Distributing power of a solar plant over many apartments is much more complex than installing solar panels on an individual house or on a lawn in Brandenburg. All units who want shared solar power are behind one common electricity meter, so you need additional smart meters to constantly detect and record how much solar power comes from the roof and who’s using it – and how much power comes from the grid and who is using that. Because of this problem of bringing solar power to large apartment buildings, the government subsidizes the additional costs of installing/metering/billing with currently 2.4 ct/kWh (the Mieterstromzuschlag).

Each owner/tenant (as well as the WEG for Hausstrom) has the option of switching to our PV plant as their only electricity provider. Whenever the sun shines, those units get power from the roof. When the sun doesn’t shine, additional electricity is bought from the electricity grid as needed.

All owners/tenants are of course free to switch back to another electricity provider if they no longer wish to get Mieterstrom/solar power.

Note: If you rent out your unit, you cannot force your tenant to use solar power. Tenants have a legal right to freely choose their own power provider.

Mieterstrom is currently the best fit for our building. However, the relevant laws and regulations can change, so it might in the future make sense to switch to a different model. Let’s hope that the government will keep introducing legal innovations to make solar power as hassle-free as possible 😉

The actual Mieterstrom price will depend on quite a number of factors – most of which can change and are hard to predict – but some we can influence.

There are however three points to keep in mind:

1. Mieterstrom must by law always be 10% cheaper than our local primary electricity provider (Grundversorgertarif). So even though the price cannot be predicted exactly, all units switching to Mieterstrom have a legal guarantee that despite inflation etc, their price will never exceed that of Vattenfall Basis privat (or whoever will happen to be our Grundversorger in 15 or 20 years).
2. You always remain free to switch to another electricity provider of your choice, if you don’t the like Mieterstrom price offered.
3. Those who financially participated in the initial investment for the solar power plant will receive a financal compensation for their investment (either annual revenue share, or contribution to the building’s maintenance fund in their name). This financial compensation offsets your electricity bill, leading to an even lower effective electricity price for all those who fiancially contributed.

Here’s a few of the factors influencing future Mieterstrom prices:

• How much additional electricity will need to be bought from the grid – and at what time of day?
• How expensive will it be to buy additional power from the grid?
• Do we want all additional grid power to be 100% renewable?
• How many units will choose to switch to Mieterstrom?
  If no-one switches, all produced solar power will have to be sold to the grid (for 6 ct/kWh, but limited to 20 years) and the solar plant will operate at a loss!
  To be profitable, we need to make sure that most of our solar power is actually used within the building, ie. we need a good participation rate in Mieterstrom (because the more units participate, te less solar power will need to be sold to the power grid at a loss).
• How “aware” will Mieterstrom consumers be in their electriciy usage? Will they be mindful to consume electricity whenever possible during sunny times?
  In the worst case, everyone uses zero power during sunny daytime, but at night everyone starts mining crypto and charging their cars 😉 In that scenario, all Mieterstrom will have to come from the power grid, and the Mietestrom price will have to be raised to be around whatever the grid power price is at a given time…

The panels will mostly be invisible. They will be installed on mounting racks on the roof at a pretty flat angle (around 12°). So unlike older PV panels (which were mounted mostly around 35°), our panels mostly won’t be visible on the roof (unless you maybe are located on the top floor) – check out those images of similar projects in Berlin:

Cables from the panels to the basement electricity rooms will be mostly invisible. Depending on the garbage room decisions, we might have unused utility shafts inside the building where the necessary cables can go (these shafts are currently being used for garbage room “ventilation” but would be available if we construct an open-air garbage room). If that should not be possible, we can place the necessary cable ducts on the facade facing the S-Bahn. Only if all those other options fail would we need to install a cable duct on one of the street-facing facades.

Background info: PV panels used to be installed at a rather steep angle, to maximize energy produced. Such panels produce most power at noon. That made sense back in the good old days, when you could still make a profit selling power to the grid.
These days however, a power plant like ours will sell power to the grid at a loss – and it will be profitable only, when most of the produced power is used within the building by its residents. You need a good match between production and use. However, typical residents mostly need power in the mornings and evenings, so steep panels are a bad fit. Flat panels in contrast will produce a bit less power overall, but but have the massive advantage of producing power when you need it (i.e. in the morning + evening) instead of producing power when you need to sell it to the grid at a loss.

PV panels keep getting cheaper – and we don’t have clarity yet about the insolveny.

Shouldn’t we maybe wait with the solar power project until …
(insert your favorite timespan here, like: until we know how much we need to pay to fix building defects, until we have actually fixed all building defects and are in the Grundbuch, until my bank loan is paid back, …

If you think waiting is a sensible option, consider the following points:

1. We are a very large WEG and there will never be a point in time where all WEG members will agree that it is convenient to invest now. That’s precisely the reason why we want to offer option 2 (voluntary investment).
2. From a purely financial standpoint, the right moment to invest is now, since the project is profitable and there is no reason to expect that profitability will dramatically improve within the next 1-2 years (in fact, the contrary is the case, see below).
3. While we wait, we don’t earn a return on our initial investment and we don’t produce cheaper energy for everyone living in the building.
   If for example we wait for only two years, the power plant would in those two years have earned back 30% of its 105.000€ investment (€31.500) AND would have produced around 157.000kWh of power. Assuming we sell 140.000kWh of that power as Mieterstrom to people in our building at a 9 cent discount compared to what they would have paid for grid power, the savings for inhabitants over those two years amount to another €12.600.
   So waiting two years costs us an estimated €44.100

In addition, there are currently a number of very advantageous government subsidies that we risk losing unless we “lock them in” now. The German government currently has two important subsidies in place, that improve profitability and reduce risk for our solar plant. However, due to budgetary problems, the finance minister has already announced that he wants to terminate those subsidies as quickly as possible (details here and here) – so if we wait for a year, chances are that we will no longer benefit from these two subsidies:

• a fixed price for selling power to the public grid (Einspeisevergütung) that is currently guaranteed for the next 20 years! So if we build now, we have a government-guaranteed price for our excess electricity during times when we can’t use up all our solar power within the building (e.g. in summer when everyone is on vacation…). In the future, negative electricity prices will become more and more common during peak solar power production hours.
• an full VAT/MwSt exemption for all PV components is currently in place, but it expires at the end of 2025 (details). To qualify for the exemption, a solar plant must be completed and handed-over in 2025. Given that it takes approx. 6 months from WEG decision to hand-over of the finished solar plant, we need to order a solar plant now to lock in the 19% price reduction. If we buy at a later point, we will probably have to pay an additional €20.000 in VAT/MwSt.

Why should I invest in cheap solar energy, if my tenant is the one who benefits from lower electricity prices?

The good news is: the Mieterstrom model (as the name suggests) was designed precisely for a scenario where an owner pays for a solar plant and sells the produced power to his/her tenant. This creates a win-win situation: the owner receives an additional stream of income (from electricity sales) and the tenant enjoys lower utility fees.

Note however that German law doesn’t allow you to force your tenant into the Mieterstrom model. Your tenant always retains the right to freely chose his/her electricity provider (but of course choosing Mieterstrom will in most cases be one of the cheapest possible options).

Operating the power plant requires quite a bit of work: not only are the one-time and recurring regulatory requirements to fulfill (like registering the plant), but someone needs to handle the Mieterstrom paperwork (signing on new tenants, generate and send invoices, track payments for all participating units), buy grid power as needed, apply for the Mieterstrom subsidy, handle possible Gewerbesteuer duties, keep proper books, calculate and handle annual payouts to investors, monitor the operation of the plant, conduct regular maintenance, replace defective parts, etc.

Option 1: Outcontracting (required if WEG invests)

Due to the required workload and specialized knowledge to operate the plant, we cannot expect the Hausverwaltung to do it. Therefore we have selected Alva Energy as partner to handle all those responsibilities. They will rent the power plant from us (either the WEG or the investing WEG members) and handle everything related to Mieterstrom. They take a 20% cut of profits for their service and there is no extra work for the WEG or the Hausverwaltng.

Key advantages of this option:

• Alva will also build the solar plant with their own construction team at a fixed price. We don’t have to deal with several companies (one builing the plant, another with operatin it) but only with Alva. In addition, Alva will out of self-interest ensure that the plant is constructed in such a way that it will operate trouble-free for the next 20-30 years.
• Alva manages many similar solar plants, so when additional grid power is needed, Alva can buy power for many properties at once it in bulk – at lower prices.
• Alva is a pretty innovating company with a young leadership team, so if there are future technological or regulatory changes, we can expect they will be fast to offer an adusted product to us (e.g. having our plant participate in a virtual power power plant/energy sharing schemes, or selling excess solar power to car charging points operated by Alva instead of selling it to the grid).

Cost: €6/month/meter, plus 20% of annual EBITDA (roughly €4000/year)

Option 2: DIY (only available if individual owners invest)

If the WEG fails to invest but instead choses to permit a group of voluntary owners to invest in the solar power plant, then outcontracting to Alva is the preferred option of the PV planning team.

However, another option would be that we (instead of an external company) handle the day-to-day operations of the plant. We cannot buy the plant from Alva, but would hire a company with only the construction of the solar plant. We would then license a specialized software portal (like Metergrid) to collect data from all smart meters in the building every 15 minutes. This software portal will continuously track how much solar power is produced – and who consumes it. With this usage data, one/a few members of the investing group could volunteer to handle all necessary correspondence/billing/tracking payments/renewing the grid power contract for residual power on a regular basis etc. This/these people would of course need to be paid for their substantial work, but chances are, the overall cost might be lower then the 20% profit cut that Alva is charging.

Cost: €5/elecricity meter/month for the software portal, plus salary for owners handling the remaining tasks.

The big tempting selling point of such offers is, that zero investment and effort by the WEG is required, since an external company takes care of planning, financing, building and operating the solar plant.

PV planning team has evaluated such offers during their research, see e.g Berliner Stadtwerke.

However, even thought this looks like a win-win situation, the external company wins a lot more than the WEG members. This actually makes sense, because whoever shoulders the financial risk and financial burden will reap the majority of the resulting benefits.

We want as much of the solar plant’s benefits to remain within the WEG – instead of flowing to Vattenfall or some Stadtwerk… For that reason, we have NOT pursued this option further.

When you compare those full-service Mieterstrom offers with the benefits of owning the solar plant ourselves over 30 years, it is easy to see why letting an external company build a solar plant on our roof is a terrible deal:

• External company pays for the solar plant: We get Mieterstrom 10% cheaper guaranteed than Grundversorgertarif, BUT Berliner Stadtwerke currently charges €31ct/kWh for Mieterstrom from a solar power plant they operate on an apartment building!
  Some companies offer an annual rent payment for the roof on top. Assuming an annual payment of approx. €3000, the WEG will receive approx. €100.000 over 30 years. The external company who invested in the solar plant in contrast is expected to walk away with a return of €400.000 – 570.000 on their investment.
• We (the WEG or individual owners) pay for the solar plant: We get Mieterstrom 10% cheaper guaranteed than Grundversorgertarif (Alva current calculation is based on 0,24ct/kWh). We also are expected to earn €500.000 – 670.000 on our investment.