Article by:

Nikki Chi and Austin Young

Topics:

Research

Published:

October 3, 2023

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Leveraging Solar: A Guide to Increase Property Value for Rental Properties

Switching to solar energy to power multifamily rental properties is becoming more attractive for property owners and investors. Installation costs continue to decrease due to innovative systems and low financing rates. Property owners can also avail of solar tax credits, CapX deductions, rebates, and other incentives, all while they and their residents enjoy utility cost savings. And on top of these benefits, going solar has been reported to significantly increase property value. This post looks into the ways you can leverage solar and maximize the value it adds to your rental properties.

How Solar Energy Increases Rental Property Value

A study published in the Appraisal Journal of the Appraisal Institute, the nation’s largest association of real estate appraisers, reports that properties with solar systems are sold at more premium prices than non-solar properties. Furthermore, the study calculated that property values increase by around $20 for every $1 utility savings through solar. However, there are many more ways that solar increases rental property value:

Low Energy Cost and Reduced Carbon Emissions

Solar-powered multifamily properties attract residents with the prospect of paying lower utility bills while reducing their carbon footprint. Although rent in solar properties is higher than in non-solar, studies have found that people are willing to pay more for sustainable options. Even residents in low-income housing categories are willing to pay a higher rent for the eco-friendly benefits and the savings, albeit long-term, they will get from choosing solar.

Also, solar power is not only cheaper but more stable than grid-based power. The stable solar rates mean that residents in solar-powered rental properties will experience fewer rate hikes in their utility bills. Stable utility rates result in higher resident retention, lower turnover rate, and consequently, higher property value.

Energy Efficiency and Better Weatherization

Switching to solar makes rental properties more energy efficient. High energy efficiency means less reliance on the grid and better weatherization or better protection from heat, humidity, ice, and other elements. These characteristics make multifamily buildings naturally attractive to residents, thus increasing their value.

Faster and Easier Resale and Attraction of Investors

Real estate investors, ESG-minded (Environmental, Social, and Governance) ones in particular, also place a high value on properties with energy efficiency and better weatherization. Investors and property buyers are likely to invest in properties that have an in-house supply of clean energy and can stand strong against the elements. Investors also value solar-powered properties for the substantial tax credits and incentives they can avail of upon buying them.

Enhanced Marketability

Solar-powered properties make it easier for real estate businesses to promote their products, services, and brand image. This is because the majority of Americans are environmentally conscious, have a positive attitude towards living sustainably, and view living in solar-powered homes as the easiest path to sustainability.

The National Renewable Energy Laboratory (NREL), a government-funded research center, reports that 8 out of 10 Americans want home builders to offer solar power options. And half of those surveyed are even willing to pay up to 10% more for a solar-equipped property. Thus, rental properties running on solar power have a better chance of standing out in the crowded market. On top of that, the added clean energy amenity allows you to offer a higher rent to compensate for your solar investment.

How to Maximize the Added Value of Solar

Although it has been proven that solar increases the value of a property, the degree of this increase can vary according to the property size and location, applicable state and federal policies, the abundance of sun power, solar system specifications, and many more. We recommend taking the steps below to ensure that you maximize the added value of solar in your rental property.

1. Consult with an NREL-qualified energy auditor or contractor.

Doing solar right for multifamily properties starts with talking to the right people. An NREL-qualified energy auditor or contractor will help you identify your business goals and evaluate whether these goals align with your building requirements for solar. It’s easy to get the cheapest quotes for a solar system, but getting the wrong system for your building or business goals will only jeopardize your goal of increasing your property value.

2. Build a business case.

Thorough planning lets you evaluate your options and manage potential risks. Noting the recommendations from the energy auditor or contractor, write a detailed business case to jumpstart your solar project. Your business case for going solar should include the following:

Positive and negative cash flows
Potential risks and how to manage them
List of financial incentives and the requirements to avail of them
List of financing options, including private and government-offered

If you’d like some expert guidance on the revenue possible from adding solar to your multifamily rental property, click here to request a Solar Revenue Estimate.

3. Always stay up to date.

The solar power industry is always evolving. The ever-changing technologies, policies, billing, maintenance, and other areas result in a solar landscape that is not the same as in past years. Staying up to date with the current and future solar landscape will help you take advantage of more solar benefits that increase your property’s value.

To illustrate, less than a decade ago, multifamily property owners were rejecting solar because of the high investment and seemingly residents-only benefits of utility savings. But with the development of policies like Virtual Net Metering (VNM), property owners can now monetize their solar assets. With the help of innovative solutions like Ivy’s Virtual Grid software, your rental property has the opportunity to generate a new NOI (net operating income) and transparent energy billing for residents.

Leverage Solar with Ivy Energy

The rental property business is yet to utilize solar power to its maximum benefit. As discussed above, increasing your property value through solar is possible with the proper steps. And with additional support from Ivy Energy, the door is open for property owners to simplify the process of increasing property value through solar. Ready to increase your property value with solar energy? Request a free demo from 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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