Earn Cash Through NEM For Landlords

As great as Net Energy Metering (NEM) is, many people still lament that earnings are not in cash. Back in 2011, our Malaysian Government implemented a scheme called Feed-In Tariff (FIT). This is a scheme where all electricity generated by your PV system, will be directly exported to the Grid in return for cash. FIT was an extremely attractive offer but unfortunately it ended in 2016, and was replaced with Net Energy Metering (NEM).

With NEM, you no longer earn in cash but get 1-to-1 credits instead. NEM is a great scheme adopted by many countries worldwide, yet many of our customers have expressed regret for missing out on FIT. Ultimately, although similar in value, getting cash in FIT is more desirable compared to credits in NEM.

But if you’re a landlord, there’s still a way for you to use NEM to earn in cash. Here’s how:

1. Install PV system on your property

Approach PV installers to provide you with a proposal or quotation. Be sure to approach multiple PV installers, and do your own research. As a guide, here’s a list of what to look for when choosing a PV installer.

2. Decide on tariff to charge your tenant

As a reference point, look at the tariff given by TNB for your property. A reasonable tariff would be a price 10-15% lower than TNB’s tariff. This will create a win-win situation as your tenant will be enjoying some electricity savings, and will happily pay you for that. Additionally, the tariff rate should coincide with your intended payback period for your PV system. A reasonable payback period would be about 4 years (with tax incentives), or 6 years (without tax incentives).

3. Include Power Purchase Agreement (PPA) clause / appendix in Tenancy Agreement

This is best left to a lawyer to properly draft out an agreement that will secure your interest. Terms and conditions need to be clearly stated to avoid any possible disputes. As a value added service, we at Next Energy do provide complimentary consulting for this matter.

4. Use PV monitoring system to bill Tenant

Almost every PV system will come with an online monitoring system. At the end of every month, use this monitoring system to find out how much solar electricity that was generated, and bill your Tenant accordingly. In order to avoid any disputes, it is recommended that you share your login credentials for the online monitoring system. Alternatively, show your Tenant on how they can check directly from the inverter screen. However, this is not recommended as the Tenant may accidentally change some settings of the inverter. Also, some inverters might not even come with a screen.

In the end, it’s a win-win situation for all parties

Apart from earning more in cash, equipping your property with a solar power system could be the difference for securing a tenant. Not only will your tenant get to save on electricity bill, but it will also be great branding for your tenant; especially if your tenant operates a business at your premise. For residential tenants, it’ll bring a feel good sense knowing that they are consuming sustainable electricity. 

Find out more info by getting in touch with us here. Our SEDA certified Solar Engineers will get glad to respond to any questions you may have.