Own a rental property with solar panels?
You’re not alone if you’re confused about who should pay the electric bill, whether the SDGE account should stay in your name, or whether you can charge tenants for your solar lease payment.
The good news is that most solar situations can be solved with one of three simple billing strategies. The right solution depends on how your solar system was purchased and a few personal preferences as an owner.
No matter what type of solar system you have, our recommendations ultimately lead to one of three billing structures.
Option 1: Keep SDGE In The Owner’s Name & Bill The Tenant For Usage
Under this approach, the SDGE account remains in the owner’s name. The owner pays the utility bill, and the tenant reimburses the actual cost of electricity each month through their tenant ledger.
This option is often the best choice when the solar agreement is tied directly to the owner and transferring responsibility could create complications.
Option 2: Tenant Opens Their Own SDGE Account
Under this approach, the tenant establishes their own SDGE account and pays their electric bill directly.
This is typically the simplest arrangement because tenants are responsible for their own usage and owners don’t have to manage monthly utility billing.
Option 3: Keep SDGE In The Owner’s Name & Charge A Flat Monthly Fee
Under this approach, the owner keeps the SDGE account in their name and includes a fixed monthly electricity charge in the lease.
This provides predictable costs for tenants and minimizes monthly billing adjustments. The flat fee can be reviewed and adjusted at lease renewal based on actual utility expenses.
Our recommendation depends on how you answering the questions seen in the flowchart below. First identify how you purchased your solar panels.
- Power Purchase Agreement (PPA)
- Leased or Financed System
- Purchased Outright
Power Purchase Agreement (PPA)
With a PPA, the solar company owns the panels and sells you the electricity they generate. With a PPA, we recommend to keep the SDGE account in the owner’s name and bill the tenant for actual electricity usage. Because the solar agreement is tied directly to the owner, this is typically the cleanest and least disruptive solution.
Leased or Financed System
With a leased solar system, we have two different recommendations dependent on if the owner plans to move back into the property.
If the answer is yes, the owner plans to move back into the property, we generally recommend maintaining continuity by keeping the utility account in your name.This guarantees you will not disrupt your Net Metering Agreement. So you will keep the SDGE account in the owner’s name and bill the tenant for actual electricity usage.
If the answer is no and the property will remain a long-term rental, we recommend that the tenant establish their own SDGE account and pay SDGE directly.
Purchased Outright
If you own the solar system outright, you have the most flexibility. The tenants can establish their own SDGE account and pay SDGE directly. Or if you’d rather prioritize simplicity and predictable billing, you can keep the SDGE account in your name and charge a flat monthly electricity fee. If precise cost coverage is important to you, we recommend the tenants pay SDGE directly. If it’s not, the flat fee option can work for you.
A common follow-up question we hear is “Can I charge my tenant for the cost of my solar lease or solar financing payment in addition to their electricity usage?”
The short answer is yes. As long as the charge is clearly disclosed in your property marketing and properly documented in the lease agreement, owners can generally recover the cost of a solar lease or solar financing payment from tenants.
However, just because you can charge for it doesn’t necessarily mean you should. Prospective tenants typically compare multiple rental properties at the same time. When they see a monthly solar lease charge, and responsibility for electricity costs, some may perceive the property as more expensive than competing rentals and choose not to apply.
On the other hand, some renters are perfectly comfortable paying a solar-related fee if they believe the system will reduce their overall utility costs and help stabilize electricity expenses throughout the year.
Ultimately, this becomes a business decision rather than a legal one.
Owners who choose to pass through the cost of a solar lease may recover some or all of that expense each month, but they should also be prepared for the possibility of fewer inquiries, fewer applications, or a longer vacancy period.
Our recommendation is simple: if you decide to charge tenants for a solar lease or solar financing payment, make sure it is clearly disclosed in your marketing, discussed before lease signing, and specifically addressed in the lease agreement.
There is no single “correct” way to handle solar billing at a rental property.
The best solution depends on:
- How your solar system was purchased
- Whether you plan to return to the property
- How much administrative involvement you want
- Whether you prioritize simplicity or precise cost recovery
Fortunately, most owners fit neatly into one of the three billing structures outlined above.
If you’re unsure which category applies to your property—or you’d like help determining the best approach for your specific situation—our team can review your solar agreement, explain your options, and help implement a billing structure that works for both you and your future tenants.
Have questions about solar panels on your rental property? Contact Uplift Property Management and we’ll help you navigate the options.