According to Johan Hallgren Madsen, the method used in accordance with the agreement when NREP establishes facilities for business tenants is that it is NREP that invests itself. It is also them who are responsible for operation and maintenance.
The tenant then receives the electricity produced. However, NREP – and other landlords – are legally prohibited from selling the electricity. This means that you have to ensure the same result differently.
“We make the facility available to the tenant, who in turn pays a higher rent. The tenant gets access to all the electricity produced and uses as much as possible and sells the surplus electricity to the grid. The tenant’s savings on the electricity bill, exceeds the rent payment due to this the tenant achieves a net saving from day one,” says Johan Hallgren Madsen.
For NREP, the result is still a satisfactory financial gain, which, however, is typically below their general required rate of return. According to Johan Hallgren Madsen, this model can be financially connected. Even if the tenant’s alternative electricity price is as low as 60 øre per. kWh. This can be the situation when it comes to pure process flow, where the tax is refunded in full.
NREP and their tenants are looking forward to both environmental and financial gain when, during 2020, they receive 7 MW roofing systems at 5 locations in Denmark.