sfe_re_solar_for_multi-tenant_building_owners by gstec


                                       SOLAR for MULTI­TENANT BUILDINGS 
                                       Why SF landlords & HOAs are switching to solar 

Installing solar makes economic sense today and is reducing
operating costs for multi-tenant building owners across San
Francisco. With current rebates and tax incentives, landlords and
home-owner associations (HOAs) have access to several
innovative ways to install solar on their buildings—while enjoying
shorter paybacks and increased property values (with no increased
property taxes)! Some property owners are leveraging the lower
electricity bills from installing solar as a tenant retention strategy.
Combined, these incentives offer an unprecedented win-win
opportunity for landlords and tenants to green their buildings!

The easiest way for multi-tenant building owners and HOAs to install solar is to design a solar electric system
that offsets common electric loads (such as hallway lighting and elevators) using solar electric panels or a solar
water heating system that displaces natural gas usage from centralized domestic water heaters (boilers) using
solar thermal collectors. With lifespans of 25+ years, solar energy systems are wise investments that pay back.

Solar PV for Common Area Electricity Loads. Currently, solar electricity is limited to serving common area
loads in multi-tenant buildings because of existing metering rules set by the state. This arrangement is
straightforward and simple—benefits flow to the party that pays for the system cost, either the landlord or the
members of an HOA, which own the system and also the common meter it serves. In most cases, landlords
and HOAs would qualify for GoSolarSF commercial incentives, not residential incentives.

Solar Water Heating for Common Domestic Hot Water. Multi-tenant buildings with centralized domestic
water heaters are ideal applications for integrating solar water heating systems. By reducing natural gas use
(and bills), solar water heating reduces operating costs—thereby increasing profits—for building owners. With
the conventional water heater remaining as a backup, tenants will never experience cold showers.

New innovative financing models have recently emerged that remove the upfront cost barrier and help reduce
system cost. In addition to cash purchases, there are now third-party ownership models (solar leases and
PPAs) that allow building owners to receive the benefits of solar energy without actually owning the system. In
fact, solar PPAs financed over 50% of new residential solar systems in California in 2011. Furthermore, SF
recently launched a property assessed financing program called GreenFinanceSF, which allows commercial
property owners to secure a loan through the private market and repay the loan through their property taxes.

    •    The cost of solar panels has fallen dramatically over the past few years
    •    Local, state, and federal incentives are currently available
    •    New financing models are helping removing the upfront cost barrier 
    •    Soft costs are falling from streamlined permitting and other processes
        For more information please visit SFEnvironment.org or email renewables@sfgov.org  
               SF Environment is a department of the City & County of San Francisco 
GoSolarSF. San Francisco’s local incentive program offers financial incentives to residents, businesses, and
non-profits in San Francisco to install grid-tied solar photovoltaic energy systems. This program offers a one-
time incentive payment for local solar electric projects to reduce the cost of installation. Any HOA that is a
registered organization will be eligible for a GoSolarSF business incentive of $1,500 per kW, capped at
$10,000. A small HOA that is not a registered organization and whose common-area meter is on a PG&E
residential account will be eligible for a residential incentive. For more information, including a list of local
installers, please visit www.solarsf.org.

California Solar Initiative (CSI). The state’s incentive for solar PV has been so successful that the funding is
nearly depleted. The good news is that the CSI—Thermal program for solar water heating is just now getting
underway and offers very attractive incentives that can reduce the cost of installing a solar water heating
system by over 50%! For more information, please visit www.pge.com/csithermal.

Federal Tax Credit + Accelerated Depreciation. A 30% federal tax credit is currently available through 2016
for both residential and commercial solar energy systems in the form of the Residential Renewable Energy Tax
Credit and Business Energy Investment Tax Credit (ITC). The tax credit is applied to the net cost after other
rebates or grants have reduced the initial system cost. Furthermore, under the federal Modified Accelerated
Cost-Recovery System (MACRS), businesses may recover renewable energy investments through
depreciation deductions. More information on solar incentives can be found at www.dsireusa.org.
100% of the certified costs of energy conservation and renewable energy improvements approved by the
Commission on the Environment may be passed through to the tenants who benefit from such work and
improvements, regardless of the number of units on the property. However no increase shall exceed, in a 12-
month period, 10% of the tenant's base rent at the time the petition was filed or $30.00, whichever is greater.
For more information please visit www.sfrb.org/Modules/ShowDocument.aspx?documentid=1498, Section 37.7. 

    1. Free Site Assessment. Interested building owners are encouraged to take advantage of SF
       Environment’s free solar site assessment service to determine the building’s solar potential. This
       service will provide a written report and financial analysis to help determine if solar is a practical
       investment. Email renewables@sfgov.org for more information.
    2. Solicit Bids from Local Installers. If the site assessment report indicates that a solar energy system
       is appropriate for your building and seems like a practical investment, the next step is to solicit bids
       from local solar installers. A list of installers that qualify for the GoSolarSF local incentive can be found
       at www.solarsf.org.
    3. Consult SF Rent Board. The solar installation may be considered an allowable capital improvement
       that benefits the tenants; therefore the landlord may be able to pass through the cost of the installation
       in the form of increased rent. The building owner should consult the SF Rent Board to find out if the
       system is eligible.
    4. Select bid and install solar! The building owner selects a bid and installs a solar energy system on
       the building. Tenants benefit from clean energy and reduced monthly electricity bills and the landlord
       benefits from increased tenant retention and higher property values, with no increased property taxes.

Download as PDF: www.sfenvironment.org/downloads/library/sfe_multitenant_solar_fact_sheet.pdf

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