Real Estate

Tenant electricity Why tenant electricity falls short of expectations

Detached house with photovoltaic system on the roof
Detached house with photovoltaic system on the roofimago images / U. J. Alexander

On sunny days, around noon, German solar systems produce almost enough electricity to supply the entire country with electricity. There are around 1.7 million solar systems on the roofs of private houses alone, which on average generate almost nine percent of the electricity consumed in Germany. If the federal government has its way, the proportion should continue to rise. To this end, politicians enacted the so-called tenant electricity law three years ago. It is intended to encourage private landlords to equip the roofs of their houses with solar systems and to sell the green electricity cheaply to tenants.

The then Federal Minister of Economics Brigitte Zypries (SPD) promised almost euphorically to “bring the energy transition to the cities by promoting tenant electricity and to involve the tenants in it.” But the results remain far below expectations, an inventory shows: accordingly Last year, tenant electricity systems with a total output of just 13.9 megawatts were installed across Germany. The funding would have been enough for 500 megawatts – per year.

The low level of interest in tenant electricity models is hardly surprising, as the bureaucratic and financial hurdles are high. In order to receive funding through the Renewable Energy Sources Act (EEG), landlords would have to assume all the obligations of an electricity supplier. This includes, for example, the billing to the tenants and the annual report to the network operator. “The model is too bureaucratic and just doesn’t pay off,” criticizes Thomas Engelke from the Federation of German Consumer Organizations (vzbv).

The Central Association of the Housing Industry (GdW) also sees an urgent need for action. Landlords must expect to lose the industry tax exemption if they sell electricity as an ancillary business. “As long as the local power generation and the direct consumption by the tenants mean the loss of the trade tax exemption for the housing company, the energy turnaround in the cities will not happen,” says GdW President Axel Gedaschko. He demands that the operation of photovoltaic systems on house roofs be treated in the same way as that of heating systems.

In the meantime, an emergency solution has been established: External service providers such as electricity suppliers lease the roofs of apartment buildings for a fee. There they then operate a photovoltaic system themselves and take care of both billing and sales of the excess electricity. But this model is also considered too complicated in the industry – and the profit too low to be of interest to landlords. According to the law, tenant electricity may cost a maximum of 90 percent of the standard tariff of the local energy supplier. However, because expensive metering technology is required for billing tenant electricity, it is usually hardly worthwhile.

Andreas Mattner, President of the Central Real Estate Committee (ZIA), rates the tenant electricity idea generally positively. “Roof areas in urban areas in particular offer huge potential for generating renewable energy that we must not leave unused,” says Mattner. In his opinion, tenant electricity is an important part of the energy transition.

In the meantime, the federal government has also recognized the problems and tried to improve it with an amendment to the EEG. According to this, tenant electricity systems should receive more financial support from 2021. However, the owners’ association Haus & Grund Germany expects that the concept of tenant electricity will continue to fall short of its potential. “As things stand at the moment, it will be far too complicated for tenants to make green electricity available to tenants in, on or on the house,” says association president Kai Warnecke. For private landlords, who provide two thirds of rental apartments in Germany, a much simpler process is needed to make tenant electricity profitable.

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