Solar energy is one of the fastest growing and most affordable sources of electricity. With the expansion of federal and state tax incentives, solar energy is helping commercial real estate (CRE) teams and their tenants reduce the cost of electricity in their smart buildings. Additionally, metering practices like submetering and net metering — the process of sending excess energy back to the grid – are boosting cash flow for commercial real estate teams.
In this article, we’ll explore net metering, the benefits of installing a solar energy system and how property teams can save time and energy with submeter billing.
Key Takeaways
- How Do Solar Energy Systems Work?
- What are the Benefits of Solar Panels?
- Why Meter Solar?
- What is Net Metering?
- How Does Submetering Save Costs?
How Do Solar Energy Systems Work?
Solar technologies work in one of two ways. The most common method involves photovoltaic (PV) panels. When sunlight hits a solar panel, its energy is absorbed by the PV cell. The energy triggers an electrical field in the cell, which causes electricity to flow.
The second type of solar technology is called concentrating solar-thermal power (CSP). CSP systems use mirrors to reflect and absorb sunlight onto receivers that then convert solar energy to heat. In turn, electricity is produced or stored for later. These panels are powerful tools used to reduce a building’s carbon footprint, lower the cost of energy bills and minimize wasted resources.
What are the Benefits of Solar Panels?
Commercial real estate teams and their tenants benefit from installing solar energy systems in several ways. These include:
- Longer leases (less occupant turnover)
- Cheaper electricity
- State and federal tax incentives
- Achieving environmental, social and governance (ESG) goals
In a survey conducted by the real estate giant, CBRE, more than 70% of respondents stated they would be willing to pay a higher rent for buildings powered by green energy. Installing a solar energy system is one way to create a green energy building.
Additionally, solar energy reduces a building’s reliance on grid-supplied electricity by as much as 80%, and in many cases offsets electric bills by up to 95%. Lower energy costs often encourage tenants to sign longer leases or extend their current leases.
But for property managers serious about lowering energy costs, they also should consider how their solar electricity is metered.
Why Meter Solar Energy?
When it comes to lowering energy costs, metering your solar electricity is essential. There are two types of solar energy metering.
- Net Metering
- Submetering
We’ll break each down method below.
What is Net Metering?
Net metering is a way for commercial real estate teams to receive credit for excess electricity generated and sent back to the grid. In other words, the more electricity your solar panels generate, the more you can offset your building’s energy costs.
How Does Solar Net Metering Help?
For those property teams looking to install a solar energy system, net metering and submetering can be effective tools. When it comes to net metering for solar, several benefits exist:
Cost Savings: Net metering allows solar panel owners to offset their electricity bills by generating their own power. When their solar system produces more electricity than they need, the excess is fed back into the grid, earning credits that can be used during times when the solar panels are not producing enough power.
Return on Investment (ROI): Users can experience a faster return on their investment in solar panels because they can monetize excess energy production through net metering. This makes solar installations more financially attractive.
Environmental Impact: By generating clean and renewable energy, solar panel owners contribute to a reduction in greenhouse gas emissions and reliance on fossil fuels.
Energy Independence: Users with solar panels become less dependent on traditional utility providers for their electricity needs. This independence is particularly valuable during power outages or disruptions.
Peak Load Reduction: Solar energy production often coincides with peak demand periods, helping to alleviate stress on the grid during times of high electricity usage.
How to Submeter Solar Energy?
Submetering your solar electricity usage is another way to reduce unnecessary utility costs. This method of metering works a lot like submetering your building’s water or gas.
To get started, property teams must select a submeter billing software provider. It’s important to make sure your provider works with both networked and non-networked building management systems (BMS).
Next, installation will occur. If you’re using Genea Submeter Billing, we will connect a small interface to your BMS. The interface transmits information between your BMS and our submeter billing software. Once installed, engineers with networked BMSs can automate the reading and data collection. Engineers operating in non-networked buildings can manually calculate their solar electricity usage with Genea’s smartphone app. With your tablet or phone, you can capture reads of your smart meter for accurate billing.
Tax Credits for Solar Energy Installation
The benefits don’t stop there. In recent years, federal and state governments have made investing in solar energy installation to make it more palatable for homeowners and businesses. For those in commercial real estate, there are two federal tax credits available when purchasing a solar energy system.
- Investment Tax Credit (ITC) is a tax credit used when purchasing the solar system.
- Production Tax Credit (PTC) is a tax credit calculated based on the amount of electricity your solar system generates. The credit is only valid for the first 10 years of a system’s operation.
These incentives are made possible by the Inflation Reduction Act and Federal Solar Investment Tax Credit, the latter of which is set at 30%. This incentive will expire in 2032.
Solar tax incentives also vary by state. Some states providing benefits include Arizona, California, Colorado, Florida, New York, Texas and more. Take a look to see if your state is on the list.
Solar Energy in California
In 2023, California became the first state to require the installation of solar PV and solar energy storage systems on all new and some retrofit commercial buildings. These buildings include, among others:
- High-rise multifamily
- Office buildings
- Financial institutions
- Retail
- Schools/educational facilities
- Warehouses
- Medical offices
With this legislative push and the normalization of solar energy, commercial real estate companies and other industries must take advantage of tax credits before they are no longer available.
Metering Solar Electricity with Genea
Genea Submeter Billing can help you measure and calculate your solar energy usage. See how enterprises, commercial real estate portfolios, schools, hospitals and more are choosing Genea for their future. Contact one of our helpful representatives to learn more.
