Virtual Net Metering - Solar for Condos

Step 1: Build your solar team & gain necessary approvals

Exploring solar for a condominium development that benefits every owner requires a leader to coordinate and build consensus among residents. It also is important to build a team to explore the opportunities and champion the project.

Valuable members of a solar team for a condo community include community residents, homeowner association (HOA) management company staff, HOA board members and sustainability and financial professionals. Solar contractors may be willing to provide free advice if there is a potential for business. You will learn more about identifying a contractor in Step 5.

Use the Solar Team Worksheet to record contact information and define roles and responsibilities. The worksheet should be saved with your community records for future reference should there be questions about the solar installation process.

The Solar Team will need to conduct a preliminary self-assessment of the condo property to identify areas suitable for a solar installation. You can use the Solar Site Considerations Worksheet to record this information.

When considering solar, condo communities must ensure due diligence in understanding the provisions of the covenants, conditions and restrictions (CC&Rs) and HOA bylaws.

Working with a member of the HOA management company can assist in understanding any applicable HOA restrictions, facilitating community meetings and HOA board discussions and serving as the primary advocate for the solar project. The Community Guidelines and HOA Bylaw Assessment Worksheet gives more information about condo and HOA rules and provides a place to track applicable CC&Rs and community bylaws.

Please note that the Solar Rights Act of 1978 and subsequent California legislation creates a legal framework for solar access. The act limits the ability of HOA CC&Rs and local governments to restrict solar installations.

Step 2: Determine which Tenants will Go Solar & Building Energy Load

A solar electric system can be sized to serve the entire community load or specific units within a community. 

The Solar Team will ultimately lead the efforts to design and implement a system, assign unit allocations and determine if common area loads are included. However, they will need to know the desires of the community and which residents are interested in participating in the solar project. These residents will be financially responsible for their portion of the solar electric system and the electricity produced. This is explained further in Step 4.

Forums for gauging community interest include

  • Holding a community meeting(s)
  • Distributing mail or email survey
  • Placing sign-up sheet at a community center
  • Requesting assistance from HOA management company for announcements

You can expect to receive questions about CC&Rs and community bylaws, so it will help to have an understanding of those rules before engaging with other residents about their interest in going solar. What you find out from this research may be useful to include in mailers or at meetings. You should also reassure community members that by expressing interest in the solar project, it does not obligate them to participate at this point. Using the Community Interest Survey Template will be a great gauge of community interest.

Once you understand which members of the community are interested in participating in the solar project, you can begin to address other issues, including utility metering and billing arrangements known as virtual net metering (NEM-V). NEM-V is a utility rate structure designed for multitenant, multimetered properties that allows numerous tenants to share a single photovoltaic (PV) system and receive direct on-bill utility savings. Arranging for solar with NEM-V entails knowing the annual consumption in kilowatt-hours (kWh) of participating residences.

There are multiple ways of identifying tenant annual energy consumption information:

  1. Ask tenants for the information: Each tenant can identify their unit’s annual consumption from the local utility. They may use their online utility account or simply call to get information. 

San Diego Gas & Electric: 1-800-411-7343
Southern California Edison: 1-800-655-4555
Pacific Gas and Electric: 1-800-743-5000

  1. Do it yourself: Have participating tenants sign a release form, which will allow a designated representative to have access to past kWh consumption levels from the utility. Release forms are available from each utility.

SDG&E Release Form - SCE Release Form - PG&E Release Form

  1. Use national averages: Studies show that an apartment household in Western states has an average electric consumption of 5,442 kWh/year.[1]

Use the Solar Participation Tracking Worksheet to track contact and energy-related information for those residences. This will also assist with the Step 3 exercise of determining the approximate system size.

 

[1] Average energy consumption data provided by the U.S. Energy Information Administration, Office of Energy Consumption and Efficiency Statistics, on Forms EIA-457 A and C-G of the 2009 Residential Energy Consumption Survey.

Step 3: Estimate System Size & Determine Solar Allocations

Use the Step 3 Unit Allocation Tracking Spreadsheet to record each unit’s expected monthly solar allocation.

Estimating System Size

Once the participation structure and associated annual energy consumption data have been determined, you can translate that information into an approximate system size needed and calculate the percentage of the total kWh production that will be applied to each unit or "benefitting account."

Remember that you do not have to offset 100% of the consumption of your building. Offsetting any portion can be beneficial and a good way to get started with solar. A rule of thumb is to divide your annual consumption (kWh) by 1,700 kWh/year (1 kW of solar will generate about 1,700 kWh/year). This will give you an approximate system size to base your design on.

Contractors may use supplemental formulas and calculators to determine the approximate production of their proposed system. For an initial understanding of your site’s needs prior to contacting a contractor, the general rule of thumb method can be used.

Unit Number

Annual kWh Consumption

Desired Offset of Total Consumption

Annual Solar kWh Needed for Desired Offset

Common area

1,000 kWh

85%

850 kWh

Unit A

5,500 kWh

85%

4,675 kWh

Unit B

6,500 kWh

85%

5,525 kWh

Unit C

7,000 kWh

85%

5,950 kWh

Unit D

7,000 kWh

85%

6,800 kWh

TOTAL

28,000 kWh

85%

23,800 kWh

23,800 kWh/1,700 kWh = 14 kW solar electric system

 

Determining Unit Allocations

Each benefitting account will need to be assigned a percentage of the total monthly kWh production that will be credited to their utility account ("unit allocations").

There are various methods to determine unit allocations, such as using historical consumption data to determine the respective percentage (Example 1)  or a more generic allocation, based on the number of bedrooms or square footage (Example 2).

Example 1

 

Example 2

Benefitting Account

Percent Allocation

Benefitting Account

Percent Allocation

Common area

3.57%

Common area

10%

Unit A (1br/1ba)

19.64%

Unit A (1br/1ba)

20%

Unit B (1br/1ba)

23.21%

Unit B (1br/1ba)

20%

Unit C (2br/2ba)

25.01%

Unit C (2br/2ba)

25%

Unit D (2br/2ba)

28.57%

Unit D (2br/2ba)

25%

Total

100%

Total

100%

Step 4: Review Financing Options & Recoupment Methods

The cost of solar in California ranges from $4 ‒ $6 per watt (AC).[1] Remember, 1 KW is equal to 1,000 watts.

Solar customers have access to a variety of methods for financing a solar electric system. When reviewing the financing products available, keep in mind considerations such as existing capital, federal tax repercussions, system ownership, property value and other items. Typical financing methods include cash, lease and power purchase agreement (PPA).

Cash purchases from a condo community may be made using upfront capital from HOA reserves, upfront capital from residents or funding acquired through personal, solar, home equity or other types of loans. The investment will be recouped through utility bill savings.

A lease agreement entails a fixed monthly payment, ideally less than the collective monthly electricity bills of the condo community. This may be paid through community reserves or from the individual residents.

A PPA entails a fixed price/kWh that is produced from solar and allocated to your utility account. This price should be less expensive than what the utility charges as a cost/kWh. This monthly fee may be covered by a prepaid PPA, from community reserves or by individual resident investors.

Determining if community reserves will be accessed or if individual resident members will be liable for the associated solar fees through a special assessment or personal investments will depend on the solar allocations defined in Step 3, as well as the preference of community members and officials.

Using reserves to fund a community solar project

  • Reserves are funds that should only be used on projects that benefit the entire community equally.
    • Reserves can pay for the entire solar electric system if every unit will receive an equal portion of the solar allocation.
    • Reserves can pay for the portion of the solar PV system that will be allocated to the common area load, since the common area fees are paid from collective HOA dues.
    • As a result of the reduced common area utility bills, two outcomes could be possible:
      1. HOA dues are reduced since common area utilities are now less expensive.
      2. HOA dues remain the same, allowing the reserves to be replenished more quickly due to the less expensive common area utility costs. This could allow for another community project to be funded from the common area savings from solar.
  • If community members collectively invest in a system, and reserves are not utilized at all, the savings allocated to the common area utility accounts (if applicable) should be passed back to the original community investors. The annual common area savings could be computed at the end of a 12-month cycle and proportionally distributed to the original investors.
    • The benefit of including the common area account into the solar allocation is mainly to serve as a default account that vacant unit credits are directed to.

Understanding recoupment methods

The type of investor (HOA versus community residents) will dictate the method by which the investment is recuperated. This recoupment method may be in the form of utility savings for resident investors or, for an HOA investor, in the form of monthly fees collected from the benefitting accounts that go toward replenishing the community reserves.

Review the Financing Considerations for Condos worksheet to better understand the scenarios of investor and recoupment structures.

Step 5: Find a Contractor

Locating a reputable, knowledgeable contractor can be a daunting task for any home improvement project. The Center for Sustainable Energy has partnered with EnergySage to develop an online solar marketplace specifically designed for multifamily property owners. Visit the site below to request and receive multifamily solar bids directly and easily through the online platform. High-quality, prescreened solar installers will compete for your business.

multifamiliysolarca.com

Other general resources include:

CALSEIA Member Directory – This directory includes contractors and industry professionals who are members of the California Solar Energy Industries Association. Members abide by the CALSEIA Code of Ethics and have been vetted by the organization.

GoSolar California - This database includes all solar contractors who have submitted a net metering application within SCE, SDG&E or PG&E service territories.

Referrals from neighbors or other solar customers are always a great way to choose a contractor.

Do you know of other contractor databases that are not listed here? Email us at smp-nem-v@energycenter.org with more information.

Vetting the Contractor

  • Do they have an active license?
    • Contractors State License Board ‒ Use this state agency page to see the type and current status of a contractor’s license. It also includes bond and workers compensation information and, if applicable, any consumer complaints or disputes along with the resolution.
  • Do they have references and a good reputation within the community?
  • Do they have experience with designing solar projects for multifamily dwellings? If not, what are the reasons they feel confident taking on this project?
  • What is the cost/watt (AC) they have proposed?
    • Does this fall within the average cost for solar? (See Step 4.) If not, what are the reasons for under/over bidding?
  • Better Business Bureau – Reference the BBB for public complaints or comments about a specific contractor.

We encourage you to obtain at least three bids. Use the Bid Comparison Worksheet to help make your determination.

Step 6: Install Your System

Typical Installation Process

RoleAssociated Fees
1Apply for building permit with appropriate city or county agencyContractorCheck with your city or county for solar permitting fees
2Submit interconnection and virtual net metering application to the utilityContractorOne-time origination fee and interconnection application fee ranging from $75-$150 (based on utility)
3Install the solar PV systemContractorContract cost
4City/county onsite system inspection; submit approval to utilityCity/county-
5Utility onsite interconnection/meter inspectionUtilityFor virtual net metered systems, an additional utility “net generation output” meter (NGOM) is required (prices below)
6Turn system on upon written permission to operate

Contractor/
customer

-
7Receive first utility bill post installation under virtual net metering with solar bill creditsCustomer-

 

Table 1: NGO Meter Price Ranges per Utility

The NGO meter type and cost will depend on your building characteristics and utility service territory.

Utility

One-time Origination Fee

NGOM Price Ranges

 

San Diego Gas & Electric (SDG&E)$25$998 - $2,943

 

Contact SDG&E for more information
Southern California Edison (SCE)$25$861 - $13,535

 

Contact SCE for more information
Pacific Gas and Electric (PG&E)$12$788 - $12,780

 

Contact PG&E for more information
 

Step 7: Ongoing Monitoring & NEM-V Management

After the installation is complete, there are ongoing management activities that should be tracked.

System performance monitoring is important for ensuring that the system is producing electricity consistently, as well as understanding if the system is producing above or below original expectations.

In an instance of low performance or system failure, identifying the problem quickly, in addition to timely troubleshooting, will be important for maximizing tenant and common load savings and also for avoiding customer complaints due to higher utility bills.

Specific system monitoring packages may be included in your system design and, in general, can be monitored online. Ask your contractor about system performance monitoring packages that would work best with your system.

Use the Solar Performance and Allocations Tracking Worksheets to compare and track monthly production and allocations. This resource will be useful for tracking system performance, tenant inquires or billing disputes.

Tenant turnover and unit vacancy also are aspects of a project’s post installation management. Generally, the solar allocations associated with a vacant unit will be assigned to the common load meter during the time of vacancy. This default account is defined on the unit allocation spreadsheet submitted to the utility.

Following are fees associated with set up and early modifications to the unit allocations before the relevant 12-month period is complete.

Table 6: NEM-V Setup and Modification Charges per Benefitting Account

 

Charge for Additional Modifications

Contact Your Utility for More Information

SDG&E

$7.50

Contact SDG&E

SCE

$7.50

Contact SCE

PG&E

$3.00

Contact PG&E