Is Your Landlord Making Money On Your Energy Bill
December 31, 2014
Hey corporate tenants, are you aware that your landlord might be making a spread on the energy that you consume and pay for? If your landlord uses an “energy server” this is a real possibility.
Here is a recent example of this type of arbitrage I reviewed in a proposed lease for a client. The landlord was going to charge 100% of the utility company energy rate for all energy consumed by the tenant even though the landlord was accruing savings by the use of an energy cell. The landlord was using this as an additional form of income with no intention of passing the savings from the energy servers along to the tenant. Plus, if the energy servers supply more power than the building needs, excess power would be fed back into the grid for credit though a net metering program. More free money for the landlord and the tenant has no idea.
There are now two different energy servers, also called fuel cells, available on the market: “combined heat and power” and “solid oxide fuel cell” energy servers. Energy servers provide for distributed power generation, which is power generation at the same location or point in which the power is consumed. Generating power on-site rather than at a central location (where power is transmitted from a power plant to where the power is needed) eliminates the cost, complexity, interdependencies, and inefficiencies associated with transmission and distrubution. Energy servers generate electricity off the electric grid. Also, unlike solar, they’re not dependent on weather, and can run all day every day. Several businesses currently using these types of energy servers include eBay, Walmart, FedEx, and Staples With federal and state incentives, a three year return on the investment is expected.
While this is a great opportunity for landlords to increase their margin on their tenants, this is definitely an area where you need to be aware of what you are being charged and determine if there is an opportunity for you to negotiate a better deal. Landlords have noticed this opportunity for margin and several have installed energy servers to supplement up to 15% to 20% of the energy purchase from their default utility company.
If you need help with your leasing program , please call us.
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