Fall 2011

Report on PV Economics and Virtual Net Metering in Affordable Housing

A recent report produced by the California Center for Sustainable Energy (CCSE) investigates the economics of photovoltaic (PV) retrofits in multifamily affordable housing under virtual net metering (VNM) tariffs.

CCSE researchers collected tenant and property-owner electric bill information at four sites within the City of San Diego and compared the bill savings that would be generated by a PV system under virtual net metering against the costs of a PV investment. The study finds that in multifamily affordable housing complexes with significant common area load (electricity consumption in shared areas like elevators, laundry rooms, etc.), PV retrofits can be cost-effective in California's major investor owned utilities (IOUs) when tax benefits are fully utilized. The study emphasizes, however, that because rents in affordable housing are restricted, and because low-income tenants generally pay discounted electric rates, it is difficult for property owners to invest in PV that offsets tenant load without significant cash incentives.

CCSE's report recommends that regulators set incentives for PV in affordable housing at levels that are not overly generous for PV projects designed to offset common area load and at levels that are sufficient to account for the lower bill savings generated by PV dedicated to offsetting tenant load. The report also recommends that utility allowances and rent restrictions in publicly owned or subsidized housing be adjusted to allow affordable housing property owners to recoup PV costs from tenants – as long as tenants' overall electricity costs are not increased.

A key study recommendation is that VNM tariffs be expanded to other multitenant buildings that don't have restricted rents and in which tenants pay more for electricity. This recommendation is in the process of being implemented by California's major IOUs under direction from the California Public Utility Commission.

To download a copy of the report, visit the Multifamily Affordable Solar Housing page for the Center for Sustainable Energy California and select the VNM MASH Report button.