Path-Q Solar

How should a landlord calculate solar ROI when tenants receive most of the bill savings?

Answer

Calculate ROI from the benefits the landlord actually retains, not the tenant's total bill savings. Include owner-paid utility savings, permitted rent or lease effects, avoided operating costs, incentives available to the owner, and all ownership or financing costs.

Key points

  • Separate tenant benefit from landlord cash benefit.
  • Include vacancy, turnover, lease structure, and whether savings can be reflected in rent or other charges.
  • Model common-area and owner-paid loads separately from tenant-metered loads.
  • Account for maintenance, insurance, financing, taxes, and roof-related costs.

What it depends on

  • Utility payment and lease structure
  • Owner versus tenant metering
  • Ability to recover or share savings
  • Project costs, financing, and applicable tax treatment

Risks and trade-offs

  • A project can create strong tenant benefits but weak owner ROI.
  • Rent adjustments may increase vacancy or reduce competitiveness.
  • Tenant turnover can change usage and the landlord's ability to retain benefits.

Information you may need

  • Lease and utility responsibility terms
  • Owner and tenant load profiles
  • Project cost and operating expense assumptions
  • Expected occupancy and turnover

Your next step

What to do next

Build a landlord cash-flow model that excludes tenant savings unless the lease or operating structure lets the landlord retain them.

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