In an era where energy efficiency and sustainability are paramount, the role of solar energy in revolutionizing the way we power our buildings cannot be overstated. Multifamily buildings, in particular, stand to benefit immensely from harnessing the power of the sun. As the demand for affordable and environmentally friendly housing continues to rise, finding innovative ways to reduce operating costs while minimizing our carbon footprint has become a top priority. While many multifamily property owners view investing in solar as an added expense, when done well, solar can actually reduce operating costs for your property. In this blog post, we will explore how solar energy can be a game-changer for multifamily buildings, not only in terms of financial savings but also in promoting a cleaner and greener future for generations to come.
How Solar Power Reduces Operating Costs
The long-term financial benefits of solar power are undeniable, with many multifamily building owners experiencing a remarkable return on investment as savings accumulate over time. By embracing solar power, property owners can unlock a cost-effective and sustainable approach to powering their buildings, making a positive impact on their bottom line while contributing to a greener future. Below are the key ways switching to solar power helps property owners cut down on operating costs.
Reduces Electricity Costs
Utilities often make up the largest portion of a property’s operating costs. Although residents usually pay for their utilities, multifamily building management must pay for utilities used in public or shared facilities. Solar energy can offset common area electricity for parking lot and landscape lighting, office and other shared space lighting, as well as common area electric heat, AC, and water heating.
By harnessing the abundant energy from the sun, property owners can significantly cut down their reliance on the grid, resulting in substantial savings and mitigating the impact of rising energy prices. Solar power eliminates or greatly reduces monthly electricity bills, offering a stable and predictable energy source.
Increases Resident Retention and Marketing Value
Multifamily buildings rely on residents for income, and thus, must promote and advertise the property to fill in vacancies and reduce turnover rate. A solar-powered property with lower utility bills is attractive to potential residents and is also more likely to retain current residents. Thus, having solar power serves as a form of marketing and cuts down on vacancy costs due to increased retention, more word-of-mouth marketing, and a sustainable amenity that helps your property’s ads stand out in a crowded market.
Lowers Tax Liability
Multifamily solar provides an effective means of reducing tax liability for multifamily building owners. Governments at various levels have recognized the importance of promoting renewable energy adoption and have implemented tax incentives and credits to encourage the installation of solar panels. One of the most notable incentives is the federal Investment Tax Credit (ITC), which allows building owners to claim a percentage of the total solar system cost as a credit against their federal tax liability. The current ITC rate is 30% until 2033, and multifamily buildings can qualify for an even higher percentage through special bonus programs. The domestic content bonus can increase your ITC by 10% if you meet the requirements of using materials made in the USA. Furthermore, multifamily buildings in low-income communities can add another 10% to their ITC, and those who equitably share the solar benefits with residents can add another 20% to their ITC.
Additionally, some states offer their own incentives, such as grants, rebates, depreciation, or property tax exemptions, further reducing the financial burden. These tax benefits not only offset the initial investment but also help accelerate the payback period, making solar power an even more attractive option for multifamily building owners.
Generates a New Net Operating Income (NOI)
The electricity industry has been a monopoly for many years, but onsite solar has changed that. Multifamily building owners can now own their own “virtual power plant”. With the support of Virtual Grid software, the solar on your multifamily building can not only reduce operating costs but also increase revenue with a new NOI. By installing solar panels, building owners can generate their own renewable energy on-site at a low levelized cost. Then, thanks to Virtual Net Metering, the solar power and its benefits can be shared with residents at a price up to the current utility rates. This results in an average of $500 to $1200 of new NOI per unit annually (depending on location).
Implement Solar Energy for Your Multifamily Building with Ivy
The goal of any multifamily building is to have high rental income and low operating expenses. By switching to solar energy, significant operations costs are reduced while providing savings to residents and value to your property. Moreover, solar power installations are often seen as value-added features by prospective tenants, allowing building owners to potentially command higher rental rates and attract environmentally conscious residents. In fact, a survey found that 75% of US adults are willing to pay more for sustainable products.
This combination of increased income and reduced expenses leads to a positive impact on the property's overall financial performance and enhances its long-term investment value. Embracing solar power not only reduces operating costs but also generates a new stream of income, positioning multifamily buildings for greater financial success in an increasingly sustainable and energy-efficient world.
Reduce your building’s operating costs with solar energy. Get a free demo of Virtual Grid today!
Pioneering the Future of Multi-Tenant Solar Energy Management
2024 was a trailblazing year for Ivy Energy, where we shattered barriers, redefined possibilities, and delivered innovative solutions to address the multi-tenant solar split incentive challenge. By driving product advancements, forging impactful partnerships, and scaling operational processes, we empowered multi-tenant properties to embrace clean energy with confidence.
A Year of Growth and Market Expansion
Ivy has grown its active project pipeline 450% compared to 2023, with a line of sight to clear +600% in active projects by the end of the year. Our tech-enabled solutions empower more communities than ever. With $18M in Series A funding (Read more) and the strategic acquisition of Glow Energy (Read more), we are poised for unprecedented growth and impact. This investment enables us to enhance our technology, streamline operations, and expand our reach into new markets nationwide.
Entering new markets with increased resources allows us to address diverse energy challenges and deliver tailored solutions to property owners and tenants. Additionally, the launch of our consulting arm provides expert guidance for our clients and partners to save money and enhance ROI while navigating intricate solar investments.
Meaningful Operational Updates
At Ivy, innovation isn’t just about technology—it’s about creating digital tools that empower our clients and their tenants:
- PropTech Integrations: Partnered with RealPage, Entrata, and Yardi to automate rent roll syncing, move-in/move-out updates, and direct charge posting to resident ledgers. These integrations reduce monthly processing time by up to 2 hours per property while enhancing data accuracy and operational efficiency.
- NEM Credit Delay Optimization: The Utility Coordination team adopted the CPUC informal complaint process to reduce delays in NEM activation after PV solar system commissioning. This improvement cut the average resolution time for delayed NEM credits from 123 days in 2023 to 49 days in 2024, allowing property owners to see Net Operating Income over two months sooner on average.
Platform Advancements that Lead the Industry
Our engineering team broke new ground, ensuring our platform stays ahead of the curve:
- Migrated to a new infrastructure processing system for faster processing and further automation improvements across operational features.
- Introduced IvyDual in response to regulatory requirements in California, which allows us to enter new markets where consolidated billing is not viable.
- Achieved SOC 2 Compliance, reaffirming our commitment to data security. (Read more)
- Built initial public API for Conservice integration and new utility data access pathways, strengthening our platform’s versatility and reliability.
Empowering Positive Experiences with CX
At Ivy Energy, our customers rely on us as true partners in their clean energy journey, helping them achieve long-term NOI growth while providing exceptional support for property owners and tenants. We consistently deliver this experience by simplifying complex utility processes and offering our white-glove service that ensures our clients feel supported, informed, and empowered to succeed. This year, Ivy’s Customer Experience Team launched two significant platforms:
- Ivy Implementation Portal: A step-by-step, transparent portal that simplifies solar implementation for our clients and partners across multiple organizations. (Watch a walkthrough of the new portal here.)
- Resident Help Center: Educate tenants about the solar program with helpful resources and offer direct support online or by phone. (Explore the Help Center)
Shaping the Future Through Thought Leadership
In 2024, Ivy Energy reinforced its position as an industry leader; our Virtual Grid 3.0 impressed the judges and earned first place in Solar Power World’s “Best in Show” award for large-scale solar innovation. (Read more)
Leadership team members Alex Dogan, Tanya Kuhn, and Sean Nam were celebrated in San Diego Business Journal’s Leaders of Influence in Technology 2024 for their contributions to advancing sustainable energy. (Read more) Ivy was also featured in Alt Energy Magazine (Read more), San Diego Business Journal (Read more), and on Solar Academy. (Read more)
Logan Carter showcased Ivy’s groundbreaking innovations in a main stage speech at Cretech NY (Watch here), an engaging appearance on the IMN Podcast (Listen here), and a deep-dive interview with Chris Moreno, also known as “Mr. PropTech.” (Watch here) Ivy’s policy team further expanded its influence by authoring a Model VNEM Whitepaper, a critical guide to enabling multi-tenant solar models nationwide. (Read the Whitepaper).
Measurable Environmental Impact
This year, Ivy Energy amplified its environmental contributions, with contracted units in implementation set to offset an astounding 109 million pounds of CO2. Meanwhile, active units have already offset 9 million pounds of CO2, demonstrating our ongoing dedication to reducing carbon emissions.
Looking Ahead to 2025
As we celebrate 2024’s successes, we are always looking to the future. In 2025, we’ll continue to push boundaries, deliver innovations that empower our clients, improve tenant experiences, and lead the multi-tenant housing sector toward a sustainable future.
A Message from Dover Janis, CEO of Ivy Energy
“2024 was a year of progress and adaptation. While utility-caused delays challenged our growing pipeline, our focus on agile problem-solving reduced their impact and kept the market moving forward. This is a testament not only to the dedication and focus of our team but also to the strong macro-level foundation that the onsite energy business model provides for real estate owners, even in the face of monopoly-driven resistance. With a large and expanding customer base and hundreds of projects, we have continued to validate the transformative potential of clean energy solutions for shared communities. I’m incredibly proud of our team—now among the most mature, knowledgeable, and experienced in the industry—as we trail blaze the path forward. The market is primed to grow and drive transformative change in local communities. I’m deeply grateful to our partners and customers, whom we have the privilege of serving every day as we continue to lead the way.”
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