Disclaimer: All statements regarding the planned PV power plant and its financials are projections/estimates. The PV planning team has contacted many different companies and conducted on-site inspections with three companies. All offers/planning documents/economic forecasts are available in our shared Google Drive (see folder GET Umbauten/Solaranlage).
Alva Energy has provided the most detailed economic analysis for our project and their calculations are the basis for most statements here.
Note that almost all estimates below are based on an annual inflation rate of 3%.
In several places, I have adjusted Alva numbers a bit down, to err on the side of caution, e.g.
Rate of return: 17% 🡖15%
Make that roof work for us!
Our building spends collectively over €120.000 every year on electricity.
We could produce about 20% of that power on our own roof!
Building a solar plant ensures that a good portion of our annual electricity payments will flow back to us, instead of going to power plant owners, grid operators and government taxes…!
Key facts about the PV project
Profitability: 📊
The investment should pay for itself within 7 years.
Expected lifetime of the solar plant is 30 years.
Expected rate of return is approx. 15%
Cumulated 30 yr. EBITDA is approx. €600.000.
Total investment: 💰
One-time investment of approx. €105.000 (including components, installation, necessary changes to electrical meters etc).
We might qualify for subsidies from the city of Berlin through the SolarPlus program.
No additional investments should be necessary in the future – all operating costs are covered by selling the produced electricity.
However, an additional investment might be required in the future, IF and only if we decide we want to add battery storage to further improve profitability.
Cost for each owner: 💶
€270-€1300 per unit.
Alternative: only voluntary investments, €1000 minimum.
Power produced: ⚡
78.000 kWh/year
Construction time: 🗓️
approx. 6 months
Operating model: §
“Mieterstrom“. Basically a model to produce power on large apartment buildings and distribute it to all residents (whether owner or tenant – the name is a bit misleading).
Each unit can freely choose to receive solar power whenever available (and grid power otherwise) – or to use a regular electricity provider.
This model is profitable, if most electricity produced is used within the building (instead of being sold to the public power grid).
Details in FAQ below.
How will the solar power be used? 🔌
Solar power will be made available to every electricity meter in the building:
- The WEG can use it for elevators, hallway lights, all house systems like heating, water pumps, fire/smoke detectors, ventilation, etc.
- Each owner or tenant can decide whether to buy solar power for their unit (cooking, fridge, TV, computer, …)
- Parking spot owners can use solar power to charge their electric cars (might require additional investments in a wall box)
Any excess solar power that cannot be used within the building will be sold to the public power grid.
How much will electricity cost? 🧾
Alva is calculating with a Mieterstrom price of currently 24 ct / kWh (plus a fixed fee of around €10/electricity meter/month). At such a price ad with 75-100 units participating in Mieterstrom, we can recoup the initial investment and cover all operating costs. For details on price factors, see FAQ.
Key advantages of a solar power plant ✅
- Cheaper electricity for everyone in the building!
Power from our roof comes witout any VAT/electricity taxes or grid fees. We even get a small government subsidy for every Kilowatthour produced and used locally! - All owners (whether they invested or not) enjoy lower monthly costs:
- directly (by switching their own unit to cheaper Mieterstrom)
- indirectly (through lower Hausgeld, since the WEG can buy cheaper electricity as well)
- Additional income stream from electricity sales – tax free!
The PV plant will earn an estimated return of approx. 15% in the form of annual payouts from electricity sales. If the WEG invests, it is expected to collect over half a million EUR over the next 30 years! Those funds can either be put into our renovation&maintenance fund of our building, or paid out to owners. Earnings from selling solar power are currently exempt from income tax! - We reduce CO2 emissions and help combat the climate crisis.
- We increase the value of our building. The availability of cheap solar power makes our building more attractive to potential tenants.
- Check your electricity use online anytime! Electricity meters will be upgraded to smart models who will send their data to an online portal. No more calling the Hausmeister to get access to the electricity room in the basement…!
How will the solar plant be financed?
The PV planning group has researched two different ways of distributing the overall investment – each with their advantages and disadvantages which are presented below.
Option 1: ALL owners have to invest
-> the WEG owns the solar power plant
The solar power plant can be owned by the entire WEG. In that case, everyone has to contribute his/her share of the initial investment in relation to one’s ownership share (MEA, Miteigentumsanteil).
For a rough estimate of your obligatory investment, multiply your MEA with a factor of 1,2 to get the EUR amount:
- Invest per apartment (MEA of 420-980): ca. € 500-1200
- Invest per microapartment (MEA of 220-485): ca. €270-600
- Invest per parking spot (MEA 100): ca. €120
According to German law, the WEG can decide that all owners have to contribute their shared of an investment in the building by simple majority – as long is the investment pays for itself within a reasonable time (see WEG §21 (2) 2.)
However, while legally possible, a majority forcing a minority to invest is not ideal – even if the investment looks highly lucrative for the building in the long run. Waiting for a few years unfortunately isn’t a good option either (see FAQ below for details why this is so).
To ensure that our building can enjoy the benefits of a solar power plant – even if some owners would prefer not to invest, the PV planning group has developed an alternative financing option, that relies only on voluntary contributions instead:
Option 2: Investment is voluntary
-> a group of WEG members owns the solar power plant
In this option, the WEG doesn’t invest, but simply gives permission that a solar plant can be built on the roof. Each owner can then decide him-/herself, whether to invest (and if so, how much).
In this scenario, the solar plant will not be owned by the entire WEG. Instead, those WEG members willing to invest form a separate legal entity with every investing owner becoming a shareholder of the new legal entity. This legal entity will become the owner of the solar plant and assume all risks and responsibilities. The WEG assumes no rights or responsibilites in this scenario – it just gives permission for a solar plant to be built and everyone in the building get access to solar power if they choose to become Mieterstrom customers.
The main advantage of option 2 (voluntary investment) is how it deals with owners who would prefer NOT to invest. Unlike in option 1, those owners are not forced to make a financial contribution, but they will STILL enjoy some benefits of the solar plant: they enjoy lower Hausgeld because the WEG can buy cheap Mieterstrom from the solar plant AND they gain the option of switching their own unit to cheap Mieterstom. Non-investing WEG members get these benefits in exchange for permitting the construction of a solar plant on the roof they co-own.
Option 2 therefore distributes both the investment burden AND the financial advantages unequally amongst the WEG members – but does so on a voluntary basis. Everyone gets the basic benefit of cheaper elecricity, but only those who take on extra cost and risk get the additional benefits of annual payments (their share of all the solar power produced and sold).
If you decide to voluntarily invest and become a shareholder of the new legal entity, it involves the following:
- investing a minimum of €1000 or more (a minium invest amount is required, because creating and running an entrepreneurial legal entity with a lot of members who have made only tiny investments but still have to be included in all decision-making is costly, conflict-ridden and ineffective).
- assume all entrepreneurial/financial/legal risks associated with owning a solar power plant (see below).
- depending on the chosen legal structure, you might also become liable for your other member’s share of total liability (gesamtschuldnerische Haftung). All those interested in investing will have to jointly hire a lawyer and tax advisor to figure out which legal structure is best suited for the purpose of jointly owning a solar plant and how to contractually regulate their enterprise (what happens if someone dies/what happens if someone sells their unit/etc). However, it is the sole responsibility of this subgroup of owners to figure out those details – not of the WEG.
Key Risks 🚨
As with every investment, building and owning a solar plant comes with certain risks. Some risks will be covered by insurance (the price of a PV plant policy is already included in our calculations) – but there are other risks that the owners will have to assume. Here are some possibilities that prospective solar plant owners should consider:
- The sun stops shining 😉
- Some components can break, requiring repairs/replacements
- Not enough units switch to Mieterstrom to make the model viable
- A future government could impose additional costly legal/regulatory obligations on the owners of solar plants
- If German electricity prices should go down, our PV plant won’t be as profitable as planned
- At the end of its life time (solar plants currently have a warranty of 25-30 years but typically can operate for much longer), the owners of the plant will have to pay for removing and recycling the solar plant at their expense – and ensure compliance with all regulations that will be in place at that time.
Proposed resolutions – Beschlussvorlagen
For the full text of the proposed resolutions, see the invitation letter/agenda for our next owners meeting (TOP 10). Here is a shortened overview with a quick explanation:
TOP 10.1 – The owners decide that we want a solar plant on our building – and authorizes the use of the roof for that purpose (along with all other necessary electrical works etc) – on the condition that the produced power is offered to everyone in the building.
TOP 10.2 – Financing option 1: compulsory investment by all owners. Advantage: everyone benefits, WEG becomes the owner the solar plant, easy to organize. Disadvantage: those owners who don’t want to invest are forced to do so by the majority.
TOP 10.3 – Financing option 2: voluntary investment by owners. Advantage: since investment is voluntary, only those invest who would prefer to do so. The solar plant can be realized even if a sizeable minority is unwilling to invest – thus realizing the benefits for everyone. Disadvantage: more difficult to organize, benefits are spread unequally amongst the owners based on whether they choose to invest or not.
FAQ
How does Mieterstrom work?
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 😉
How much will Mieterstrom cost in the future?
The actual Mieterstrom price will depend on quite a number of factors – most of which are hard to predict – but some we can influence.
There are however three points to keep in mind:
- 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).
- You always remain free to switch to another electricity provider of your choice, if you don’t the like Mieterstrom price offered.
- 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?
- 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: the more units participate, the 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 adjust their electricity consumption to match solar production times as much as possible?
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…
How will the visual appearance of the building be affected?
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.
Shouldn’t we wait with installing solar power until a later time?
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:
- 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).
- 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).
- 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 145.000kWh of that power as Mieterstrom to people in our building at a 6 cent discount compared to what they would have paid for grid power, the savings for inhabitants over those two years amount to another €8.700.
So waiting two years costs us an estimated €40.200 - Waiting/the status quo means financially: around 120.000€ in annual electricity payments (and the resulting profit) wont go to us, but to Vattenfall/Eon, power grid operators and the government.
In addition, there are currently a number of very advantageous government subsidies that we risk losing unless we “lock them in” now. With fiscal tightening and elections coming up in Feb ’25, it is very likely that the current generous subsidies will either be eliminated or dramatically scaled back (details here and here). If we wait, 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.
Should I invest in a solar plant if I’m renting out my unit?
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 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). There is no need to convince your individual tenant though, because the produced solar power can be used by all/other people in the building.
Who will handle all the work related to operating the solar power plant?
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: around €25.000 initial investment in meter infrastructure and set-up fees (included in Alva’s offer, but not included if we go the DYI route), plus €5/electricity meter/month for the software portal, plus salary for owners handling the remaining tasks or another €4/meter/month for billing service provider.
External companies offer to build solar plants on apartment buildings using their own money – isn’t that also a good option to consider?
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. So letting other companies invest is the option for “lazy” WEGs – and it means that most of the profits go elsewhere.
We want as much of the solar plant’s benefits to remain within the WEG – instead of flowing to Vattenfall or Stadtwerke Berlin… For that reason, we have NOT pursued this option further.
When you compare those external Mieterstrom investment offers with the benefits of investing in the solar plant ourselves over 30 years, it is easy to see why the external option is a terrible deal:
- External company pays for the solar plant: The Mieterstrom pricing of external investors is rather unattractive – you can often find similar or even better prices on check24.de – For instance, if we let Berliner Stadtwerke build a solar plant on our building, our Mieterstrom would costs around 30ct/kWh, see Berliner Stadtwerke
Some companies offer an annual rent payment for the roof on top. However, this is the option for WEGs that are not only “lazy”, but also “stupid”: with such a payment, WEGs feel be proud to “get” something from their roof – not realizing that they will be the ones who in the end is financing this payment: a high rent for using the roof will directly affect the electricity price for the inhabitants. Assuming an annual payment of €3000, the WEG would receive €100.000 over 30 years, but the external company who invested in the solar plant will reap the bulk of the return on their investment. - We (the WEG or individual owners) pay for the solar plant: Alva currently offers Mieterstrom in their existing projects at around 26-28 ct/kWh, check their pricing at www.karlssonn.de. We also are expected to earn €500.000 – 670.000 on our investment.
Who is Alva – and why did you choose them to build & operate our solar plant?
Alva Energie is a Berlin company that was recommended to us by an industry contact. They were quick to respond to our initial request, provided a fast and accurate analysis, and most importantly: they have a very fair business model.
What kind of long-term commitments does the decision for a solar plant imply?
There are two long-term commitments:
However, there is NO commitment towards a specific energy provider implied – neither for the WEG nor for the individual units in the building. Everyone remains free to switch to any electricity provider of their choice. Alva is merely providing the service of operating the plant (i.e. metering, billing and purchasing additional grid power as needed).
Where can I find additional information?
- Detailed documents can be found in our shared owners google drive (see folder GET Umbauten/Solaranlage)
- Watch the video below of our video Q+A session from Sept ’24
- Have a look at the Alva presentation outlining both Mieterstrom and the related service package they offer for WEGs
- See Vincent’s presentation for a quick summary and more details on Alvas rentability predictions
- We will try to get the CEO of Alva to attend our WEG meeting to briefly present the project and answer any questions.