The tenant electricity model

In a narrow sense, there is only one in Germany Tenant electricity model. It is a concept for the direct supply of tenants in commercial properties or multi-family buildings with green electricity from local PV systems. The solar electricity generated is delivered directly to local consumers without going through the internal power grid. This direct power supply makes it possible to, Grid charges, Charges and Electricity tax to save money and significantly reduce electricity costs for tenants. At the same time, tenant electricity actively contributes to the energy transition by utilizing renewable energies locally and reducing CO₂ emissions.

The classic tenant model is based on the „Law to Promote Tenant Electricity and to Amend Further Provisions of the EEG,“ which Mid-2017 introduced as part of the Renewable Energy Sources Act (EEG). It was one of the first and remains one of the most important pillars in the decentralized energy supply. In the meantime, other models have also become established, which are also referred to more broadly as „tenant electricity models.“ These include, for example, the direct marketing, subsidiary, or Contracting-Model of B2B tenant electricity, onsite PPAs, or the customer plant model.

Legal Basis & History of the Tenant Electricity Model

The basis of the tenant electricity model is the amendments according to § 19 Paragraph 1 Number 3 in conjunction with § 3 No. 20, No. 50, § 21 Paragraph 3 and § 48a EEG 2023 as well as § 42a EnWG. In particular, the Renter electricity subsidy, which is enshrined in Section 21(3) and Section 48a of the Renewable Energy Sources Act (EEG), makes the traditional model particularly attractive. Additional provisions regarding billing and smart meter requirements can be found in the Metering Point Operation Act (MsbG). Key principles include the prohibition on tying (tenant electricity may not be tied to lease agreements), a price cap of 90% of the local basic supply tariff, and the physical proximity of the PV system to the consumers.

The story began with the Tenant Electricity Act of July 25, 2017, which was introduced as an amendment to the EEG and provided for the promotion of solar systems from July 24, 2017, and the Tenant electricity supplement created. Earlier approaches like own-electricity privileges or solar green electricity privileges existed but remained limited. Significant milestones included the EEG amendment in 2021 (introduction of the supply chain model), Solar package I 2024 (increase in investment limit to 1 MW, simplified metering concepts) and 2025 changes (abolition of the 100 kWp limit, mandatory smart meters).

How the classic tenant electricity model works

The classic tenant electricity model, also Enabling Model called, makes the owner of the property or the operator of the PV system the Energy supplier for its tenants. It allows solar power generated directly on-site from a photovoltaic system to be supplied directly to tenants or users in the same building or building complex. The electricity is generated by PV systems installed on the roof or in close proximity. The generated electricity is primarily consumed directly, with surpluses fed into the public grid and compensated for.

The distribution of electricity takes place within a so-called customer system, which avoids the use of the public distribution grid and saves grid fees and surcharges. Billing is done based on measured values, typically in quarter-hour intervals for each unit or tenant. The property owner funded and operates the solar power system and ensures the Standby power consumption. In return, for every kilowatt-hour sold to their tenants, landlords receive the tenant electricity surcharge, the EEG feed-in tariff, and the proceeds from the sale of electricity. Electricity prices may not exceed 90% of the local basic service rate in order to ensure that tenants receive a genuine financial benefit. In the commercial sector, however, this limit is waived and does not apply. 

Promotion & Profitability

The central support for the German tenant electricity model is the tenant electricity subsidy according to the EEG. It is paid for every kilowatt-hour that comes from a qualifying PV system and is supplied directly as tenant electricity to end consumers in the building (or in close spatial proximity). The subsidy amount is by plant size class staggered (e.g., up to 10 kW, up to 40 kW, up to 1,000 kW) and decreases with increasing output, but is typically in the range of roughly 1.5–3 ct/kWh and is used for 20 years granted from commissioning. It is currently 1.62 kWh For a PV system up to 1 MW, it falls below the EEG feed-in tariff because it represents an additional revenue stream beyond electricity sales. Cumulatively, this creates a support base intended to ensure the economic viability of investing in PV systems on multi-unit buildings.

The economic viability of a tenant electricity project fundamentally depends on three factors:

• Levelized Cost of Electricity from PV Systems (Capex, Opex, Financing)
• Achievable self-consumption rate in the building
• Difference between tenant electricity price and waived grid costs/levies.

Operators generate revenue from the sale of PV electricity to tenants (capped at a maximum of 90 % of the local basic service rate), from the tenant electricity surcharge, and from the feed-in tariff for electricity not consumed on site. These revenues are offset by investment costs, operating and billing costs, meter point operation, potential service provider fees, as well as risks associated with tenant turnover and vacancies.

The main obstacles to the economic viability of a traditional tenant electricity model are often organizational rather than technical: complex metering and billing systems, legal requirements (e.g., supplier role, balancing group management, prohibition on tying), and the effort involved in securing a sufficient number of tenants through contracts. For this reason, many stakeholders are turning to other standardized Contracting or supply chain models, in which specialized service providers handle operations, billing, and market processes, thereby reducing fixed costs and complexity per property.

Models & Variants

The Enabling Model is that Core Model of the EEG Support ProgramThe landlord or owner installs a PV system on the roof and supplies tenants directly with the generated solar power within a customer installation. The landlord takes on the role of the electricity supplier, concludes separate tenant electricity contracts, procures residual electricity from the market if necessary, and is responsible for billing and balancing group management. This model fully qualifies for the tenant electricity subsidy, but requires high administrative effort and meets strict requirements such as spatial proximity and price caps.

Cooperative model

A variation of the classic model is the Cooperative model, in which a tenant or homeowner cooperative finances and operates the PV system and collectively supplies the electricity to its members. In this model, the cooperative members share the investment, returns, and risks. The tenant electricity surcharge is usually not granted, but remains possible as long as EEG criteria are met. Provided the cooperative records only up to 30% of its revenue as income, its exemption from sales tax, trade tax, and corporate income tax remains in effect. This model is particularly suitable for committed communities in multi-family buildings with high levels of acceptance.

Models for larger PV systems

Other commercial models that are also applicable to larger PV systems (> 1 MW) with large battery storage systems are based on similar principles but are not classic tenant electricity models in the sense of the EEG and do not qualify for the tenant electricity subsidy. Here, Onsite Power Purchase Agreements PPAs, the Contracting- or Subsidiary model, if grid fees and surcharges are to be saved when operating PV systems over 1 MW on the same site by tenants. Formally, these models, which have sometimes been referred to as „B2B tenant electricity“ or „customer facility model,“ are simple direct deliveries within a property or neighborhood. The individual tenant contracts for the remaining electricity supply remain in place.

Communal building services

The one applicable since 2024 through the Solar Package I Communal building supply also enables communal PV usage. In contrast to the classic tenant model, the owner and operator of the PV system under 1 MW does not assume all the tasks of a power supplier and is not obligated to supply. They are only responsible for the PV electricity, and tenants have the freedom to choose their remaining electricity supplier. The EEG-subsidized tenant electricity surcharge is retained.

Model Overview

Metrological requirements for the tenant electricity model

For the implementation of a classic tenant electricity model, a suitable technical infrastructure and a clear metering concept are primarily required. The PV system must be installed behind the grid connection point so that the generated electricity is physically available to tenants first. Technically necessary are a generation meter for the PV system, individual consumption meters for all participating tenants, and a bi-directional meter at the grid interconnection point that records both the remaining consumption from the public grid and the feed-in of surplus PV electricity.

Allocation of energy quantities is done via a Balancing difference measurementFrom the PV generation and the feed-in measured at the grid connection point, it is determined what portion was delivered locally to the rental tenants. Depending on the project size, either classic sum counter models or Intelligent metering systems for use; the latter also enable automated data transmission and simplify billing. Additional systems such as battery storage or charging points require additional meter spaces but do not change the basic structure of the measurement concept. The prerequisite is always coordination with the grid operator and the legally compliant recording and transmission of all measured values.

Advantages and disadvantages for landlords

Landlords increase through the classic tenant electricity model Attractiveness and sustainability your property and achieve additional income through their role as a tenant electricity supplier. The model can support the marketing of new or modernized residential or commercial properties and promote long-term tenant retention. On the other hand, there are increased organizational requirements, such as coordination with the grid operator, meter point operator, and energy supplier. If the model is operated independently, there are also administrative duties as well as a certain amount of liability and support effort. Their role as the sole responsible electricity supplier for their tenants should also not be underestimated.

Advantages and disadvantages for tenants

For tenants, the tenant electricity model generally offers an economic advantage, as locally produced PV electricity is cheaper than regular household electricity tariffs due to the absence of grid fees, levies, or electricity tax. Additionally, they benefit from a higher share of renewable energy and lower CO₂ emissions without their own investment or technical effort. Limitations can arise from a certain price tie to the tenant electricity provider, and access to affordable PV electricity automatically ends upon moving out. The actual cost advantage naturally depends on the individual consumption profile of the tenants and whether the PV consumption share is met through the use of Battery storage is increased.

Conclusion & Future of the Tenant Electricity Model

The German tenant electricity model remains an important instrument to drive the decentralized energy transition and increase the self-consumption of solar power in residential and commercial properties. Current legal adjustments, such as increasing the system size to up to 1 MW and simplified metering and billing requirements, improve economic viability and facilitate implementation. Further regulatory changes for customer facilities & tenant electricity are after the ECJ and BGH ruling However, this will be necessary from 2024 and 2025. New models, such as community-based building supply (GGV), are gaining importance as they enable more flexible supply options, albeit without the EEG tenant electricity subsidy.

Despite technical and regulatory advances, the administrative burden on landlords remains a hurdle. The role of specialized service providers and Contracting providers will therefore continue to grow in order to reduce complexity and liability. Nevertheless, tenant-generated electricity projects are attractive to landlords as a way to retain tenants, lower energy costs, and meet environmental goals.

Overall, the classic tenant electricity model with a tenant electricity surcharge offers an economical and sustainable solution for multi-party buildings. It is important to overcome the existing organizational hurdles and to better align market offerings with the needs of landlords and tenants in order to fully exploit the potential of solar power supply in buildings.