Tenant electricity: How the supply model works

More and more homes are already taking advantage of freeand environmentally friendly solar power. But residents of apartment buildings can also take advantage of the positive aspects of photovoltaics – through the concept of tenant or residentelectricity. The potential is enormous: According to EnBW projections, around 70 percent of all apartment buildings could use a PV system by 2040 and thus supply around 16 millionapartments with locally generated solar power.

What is "tenant electricity"?

An important note in advance: In recent years, the term "tenant electricity" has become established for the energy supply model presented here, but it is somewhat misleading. Because the concept is not only about tenants, but about residents of apartment buildings in general. And in addition to tenants, these can also be owners who live in their apartments themselves. Therefore, the term "residents' electricity" would actually be more appropriate. In the following, we therefore use both terms, but always mean the more comprehensive approach.

Whether resident or tenant electricity, the core idea behind it is relatively simple: electricity is produced directly where it is consumed. Due to the district approach that is now in force , the photovoltaic system no longer has to be attached directly to the building, but may also be located in the immediate vicinity. The locally generated electricity is then made available to the residents of the building via a special tenant electricity contract. 

Energy can be generated using various technologies, usually photovoltaic or combined heat and power plants. Due to better profitability and CO2 neutrality, photovoltaic systems dominate.

A practical advantage of tenant electricity projects is the direct use of the electricity generated within the building. This reduces the need to transport electricity over long distances, which in turn reduces grid load and energy losses. But the main advantage of a tenant electricity model (with EEG subsidies, more on that in a moment) is that the return for the system operator increases and the expansion of PV systems is thus to be stimulated. In addition, tenants or residents in general can often benefit from lower electricity prices, as some of the usual cost components of the electricity price, such as grid fees and electricity taxes, are reduced or eliminated altogether for direct delivery and use on site.

What tenant electricity concepts are there?

The implementation of tenant or resident electricity projects requires careful planning and coordination. The correct recording and billing of the electricity consumption of the individual tenants can be complex. For this reason, specialised third-party providers now often take over the technical and administrative handling of the tenant electricity model. In general, a distinction is made between the following tenant electricity concepts:

1. Direct marketing: In the classic "tenant electricity model", landlords sell the self-generated electricity from their own PV system directly to tenants. For the additional electricity requirement, the residents conclude a separate contract with an external energy supplier. This model is easy for landlords to handle, but the entitlement to subsidies, such as the tenant electricity surcharge, is also lost.
2. Communal building supply: This is a further development of the tenant electricity model, which is particularly interesting for apartment buildings with many owners who live in their apartments themselves. In this case, the electricity generated from the jointly purchased PV system is allocated proportionately to the residents of a building behind the grid connection point and deducted from the grid reference quantities. The electricity is therefore not "sold" here, but "consumed" in each case. The residual power supply is provided by individual supply contracts, and intelligent metering systems ensure fair billing. The tenant electricity surcharge is also waived.
3. Landlords as energy suppliers: In this model, property owners take on the role of energy supplier and cover the entire electricity needs of the parties involved, usually the tenants. This requires more effort for operators, as they have to take care not only of the PV system, but also of the metering infrastructure and contractual relationships. However, this concept offers the advantage of the tenant electricity surcharge as a financial incentive.
4. Supply chain model: Instead of organizing the handling of tenant electricity itself, the plant operator can also delegate these tasks to a third party. The service provider takes on the role of the electricity seller and acts as an intermediary between the operator of the photovoltaic system and the tenants or residents who purchase the electricity. The provider takes care of the entire power supply, including the drafting of contracts with the parties involved and compliance with the sometimes complex reporting obligations to authorities and grid operators.
5. Cooperative model: Landlords or owners can set up a cooperative, and tenants can also participate in it. This model makes it possible to generate up to 30% of the revenue from tenant electricity in a tax-advantaged manner. It promotes community participation and can offer tax advantages in terms of sales, trade and corporate tax.
6. Fake or pseudo-tenant electricity: In this variant, the electricity is fully fed into the grid, in addition to the feed-in tariff, the operator receives a certain surcharge that depends on the output of the PV system. Residents can take out a conventional, albeit discounted, electricity tariff. Physically, the electricity generated is also used on site, but there is no direct supply of the electricity from the PV system to the end consumers (within the meaning of the EnWG).

Is tenant electricity subsidized by the state?

The state subsidy aims to significantly boost the use and distribution of locally generated electricity in residential buildings. For the year 2024, this funding comprises two main components:

1. Tenant electricity surcharge: This surcharge is paid by the grid operators directly to the operators of the photovoltaic systems. It serves as compensation for the additional effort incurred by providing a continuous power supply to the tenants. The tenant electricity surcharge is intended to create incentives for the installation and operation of photovoltaic systems in residential buildings by improving the profitability of these projects.
2. Feed-in tariff according to EEG: In addition to the tenant electricity surcharge, system operators can also benefit from the classic feed-in tariff. This remuneration is paid for electricity that is not consumed directly on site, but is fed into the public electricity grid. The amount of the feed-in tariff is based on the Renewable Energy Sources Act (EEG) and is intended to make the production of renewable energy economically attractive.

Function and requirements of the tenant electricity surcharge

In order to receive the tenant electricity surcharge, landlords or the operators of photovoltaic systems must meet certain conditions:

• Registration and registration: The photovoltaic system must be registered with the Federal Network Agency and entered in the market master data register.
• Performance criteria: In general, only solar systems with a maximum output of 100 kWp are funded. Since January 2023, individual turbines have been allowed to deliver more than 100 kW of power, and several neighbouring turbines can add up to 1 megawatt of total output.
• Independence: The contract is only awarded if the electricity is transported exclusively via the building's own grid, but not via the public grid.
• Subsidy rates: The amount of the surcharge depends on the output of the photovoltaic system. So far, they have been stable. Since February 2024, however, it has been planned to gradually reduce the subsidy rates.
• Price caps: The electricity price for resident or tenant electricity and the additional electricity purchase may not exceed 90 percent of the basic supply tariff applicable in the respective grid area.
• Consumer-friendly regulations: The maximum contract term at the time of conclusion may not exceed one year, after which tacit extensions are possible. The maximum notice period is three months.

Tenant electricity surcharges for PV systems that were installed between 1. February and 31 July 2024:

Example: A PV system with 20 kW receives 2.64 cents per kilowatt hour (kWh) for the first 10 kW, and 2.45 cents per kWh for the remaining 10 kW.

How is tenant electricity billed?

Tenant electricity is billed via a special contract concluded between the residents and the operators of the system (be it the owners themselves or an external contractor) or the tenant electricity provider as part of the supply chain model. This contract includes both the supply of the electricity generated directly by the PV system and the provision of additional grid electricity to cover all demand. Background: Providers must ensure full supply and always need a residual electricity contract, if only to cover the event that the PV system temporarily fails.

In order to create a correct tenant electricity bill, which is comparable to a conventional electricity bill, certain requirements must be met:

• The bill must include the electricity mix as well as all levies and taxes that are passed on to the customer via the residual electricity.
• Each residential unit must be equipped with a calibrated electricity meter.
• The connection between the domestic electricity grid and the public electricity grid is ensured by bidirectional meters, which allow for accurate recording of the electricity flow. Complex measurement technology is not absolutely necessary. A total counter can be used to measure the total consumption of the building. Residents who do not participate in the tenant electricity model will be deducted from this. In this way, the consumption of the residual electricity can be determined.

Abrechnung mit Excel oder speziellen Tools?

Die Abrechnung von Mieterstromprojekten kann sehr komplex werden, da eine genaue Erfassung und Zuordnung des Stromverbrauchs erforderlich ist. Viele Vermieter*innen und Eigentümer*innen werden jetzt an eine eigene Excel-Tabelle denken, um Kosten für professionelle Tools zu sparen. Doch dabei können sich schnell Fehler einschleichen! 

Special software solutions are much more convenient, albeit associated with costs. These tools often offer extensive automation features that greatly simplify and speed up the billing process. This also significantly reduces the risk of errors. In addition, the tools are usually designed to deal efficiently with a large number of tenants and complex billing models. 

Examples of software solutions:

• StromLux (EnBW)
• Solarize 
• Solratio 
• Metergrid 
• Sinovo 
• smartRED

Full-service providers don't just take care of billing

Instead of a tool for independent billing, you can also hire a full-service provider. They take care of the work for you and, in addition to billing, also take care of the re-registration of meters, new contracts and terminations, e.g. when moving in/moving out. Depending on the range of services, they also ensure the procurement of residual electricity. This can also be an advantage. This is because the resale of electricity not only offers the opportunity for higher returns, but also involves risks. 

For example, if you also have to increase your electricity price due to rising energy prices, but the local basic supplier tariff remains constant due to other procurement horizons. The danger: If you increase the tariff anyway, you may lose a criterion for meeting the tenant electricity surcharge (because you exceed the 90 percent limit). Your customers can also cancel your contract if the price is unattractive. If necessary, you will then be left with your own procured amounts of electricity. 

Examples of full-service providers:

• EnBW immo+
• One Hundred Energy
• 7YRDS Energy
• Inexogy
• Green Planet Energy

Result

The tenant electricity model with the tenant electricity surcharge offers a lot of advantages for everyone involved: Residents receive an electricity tariff that is usually cheaper than the basic supply. Owners or operators benefit from the state subsidy and can generate additional income. In addition, the company's own PV system ensures that the CO2 balance of the residential building improves and the degree of self-sufficiency increases. 

By the way: Most recently, the entire industry was waiting for the adoption of the Solar Package I, in which the aforementioned "community building supply" is established. In the meantime, the legislative package has been passed. The communal building supply included in this simplifies billing and reduces the risks for the system operators. However, the tenant electricity surcharge is waived with this model.

Tip: A balcony power plant can also help to advance the expansion of renewable energies.