How to Calculate the NOI Lift From Adding Solar to a Multifamily Property

The four-variable model

Strip away the noise, and projecting solar NOI on a rental property comes down to:

Annual NOI lift = (kWh generated × $/kWh tenant rate × take rate)
                - operating fees
                - financing payment (if PPA)

Most calculators online stop at the first line. That's the gross revenue number — not yours to keep.

Step 1: Estimate generation

Production depends on location, roof orientation, tilt and shading, so model it for the actual address with a tool such as NREL's PVWatts rather than a regional rule of thumb.

Illustration (assumed inputs, not a quote or a benchmark): a 75 kW system in Tampa assumed to produce 1,650 kWh per kW per year: 75 × 1,650 = ~124,000 kWh per year.

Step 2: Set the tenant rate

Set the rate below the utility's retail rate by enough that tenants see an obvious win, or they won't enroll. The discount is a pricing decision for each property and state rules. In this illustration we assume a utility rate of $0.155/kWh and a solar rate of $0.13/kWh.

124,000 kWh × $0.13 = $16,120 gross revenue

Step 3: Apply a realistic take rate

Not every unit enrolls on day one, so underwrite a take rate below 100% and step it up. This illustration assumes 75%; use your own leasing data where you have it.

$16,120 × 0.75 = $12,090 in stabilized year one

Step 4: Subtract real fees

• Billing and platform fees
• Payment processing
• An O&M reserve (inverter replacement, cleaning, monitoring)

Each is a quoted cost for the specific property, so this illustration does not assume them. The net figure is the gross above less those quoted costs, before any financing payment. What the owner keeps depends on how the project is funded: an owner-funded project carries the install cost, a financed or third-party-funded project carries a payment against that revenue. Who pays, who owns and who receives the benefit is set in the project agreement after underwriting.

The variable everyone forgets

The fifth, hidden variable: how the recurring line is valued. Recurring operating income is capitalised at market cap rates, so a durable line can matter more than its annual size. Use the owner benefit after applicable payments and costs — not gross revenue — and agree the treatment with your appraiser or lender.

What changes the model

• Financed or third-party funded: a financing or service payment comes off the revenue for the contracted term. The share, the term and any transfer or buy-out at end of term are contractual — they only exist if they are written into your project agreement, so read them there rather than assuming a standard split.
• Owner-funded: full revenue from day one, but you fund the install.
• HOAs / common areas: meter the common load first, sell the surplus.

Don't underwrite in a spreadsheet alone. Run your property through our property review and we will tell you which of these inputs we still need — the tariff read, the interval data, the roof condition and your funding preference — before any figure is worth relying on.

Want this checked on your own property? Get a free energy assessment or see how it works.