got a network of about 60 volunteers and 15 very part-time employees all across the state and even beyond. We’re virtual, so we’ve got folks helping from everywhere.
I think it's important to look at solar in two contexts. The first is climate change and the impact on real estate. In particular, if you look at the National Oceanic Atmospheric Administration forecasts, they show a 50 percent chance of at least 10 additional inches in sea level rise by 2050, in other words, over the next 30 year mortgage.
Stack them into a 6-foot storm surge, and you can see that parts of Cambridge and Boston, to pick on two examples, really ought to be behind levee or owners there ought to have flood insurance. We know that based on studies in New Jersey and down south further, Florida especially in the Virginias-Carolinas area, that part of the coast, every $5,000 in flood insurance premium you have is going to decrease your appraised value or your resell value on your real estate by about $100,000. We’re seeing significant hits from flood risks at coastal areas. If you think about Pioneer Valley in Springfield, which you imagine is very far from the ocean, we actually have a lot of flood risks there, too, because of the river.
The Commonwealth actually has projections for how much real estate and equipment damage is going to be caused by flooding over the same time period, and their estimate is at over $400 billion, a huge headwind we haven’t faced in real estate ever really. It’s not hopeless, I mean because although sea level change is not really within Massachusetts’ control, Massachusetts is a leader in greenhouse gas reductions and we’re below 1990 levels. We’re 20 percent below 1990 levels actually, but we need structural change. We need to just completely eliminate fossil fuel use and greenhouse gas emissions in housing and in transportation in the Commonwealth.
[0:05:35]
There’s that context. Even if you’re not concerned with costs of real estate, whatever, it’s important to think about solar because it is one of the primary business opportunities for landlords at the moment. In Massachusetts, it’s very tightly regulated. What we can do is zoning in property, and it’s really hard to add new units. If you wanted to get another $1,000 a month of rental income on a property, you have to get zoning permission at another apartment, or to subdivide it, or build out, or something. A lot of times, that permission is not granted.
If you focus on cosmetic upgrades like I will make this apartment really nice, you’re going to potentially push yourself through the top of the market for your neighborhood. Now nobody who wants to live there is going to be able to afford the rents you’re asking.
The competition in Massachusetts really, whether or not you realize it, has been on heating costs for a long while now. According to the US Energy Information Administration, the average household energy consumption for Massachusetts specifically is over $200 a month. We know from talking to folks that some households, leaky households with electric baseboard heat, those renters are paying $600 a month in winter for utility bills. They’ll move. If your building is not properly insulated and sealed, your renters are not going to stay as long. You’re going to have a higher turnover cost.
Here is where it gets interesting from the point of view of the webinar. There are about 70,00 small rental property owners in Massachusetts, and there are about 100 of us registered for this call and listen to the recording after here now, so the question for you is can you provide comfortable, well-heated rental premises at a structural cost advantage to other owners? So MassLandlords is a cooperative nonprofit. We’re trying to help each other, but ultimately we’re all somewhat in competition for the best renters.
There are really three enabling technologies that are going to let you do that. The first of those is insulation air sealing. In particular now, it’s possible to retrofit old buildings, three-deckers, four units, and so on with blow-in insulation and spray foam in a way that it won’t settle and will be an enduring thermal barrier for your building. Thanks to MassSave, now you can get 90 percent off, 9-0 percent off the cost of that. If you’re not aware of the insulation air sealing opportunities from MassSave, you need to look at that.
The second of the three enabling technologies is solar, and that’s what we’re going to talk about today. It’s incentivized very heavily for Massachusetts, so if you’re thinking about solar elsewhere in the country, you’re going to have to put up more at more cost potentially than you would in Massachusetts in particular, especially with our credit programs where they are.
The third enabling technology is heat pumps, and this is where it gets really interesting from a landlord perspective. These are basically air-conditioners that run backwards and can heat buildings, and now for the first time ever, they are cold-rated for Massachusetts, so they can heat even on the coldest days outside, and just a year and a half ago, they became cheaper on a per BTU basis than natural gas.
I think those three things have really changed the dynamic for folks who are thinking about their business long-term and proactively. It’s at the point where if you’re going to build something new, you wouldn’t have a new chimney in your building. You wouldn’t even have gas lines. You would install these three technologies from the start and you provide your heat that way, and you would do it for cheaper than any other landlord out there.
I’ll just make a note that Berkley, California just this summer became the first municipality to ban gas lines in new structures. You’re also going to worry in Massachusetts about carbon tax. We’ve been talking about it for a long time. At some point, there’s going to be some kind of policy disincentive to burn fossil fuels and can bet that landlords are going to be the ones to pay it directly. If you got long-term leases, you may not be able to pass that cost through to your renters.
The basic idea for landlords is that you can work to provide heat and electricity for basically zero marginal costs because sunlight is free, and your competitors in the business are going to be operating with leakier buildings and they’re going to be paying for fuel or the renters are going to be paying for fuel, and they’re going to have a hard time competing.
In this call, we’re going to focus on federal tax and the particular electricity discussions, so we can kind of get basic grounding for how solar works and then if you want more specific details about for this and monetizing it, you can search MassLandlords.net for the article, “Can a Landlord Charge for Solar?” It will walk you through what we’ve seen from others and just share all the best practices we know of.
[0:10:30]
I hope that teased up the context and the business motivation for this, and I think with that, I’ll turn it over back to our Clean Energy Center here to walk us through how the stuff will work, at least for the solar panel part.
Elizabeth: Excellent. Thank you so much, Doug. I also wanted to recommend the document that you mentioned. I think it’s a great read for landlords and very much complements these resources as well.
Next, we’re going to be speaking with Sam Milton, who is the lead on developing these resources, and Sam is going to walk us through the document.
Sam: Great. Thank you, Elizabeth. I thank Doug has great context. I think you’re absolutely. right that for landlords in Massachusetts, it really behooves them to be thinking about how they can position themselves really best for [unintelligible 0:11:27] in the future and also be in the best position to be helping their tenants, kind of like embrace technologies and can reduce the possible use.
With that really, one of the catalysts of this study and was mentioned, the State for many years has been thinking about how to really help improve access to technologies for clean energy to residents and business in the Commonwealth and has found that renters really is one of the missing groups that haven’t been fully able to realize the benefits of solar power. With that, the CEC brought us on to help develop this toolkit for educating landlords around how to best share the sun, if you will, and bring those renters to the table here.
We developed this really neat toolkit here, which is comprised of a few documents, one is an overview guidance document, which prevents some high-level benefits and some steps to really get this [unintelligible 0:12:45] solar, in addition to some guidance for landlords that are onsite as well as offsite. We also developed some case studies to help illustrate some of the examples that a landlord maybe experiencing [unintelligible 0:13:00].
We began our effort a few months ago, maybe a year or so ago. I think the reason is collect information about what are the needs of landlords and renters as it pertain to solar power.
I had the great pleasure of attending a couple of the MassLandlords events and it was really queer to me by the fact that the attendees were on the edge of their seats during the presentation about solar. This is like a real and urgent need and something that I think people really want to get more information about, based on our own research as well and found some interesting facts about the industry in Massachusetts and kind of where solar is. This couple of fact that I do want to share is that 94 percent of solar in Massachusetts is on a rental building, so most of the installation are for households.
In terms of the renter stock, 38 percent of the housing units in Massachusetts are actually occupied by tenants. We found that to be an amazingly high number. I mean it goes to show how big an opportunity is this for landlords and for solar providers to really get the technology in the hands of this new, relatively untapped constituency. On top of that, about 80 percent of housing is in kind of one- to four-family multi-units, which again is a pretty shocking fact that demonstrates further what the opportunity here is.
Our project, our initiative, our motivation is really to demystify solar for landlords and how do you best share the benefits of solar with tenants. To that end, we want to make sure that the folks have a good high-level approach to it without getting into too much in the weeds. Some of the steps that we brought people to our group sharing this document, which we will provide a link to at the end is really looking at the results are out there.
[0:15:22]
First, we recommend that folks attention pursuing solar review the guide, get the guidebooks and the material already in the CEC website. These are fantastic resources. Again, the MassCEC has been at this for a number of years and has developed great materials for folks looking out to understand better how they approach solar, again what are the technical requirements and how can they begin to think about their property is right for solar.
After having reviewed this material, we recommend that you reach out to installers. We recommend at least three installers to reach out to. EnergySage is a Massachusetts company that got its start here at MassCEC. They can really be helpful in terms of giving shoppers some names of solar installers to reach out to that can help them walk through the process.
The third step we recommend is you asses the usability of solar on your property. Again, this is something the installer can help you do. They will come out and visit and look at the solar resources on your roof and see if it makes sense. They will give you a feel for whether or not your rooftop is equipped for solar. There are some parameters that these guys consider as you do if it makes sense or not.
Then the next step is think about as a landlord, again if you’re living on the property or you’re off the property, you know that sure, but if you’ve been thinking about how do you want to meter the solar system to use in your building. I’ll get to that in a little bit in terms of how we divided the benefits, like how do you share those. It really is I believe the function of effectively who owns the solar power at the outset and depending on how who gets those credits and kind of how you share those, kind of the original metering arrangement, so think about the metering.
Then just do the financial analysis, if this goes beyond the sharing the solar benefits with your tenants, but I like speaking about how do you, by [unintelligible 0:17:42] you own it, do you lease it? There is a great resource that that Sunny Cambridge has put together, which is a renting fee methodology, which I think [unintelligible 0:17:55] we can help to develop. It’s a great resource, and we have a link to that on the second page of this document.
We put together two specific documents for the landlord types, so to speak, if you live onsite or if you live offsite. We broke down two scenarios for each of those. This screen here shows the front back of our Onsite Landlord Solar Guide, and there are two scenarios that we figured. One is really you kind of consistent to a landlord utility meter, and you connect to a common utility meter. Again, it comes down to who owns the solar credits at the outset.
For connecting to a landlord utility meter, probably the most common way I think we usually see it, you will have somebody in a triple-decker, for example, that is a landlord, has a rental unit, and wants to go solar. They will have solar installed on their property and will tie it to their own meter, and then a lot of times after the fact, they kind of wonder how to share that with their tenant. Just because it’s the most common way to do you want to make sure that folks understood what those options are.
Really, that gives landlords a lot of flexibility about how to do it. I mean there will always be enough solar power credits to go around, but in order to share the solar credits with landlords, you’re going to do some are going to have some through app with your tenants and find a way to share by increasing the rent or perhaps by offering other ways for the tenants to participate doing that.
[0:20:01]
Another scenario is using common meter. For common meter, this is where there’s a second meter or a third meter on the property, which is basically used to operate lights in the common space. Very often, there is little power that is actually consumed through the common meter, so they will use some credits.
When those excess credits appear, it will be the responsibility of the landlord to divide those up. One way to do that is through kind of net metering scenario, which is where you can your share with another customer. You can divide those up how many as you see fit. That’s a good way to effectively guarantee there will be some excess power to share whereas if this was with a landlord meter directly, there may always be an excess.
We also developed this Offsite Landlord Solar Guide, which helps folks again who are living off the site, to figure out the best approaches. Again, you can install to a tenant meter, an actual unit’s meter, or to a common meter. To the tenant meter, we found that to be really compelling idea because effectively the tenant they own the power and they’re getting their power bill. It reduces their solar production. In this instance, it really creates an opportunity for the landlord to raise the rent a little bit in exchange for reduced electricity bills. You can also provide kind of utilities included in that as well. Some we found that has been an option that is really practical for some folks.
Again, we can install to the common meter and this comes sort of in the same scenario with the onsite landlords. It’s really a straightforward option if you want to share utility costs multiple utility counts again through [unintelligible 0:22:38] virtual net metering.
Then we put up these three case studies, looking at the meter that is connected to a landlord meter and also to an offsite tenant meter, it’s a common meter. Each of these are some examples that we pulled out from our work and kind of interviewing different folks around the Commonwealth who have actually gone through and had these experiences.
I’m going some right now too much. I will allow Ben to share some of his experiences and how it relates to the specific work types of actual studies, but I know for example, that SunBug was involved in the case study type of common meter for landlords.
With that, I think I will pass it over to Ben, who can describe some of his work as the vice president of marketing and residential sales at SunBug Solar, to let us know how he’s approached these issues and kind of what are some of the guidance that he has to recommend for landlords out there.
Ben: Thank you, Sam. SunBug Solar is a solar company. We have two offices, one in eastern Mass and one in western Mass. We’ve been around for about 10 years, which means that we’ve been doing solar under lots of different rules and regulations and incentive programs that have changed over time. There were definitely times in SunBug’s 10-year history where I would get a nice call from a nice landlord, and I would say, “Sorry, I really don't have a good solution for you.” But over time in the Commonwealth, various rules and regulations and incentives have changed and the Mass CEC has put a lot of effort toward promoting solar on multifamily homes, which is really, really important to Sam’s point about the number of multifamily properties that we have in Massachusetts.
We’re going to get to good PV penetration. We have to figure out how to do this on things other suburban single-family homes with perfectly southern-facing roofs.
[0:25:02]
The perspective I want to offer, mostly in the Q&A, is the just the perspective of an installer, what happens if you decide you’re interested in looking at solar and you would reach out to a series of installers, and one of them is us, we would have a bunch of questions for you that we want to come prepared to be able to answer for us. We might not have all the answers, but depending on the answers to them, we’re going to get to different places in this decision matrix.
One thing I would recommend right off the bat is that Sam mentioned reaching out to three installers, and I think that’s a great idea. One of the things that you really want to do because there are lots of different kinds of installers, and some are national, some are local, you want to try to find installers that when you ask them have you done this before, have you done PV for two-family home, for three-family home, that you get some good answers and good references to that because the experience behind it is valuable in order to be able to point you in the right direction.
But some of the things that we would try to address with you right off the bat is these three handouts that we created are very good at getting to the heart of electricity monetization, which is important, if we’re going to be making solar power, how you’re going to turn it into something valuable for you and we’re going to need to do that through knowing whether you’re on the property, whether it’s owner occupied, or if you’re an offsite landlord, then some of the various scenarios we can get into about how to monetize it if you’re offsite, whether you raise the rent and include electricity, whether you have a separate deal for electricity for the tenant.
Tax incentive considerations, this is the thing that I always say at this point, which is that I’m not a tax professional, and I don’t offer anybody tax advice. However, I’m asked a lot of questions about tax applications for solar and a really important one is what are you when you file your taxes? Are you filing your taxes as an individual family, or are you filing commercial taxes? That will change some of the incentives that maybe available to you on the tax side, specifically something called accelerated depreciation or MACRS. That’s what we’re going to ask you about.
Net metering, the way that net metering works in Massachusetts is there is kind of little sub piece of information about it, which has to do with whether the physical configuration on your property is single-phase or three-phase service. It changes the path for your eligibility for net metering. We’re going to want to find out are you single or three-phase? Almost everybody is going to be single-phase in the one- to four-sized unit per building area, but not everybody. Sometimes we find somebody who’s three-phase and that changes how big a solar array it could install it and take advantage of one-to-one net metering.
There is another factor involved here which is that there is a strange rule in Massachusetts that was designed to prevent large-scale developers from gaming the system by installing megawatt array and claiming it was really 110-kilowatt arrays, splitting it up for a smaller incentive, and it’s called the single parcel rule. That is there can only be one net meter on a single parcel and that has been a longstanding rule that we’re working on getting changed and we made some progress with it recently. Now you can have more than one net meter on a single parcel, as long as it doesn’t exceed 10kW AC capacity. That’s one of the things that we’re going to ask you (a) if we’re going to walk and see we could have more solar, but (b) we’re also trying to figure out are we doing this project now, but in the future, we’re going to want to try to do another one. Well that’s going to play under the single-parcel rule.
Then finally another thing that Sam got to, which is commonly called virtual net metering, which is credits can be sent from one account to another, and so the question of should we be interconnecting to an individual unit account or should they be connecting to a common meter if there is a common meter on the property. A lot of smaller properties don't have common meters, and if it’s a good setup for you, we might recommend that part of what to upgrade to is having a common meter on the property, which will also allow you to put certain common things onto that, such as the laundry or the basement if it’s there or the driveway lights, the various things that most people might actually want to have on a common meter anyway.
Those are kind of just some of the things that if you get into it where you’re calling installers and you’re asking them about it, you should be prepared to answer some of these questions.
[0:30:02]
Sam: Great. Thanks, Ben. that’s fantastic. You’re absolutely right, man. I think there’s a lot of these questions that people have that can make the idea of solar complex. It can be addressed by having good conversations with knowledgeable installers.
Ben: Yes, you have. The situation is very specific to what you’re doing and what your topic is.
Sam: Yes. It’s a point about me about these questions. One of the things that we discovered really was where is the tenant, where does the landlord live, and how is the metering set up. Basing on that determines how you arrange the sharing with the tenants. Again, you’re getting into the net metering phase and kind of how you actually rearrange with utilities. It also becomes complicated and that’s where you guys can really help to demystify the stuff.
Elizabeth: Great! I’ll [unintelligible 0:31:01] on there is that installers are really there to help walk you through a lot of the aspects of installing solar. As you’re getting bids and things like that, especially as Ben mentioned, asking installers have they done it before and really kind of learning from their experience and saying, “Okay, here a couple of these roof configurations. Here are the benefits of one. Here are the benefits of the other,” and really just getting a sense of what that value proposition is when deciding what makes sense for you and your property. Great.
I’m just going to go over a few of the resources that were mentioned. As this webinar is talking about the solar resource toolkit for residential landlords called Sharing the Sun: Solar Solutions for Landlords and Tenants toolkit, that’s on our website. You should have a copy of that.
Also linked here is the Sunny Cambridge Rent Increase Methodology. That’s one method by which to see value for installing solar. There is also quite a few resources. We have one webpage that’s focused on residential solar resources and a separate webpage for commercial solar resources.
Although there maybe a few specific resources for landlords that are applicable on the commercial solar page, I would recommend because many of these properties are kind of residential scale, the roofing and things like that, so really let’s first start with the residential solar resources, and this is just a picture of what that frontpage looks like.
A couple of things to just be aware of. (1) We have a really amazing resource called The Residential Guide to Solar Electricity. There is information in there about the whole process of going solar, more information about net metering, the incentives that are out there. Also, there is a pretty big section on battery storage, if you want to learn about that and a section on buying and selling a home with solar, and that’s actually another potential value stream is that if you own a solar on the property, it can increase the value of that property. I greatly recommend taking a look at the residential guide.
A couple of other things on this webpage. There is a Finding an Installer resource on there, as well as something called Cost and Performance.
One thing at MassCEC is that we track and monitor the vast majority of solar PV systems in the state, and so on this page, there is a widget or a tool that provides information on residential-scale solar pricing, number of systems that have been installed in various town or county, so you can get a good sense of who has been installing in what area, and when. Some of the early systems are from 2001. Obviously, there is a huge uptake in the last few years, but definitely take a look there and take a look at this webpage.
I definitely recommend this is a good kind of first step of exploring and taking advantage of these free resources.
Question and Answer
Elizabeth: We’re going to move on the question and answer section, so feel free to add your questions above. I see that we already have a few in here.
I’m just going to start off with first question for Ben is, “What would be a reason why someone would want to connect a solar PV system to a common meter versus a landlord meter or a tenant meter?”
Ben: Yes. The first thing that connecting your array to a common meter does is offer you flexibility. If you have a situation where people move out or people change the amount of electricity they’re using, we’ll use an example of a two-family, in which the landlord lives on site, and there is a tenant unit. Over time, people might use different amounts of electricity. You might have a different relationship with that tenant. If we’ve connected the solar system to the common meter, then changing the value stream is as simple as filing paperwork with utility. There’s something called a Schedule Z, as in zebra, and what you can do every six months as the owner of a solar array, is you can file a paperwork with utility that says, “Hey, send 50 percent of the excess credit to meter number XXXXX and 50 percent to YYYYY.”
When a relationship changes on the property, somebody moves out, somebody is using more or less, you can always go back and refile that every six months and say, “Okay, 75 percent to this one, 25 percent to that one.”
A really good reason to install common meter or to connect to common meter is to have flexibility down the line. If you think about it, if we build the system and we install it to one meter and we don't have the ability to change that and it’s going directly to that meter, then that’s going to require a physical reconfiguration of the future for stuff, and that’s something you want to avoid if you could do it virtually.
Sam: Then there’s the cost to installing a common meter, is that right?
Ben: Yes.
Sam: It’s installed cost often is an ongoing cost to utility?
Ben: Yes.
Sam: People buying that sort of stuff?
Ben: It totally depends. That’s where you get into this decision-maker X. Generally, the cost of installing a common meter is about $2,400 to $3,000, but in some cases, you can’t even do it because it’s underground than the original and that would make it cost prohibitive, so it really depends on the situation and whether when you tag $2,4000 onto this project, what does that do to the value stream? What does that do to the payback? What does that do to the overall project viability?
Sam: Yes.
Elizabeth: Great. There’s a follow-on question here related to the common meter, but I think it’s probably applicable to any meter. “If you have net metering credits, do the credits have to go to someone else within the building or can it go to another property?”
I’m happy to take this one. I’ve got some people here who can backtrack me if that’s incorrect. If you have net metering credits, let’s say the system is producing more electricity in a given month than is consumed on that meter, you will have a $1 credit on the electric bill that you can, as Ben mentioned, virtually net meter using schedule Z to other accounts.
Those accounts do not need to be in the same building. They can be offsite. They just need to be in the same utility and same load zone, which are fairly large. Likely if you live in the same town or if you live perhaps even in the same county, you might be in a good place, but an installer could certainly help you. You could even go online and if you have a separate property that’s in the same utility load zone, then that is a problem. You can actually net meter those excess credits to a different site.
Ben: Yes. The big flag there is when you’re looking at it, just make sure that you’re the same utility, right? If where you want to send it is National Grid and you’re Eversource, then that’s a no-no. Then if it the same utility, you want to check to see if it’s the same load zone, and for instance, Eversource, there aren’t that many load zones, so it probably is, but you should definitely ask your installer because they can look it up of the load zone map.
Elizabeth: Great! There’s a couple of questions here about the slide deck and the resources. Just to clarify, we will absolutely be sending a copy of the slide deck and the resources out as part of an email update once you’ve put this up on YouTube. No worries about that. I’ll take a look at the questions here. “How can installing solar PV add value to a home?’
This is a great question. There have been several studies put out by a national lab called Lawrence Berkeley National Lab. What they found is, this is alluded to earlier, there is kind of two major ways to get solar on your home. One is to own a system and one is to lease or kind of have a third-party owner own that system.
What Lawrence Berkeley had found through doing a number of different studies was that if you own the system yourself, it provides value to the property and if you don’t own the system, their study found that there was no added value. In fact, Fannie Mae & Freddie Mac have said it’s actually considered personal property. It’s something that’s not owned by you, and so it’s something that cannot add value to the home.
[0:40:02]
The US Department of Energy has actually put some funding into both trainings for appraisers on how to best value homes with solar, and in addition to that, they have something called the PV Value Tool, which is a resource. It’s available online, but it’s something that appraisers can use to clarify what that value is.
If a system was installed a year ago and it has 20 years to go, it can even figure out the value. If it’s a 10-year-old system, it will figure out the value from that point. Obviously, some of the value system has depreciated because it’s already produced so much power and the systems tend to last oftentimes their equivalent warranties around 20 years or so.
The answer is yes, they generally do show that they add value to your home, which is another potential value stream if you intend to sell.
Ben: To follow up on that, Elizabeth. At Sunbug, we use a third-party company called PEARL, which is an entity that invented a certification system for energy efficiency measures that are installed on a home, and all of the systems that we installed, we get certified through this entity called PEARL. There are other places that do it, but we really like them and they deliver a great product.
Part of the product that they deliver is a completed AIA form that has all of the data about the PV system that then becomes part of the record of the property, which to my understanding, I’m not a real estate agent or mortgage professional, but to my understanding, it means that real estate agents and mortgage professionals, when the form is created and added to the record for the property, have to factor in the details of the solar system in assessing its value. It essentially can’t be ignored because it’s now part of the AIA system.
PEARL is one of the entities that can do it, but there are now ways to officially add a solar system as a value stream of record to a property that has to be taken into consideration by the AIA.
Sam: If memory serves, I think there is a parallel initiative to this to educate real estate agents around how solar improves the property value for the home, right?
Elizabeth: Thank you. That is actually another initiative in which MassCEC has been actually involved. Thank you for plugging our own resource. Yes, there is also a two-hour online training called Selling the Sun, and it’s a tremendous resource that also speaks a bit to the PV value tool, but also working with real estate agents on best practices for buying and selling a home. Actually, that’s actually where we [unintelligible 0:43:00] our information and resources that we put into residential guide as well, so it’s really nice to have that collaboration. It’s available online through Keep Me Certified on the trainer’s [unintelligible 0:43:10], so thank you for plugging that.
We’ve got a question here about solar hot water. I’ve asked it, but I also kind of expanded it to other complementary technologies and how they work with solar. But the question is if there is perhaps not sufficient roof space for solar PV, is solar hot water an option?
I’ll also throw it in there when does it make the most financial sense to install solar hot ware in the most financial sense to install an air source heat pump, for example, or maybe the ground-source heat pump and potentially even either by itself or combining it with solar PV.
Sam: I’ll talk about the solar part a little bit. Even if there is space for PV, you might want to consider solar hot water as a different option, depending on the profile of how hot water is made on the property.
The ways that we make hot water in Massachusetts, well everywhere but in Massachusetts in particular is not very efficient or environmentally intelligent. From a kind of environmental point of view, solar hot water is a really wonderful idea. From a financial point of view, it can be a great, very strong return on investment because the State of Massachusetts has put a lot of effort into incentivizing it in intelligent ways, so that the costs can be tax credits, other incentives. Solar thermal racks are now in play in Massachusetts, which if you talk to a quality solar hot water installer, they can describe a few. But payback periods for solar hot water can be measured in as short as two or three years sometimes.
[0:45:04]
Whether it’s a good idea for a landlord on a multifamily property has everything to do with the configuration of the hot water system that you currently have. If it’s a shared hot water system, in which one hot water production unit is feeding multiple units, solar hot water is almost a no-brainer. I mean it would make a ton of sense. That’s uncommon. Usually, you have multiple heating units. But even in the case of multiple heating units, it can often be a great, great idea.
As for your point, Elizabeth, about air source heat pumps, I know there’s a huge push in the state about them, and I know that they’re very efficient and very cost effective. I’m not a complete expert in the financial dynamics of it.
Elizabeth: Yes, there are some Mass Save incentives for if you’re looking to fuel switch. I think it was mentioned if you’re offsetting high-cost heating fuels, that can be where the economic sweet spots for heating with oil or propane, or electric baseboard water resistance heating, air source heat pump can be a real saver of money in part because it’s much more efficient. It’s not creating energy; it’s actually transferring it from one to another. If you think of electric baseboard heating, it’s kind of the one, one unit of energy, one unit of heat. Air source heat pump, it’s more of a 3:1 when it’s installed appropriately. [crosstalk 0:46:38] think about that.
Doug, we actually have a question for you here. Did you have any to add to that previous one?
Doug: Yes, I did. I didn’t mean to put you off, though. Were you finished?
Elizabeth: Yes.
Doug: Okay, yes. I think the point you’re raising, I want to emphasize is really important. A lot of folks think electric heat is a non-starter because they’re coming from a baseboard world where one unit of energy is one unit of heat. But in the heat pump world, one unit of energy can move three to five units of heat as you said, Elizabeth, and that’s really important when you consider maintenance costs.
If you go with solar thermal for hot water, you’ve got like Ben said, be careful about your situation because you could end up with the situation where you’ve got two systems now, photovoltaic and solar thermal and twice of anything is to break whereas if you currently have separate water meters for each unit, you can go with photovoltaic. You can get those really efficient heat pump for water heaters and drive those off of the photovoltaic, as well, and then you got one system and only one side of things to break.
From a landlord point of view, I think what Ben said, understand where you’re coming from with your systems is really important, too.
Elizabeth: Great. Thank you. This is a question for you. “Do you have any ideas or recommendations on how to increase landlord uptake of MassSave offerings and also adding solar PV?”
Doug: Yes. I’ve written extensively about this on our site. It has been a tough nut to crack because at a high level, you know the renter pays utilities and the landlord is the one being asked to put up the capital. I think MassSave has done a wonderful thing with this insulation program. The insulation incentives are so staggeringly huge that every landlord should get their properties insulated right away.
There will be hoops to jump through especially when you consider the difference between a market rate renter paying the market rate heat, and then if you get subsidized renters in the building, you might need to combine funding sources or programs to get that whole building done, but it can be done.
The general roadmap is take care of insulation as soon as you can. That will help in so many ways. Then when you look to the future, you want to start replacing your fuel systems with these electric air source heat pumps, which are very efficient that will treat electrical load, that will really help just five solar panels, so that you get all three installed together.
What you’re going to see if you look at our site is there’s a direct monetization for that, not just cost savings but you can charge oil or fuel type heat-included costs for your base rent. Your base rent goes up is if you’re charging for oil or gas because that’s what people are used to paying, but your marginal cost is zero because you’re powered by the sun.
I think it’s a difficult problem, but when you look at including those items in the rent, there’s a lot of legal work that has to be done up to a cap and you got to make sure to do the billing correctly and all that, but that’s the roadmap.
Elizabeth: Excellent, thank you. There’s a question about here about property that’s located in what’s called the municipal light plant territory. This is an area that the municipality owns the electric utilities service. The question is about, “Is net metering available in municipal light plant territories?”
[0:50:11]
The answer is that it really depends. They are investor on utilities, so Eversource, National Grid, and Unitel. Those all offer net metering as an option. If your property is in a municipal light plant territory, it really is up to that entity to clarify what they offer in their town, whether it be net metering or a different structure. And so, I would recommend that you reach out directly to your utility and clarify if you’re in a municipal light plant territory.
Ben: I just would want to add to that, it’s pretty common because out of 353 municipalities, there are 51 or something towns – Wellesley, Belmont, Concord—a bunch of places that are served by what we call MUNITS, municipal utilities. They are allowed to make their own rules individually. Now they try to make good rules and they try to make softer roles, but it’s kind of got a Wild West quality to it.
Make sure that you reach out to your utility, your municipal utility and they’re technically you own them. They’re a municipal not-for-profit entity, right? That’s the good part about MUNITS, but also make sure again that if you’re working with an installer, that that installer has worked in that municipal utility because the chance for misunderstanding those rules and regulations compared to what actually happens is actually pretty high and so really making sure that you picked somebody to work, who knows what they’re talking about will be very valuable for you.
Elizabeth: Great. We have kind of a two-part question here. “Does this resource toolkit apply to larger buildings greater than one to four units? I have a two-family that’s been condolized, and I have a condo association. Could a PV system be installed in the name of the condo association and can a loan be taken out in the name of the condo association?”
I’ll speak to the larger than four units piece and we can also talk about condos as well, though that’s not directly part of the scope of this set. Knowing that a large number can be 80 percent of housing in Massachusetts is kind of the one to four units property, we really kind of focused this on the one to four units space. That being said, I mean certainly there is the opportunity for larger scale properties to install solar. It probably will be a little bit different and probably maybe even a little bit more complex, depending on some of those net metering rules that were mentioned earlier.
A lot of this is kind of predicated on the idea of getting that one-to-one value for your net metering credits. But that being said, there are definitely are scenarios in which you can install on a five-unit or larger sites, and then it’s just a matter of how do you get that value to the participants.
I’ll talk to the condo associations and feel free to jump in front of everyone else. The Department of Energy Resources has a condominium guide that’s about a 30-page resource document, and I can include that in the list of resources for those additional information and resources focused on condo owners. There are kind of a different scenarios that are applicable to condo associations and condo owners.
If you actually live in Cambridge, the City of Cambridge and Sunny Cambridge is offering a technical resource with photovoltaic cells to kind of answer questions and things like that as well.
I can certainly send on that resource. Does anyone else have anything in addition?
Ben: I would just say that that is one of the most asked questions that we get at SunBug. We get a lot of condo owners calling. The first decision matrix is how many units? Is it basically a two or three family or is it a big complicated one? Again, if it’s a smaller one, a lot of this information in this presentation applies. It really comes down to the fact that when you own a condo, you own from studs in. your roof is not owned directly by any one condo person. It’s owned by the association, and consequently you have to amend your condo doc saying, “Unit 1 is allowed to have an array on the roof,” and have it reflected there, so unit 2 is allowed to go the common,” and what the rules are for distributing the benefit of it. Totally doable, totally possible. It’s not even particularly difficult. It just adds a layer of complexity.
[0:55:17]
Elizabeth: We are getting a little bit close to the end of the webinar here. We do have a handful of additional questions, many of which I can certainly follow up on separately or individually. There’s a couple of more questions on where to get the resources, and as I mentioned, certainly I’m happy to include any that I just mentioned that were not on this PowerPoint slide about the condominium resource, The Selling the Sun Real Estate Agent training, anything like that, I’m happy to include. We will be putting out the slide deck as well as copy or a link to those webinar luckily sometime next week.
I’d like to thank everybody for joining today and participating on this webinar. Please feel free to spread the word if you know of other landlords, who might be interested. We would love for this resource to really get out there and to be a real tool for landlords who are considering solar as a viable option for their project, for their property.
Thank you very much and look forward to being in contact.
[End 0:56:36]
