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I want to install solar/batteries/inverter on our business premises. We are 1 of 7 tenants in a park.

Landlord refuses to give us permission, claiming we would take revenue from his solar installation.

Fact is hi solar installation is smaller than the complex peak consumption,  and he has no battery storage.

I have the landlord from hell, everything ends up in a legal dispute.

Anyone got a legal opinion on this? Or know a lawyer who has dealt with these matters?

- Robert

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7 hours ago, robertbreyer said:

claiming we would take revenue from his solar installation

So he is billing you for electricity that he is not paying the city for? So he is effectively selling electricity, which is not allowed by law. Eskom is the only legal distributor of electricity. He must sell to Eskom and they can sell to the city and then to you.

I don't know if that helps, threatening your landlord is hardly ever a good idea... but if he is selling electricity to you he could end up in hot water.

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Posted (edited)

I am not a lawyer.

21 hours ago, robertbreyer said:

I want to install solar/batteries/inverter on our business premises. 

take revenue from his solar installation.

Fact is hi solar installation is smaller than the complex peak consumption,  and he has no battery storage.

Out of interest, 

1) is this an office park or a more industrial setting (light/medium/heavy production/manufacture)?

2) Is "the park" connected to the municipal/eskom grid in any way? 

3) how is electricity charged/billed? (does each tenant get a metered consumption bill or is the rent a flat rate that includes electricity?)

4) does your lease stipulate anything around the provision of services/utilities like electricity?

14 hours ago, plonkster said:

So he is billing you for electricity that he is not paying the city for? So he is effectively selling electricity, which is not allowed by law.

This was my first thought that the landlord is not allowed to sell electricity but looks like maybe he may depending on especially the size of generation capacity and connection to the grid or not. But this is generally as clear as mud with many possible loop holes and very little concrete indication who regulates exactly what.

If SSEG is below 1MW then only municipal approval is needed to be able to generate (no NERSA license etc), and a generation license from NERSA for 1-10MW is also not impossible.

So he might have approval to generate, and unless he is also supplying electricity to neighbouring properties issues/licenses around transmission and distribution are likely not relevant and even more so if the entire property is "off grid". 

From here it seems that private power purchase agreements allow for the sale of electricity by private companies ("Private companies can legally sell you electricity if generation is less than 1 megawatt (MW) – which only requires municipal or Eskom technical sign-off to supply their owners or feed into the grid.").

From here it also seems that a trading license for selling electricity potentially only falls under NERSA if selling/buying electricity is a commercial activity ("The ERA requires that any person involved in trading of electricity must obtain an applicable licence from NERSA. These trading licences are applicable both to the selling and the buying of electricity as a commercial activity"). Unless the landlord's commercial activity is to sell electricity at profit he could potentially side step NERSA and unless the landlord is also "selling" electricity from the grid he is not a reseller (being a reseller would immemdiately put him under NERSA's perview - even if he is not registered/licensed ("Any person or entity who buys and sells electricity as a commercial activity and is not already licenced by NERSA automatically qualifies as a reseller and is subject to the Reseller Guidelines.").

My guess is that the landlord has either an off-grid PV plant or a grid-connected SSEG registered for self-consumption.

If totally off-grid seems like he can potentially do almost whatever he wants - unless his generation is above a certain level. If he does not charge a specific (metered) electricity fee then he is also not selling electricity - he provides a facility that includes electricity supply.

If grid-connected self-consumption SSEG with each tenant metered it can become more interesting if he is reducing his property's electricty bill but getting the tenants to finance it. In this case you could probably argue that he is now turning a profit from selling electricity but to prove this will be somewhat difficult and I will bet that the landlord has deeper pockets for complex drawn out precedent setting legal cases. If he is selling electricty at a rate higher than the municipality/eskom the municipality/eskom is very likely to take exception to it...

I would consider the following courses of action:

1) depending on the lease agreement the landlord is obliged to provide certain things -- potentially electricity. So he may be in breach of this. So in terms of simpler (?) contract law he could be forced to remedy his abiility to provide for the required electricty demand OR being in breach could leave you the option without penalty for ending the lease and relocating to a more suitable premises.

2) depending on the lease terms, and with substantial proof, initiate action for loss of income due to a) his failure to provide the relevant services/utilities and/or b) his unreasonable refusal to allow you to remedy the situation your self (a letter from a lawyer threatening to do this could get you further than you tink).

3) if not wanting to get into unpleasant and expensive legal proceedings and if the nature of the business allows for it, install a non-solar battery based UPS to at least allow to smooth out the peaks. In an office park environment this can be easier with litterally a "plug-in" option. If needing to make provision for larger loads it becomes more complicated and even if the landlord allows it, you are adding betterment to his property at your expense. The latter would also apply to if he allows PV in the first place. Unless agreed IN WRITING, the landlord will keep everything if/when you relocate.

4) make friendly enquiries at the local municipality/eskom whether the said PV plant (rates charged?) is registered/approved (and hope the landlord is not "connected").

Edited by introverter
typo
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1/ Inospace Industrial Park, Paarden Eiland.  7 tenants I think. 

2/ Landlord has installed a PV grid-tied system, no batteries, so he is effectively selling to us Park tenants when the sun shines brightly.

3/ Solar PV is 190 KW, the park is connected via 2 x 400 KVA transformers to CofCT. 

4/  Park is billed from CofCT as per the TOU-LUMEDV tariffs.  We get billed via a separate submeter, also as per the same CoCT tariff. 

5/ My point is that he is in fact not selling to my business, as the peak demand for the park exceeds the solar PV peak output.

6/ We get billed monthly on actual usage. Plus a R3,000 service/connection charge. 

7/ I do think he can sell to us legally. The question is whether he can prevent us from installing our own solar system. It's his building, his roof, but there's a lot of language in the NERSA documents about equal access, fair pricing, etc.

8/ moving out not an option.

9/ legal letters/ping-pong yes, if need be. but I would need to find an attorney that is well-versed in NERSA rules and regulations...

 

10/ Lease clause FYI:

1     The Tenant shall be liable for, and on demand, pay for any charges arising out of its use of electric current, gas, water and refuse collection, incineration and /or compaction or any other service provided for the Tenant in respect of the Premises, including water and/or electricity consumed in the operation of any air-conditioning unit/s serving the Premises exclusively. Charges shall include a service charge for separate submeters, where applicable or appropriate. Should there be no separate submeters, the Landlord shall be entitled to install a separate submeter at any time.  Should no separate submeter be installed, the Tenant shall monthly pay a proportionate share of such charges on the same ratio that the area of the leased Premises bears to the total occupied floor area served by a meter from time to time. 

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53 minutes ago, robertbreyer said:

4/  Park is billed from CofCT as per the TOU-LUMEDV tariffs.  We get billed via a separate submeter, also as per the same CoCT tariff. 

5/ My point is that he is in fact not selling to my business, as the peak demand for the park exceeds the solar PV peak output.

That sounds confusing to me. He is reducing his costs but billing you the full amount? Or do you benefit from the peak reduction (since, if I understand you correctly, you are on a tariff that bills harder if you peak at the wrong time... yeah that sounds weird)?

In any case, that is probably academic. I'm not sure a Tu Quoque is the best course of action.

There may be some room to save money by taking off your own peak consumption using a storage system without PV modules. This sort of thing is popular in the UK.

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Yes landlord reducing his costs and charging me full amount. but he has to pay for his installation, so I dont have an issue with that. the price of capital... 

peak shaving makes no economic sense in SA. our peak rates are still far cheaper than UK rates. 

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On 2020/07/04 at 12:08 PM, robertbreyer said:

Landlord refuses to give us permission, claiming we would take revenue from his solar installation.

 

45 minutes ago, robertbreyer said:

Yes landlord reducing his costs and charging me full amount. but he has to pay for his installation, so I dont have an issue with that. the price of capital... 

I  am confused what do you want to achieve?

Do you want to install your own solar because

a) the lights go out because the installed solar does not cover the peak load

b) the lights go out when the grid goes down (for instance eskom load shedding with grid-tied solar and no batteries)

c) your time of use bill is not lower because his solar does not cover the peak

d) you want to lower/eliminate your own electricity bill through your own solar installation

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1 hour ago, robertbreyer said:

Yes landlord reducing his costs and charging me full amount. but he has to pay for his installation, so I dont have an issue with that. the price of capital... 

aaah I think I get it. You're saying there is enough room left for him to make money from other tenants, since his install is much smaller than the peak. Whatever amount you pay less per month will be reflected in the landlord paying the same reduction to the city, so he will lose no money.

Sorry, sometimes I am a tad slow 🙂

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1 hour ago, plonkster said:

aaah I think I get it. You're saying there is enough room left for him to make money from other tenants, since his install is much smaller than the peak. Whatever amount you pay less per month will be reflected in the landlord paying the same reduction to the city, so he will lose no money.

I am clearly no financial, or any other type of wizard

but who pays for the landlord's solar install?  If tenants produce their own power and the landlord's installation is financed through some power purchase agreement with a take-or-pay clause then the landlord ends up paying for power that no one is using/billed for?

or 

If we assume the landlord's solar is financed in more traditional ways or even already paid for. The install does not cover the total tenant power consumption but some of it.

Today the total power used by all tenants in the complex was 200Kwh.

Solar produced 150kWh (it is a very good system).

From CoCT perspective the entire complex is billed for 50kWh

The tenants are billed for 200kwh by the landlord.

The landlord pockets the 150kWh component fee.

?

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In my opinion there is not much you can do other that trying to persuade your landlord to allow this, or just adding your own batteries (if battery backup is a requirement).

You rent and has signed a contract in that regard. Now when your contract is up for renewal this would be a perfect time to negotiate for what you want. 

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On 2020/07/06 at 8:45 AM, robertbreyer said:

7/ I do think he can sell to us legally. The question is whether he can prevent us from installing our own solar system. It's his building, his roof, but there's a lot of language in the NERSA documents about equal access, fair pricing, etc.

Most of the language is probably more aimed at the Electricity Industry (regulating acces to the distribution network for new energy producers etc). I think the only place where consumers feature for NERSA is in terms of determining/regulating fees. Which is why asked what you want/need to achieve. NERSA will likely only be somewhat relevant in terms of being unfairly denied access to a way of lowering your own bill..

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I am a lawyer. Not sure it helps though. And this is not professional advice - just my impressions - 😉 on the face of it.

 

The number one question is not related to NERSA. It relates to your rights as a tenant flowing from the rental agreement and/or any other terms you signed on to.  If you have the roof above your own shop the question then is whether you may install on it.  That question is answered with reference (first) to the written and tacit terms of the lease agreement and any other applicable sign-on terms. If the agreement is silent on the issue then the common law may apply.

The way of approaching the problem runs a bit like in what follows:

Do you hire the roof above your head? If so, is there any prohibition on a tenant appending fixtures and fittings to the roof? 

Take a non-contentious issue - are you permitted to install an aerial? An owl box? An extraction fan? A weather vane? A pigeon deterrent device?

Note some of these items are moveables eg the aerial and owl box. Arguably they are similar to panels.

Some are more permanent eg the extractor fan may require a hole in the roof.

Are you permitted to connect an electricity supply point that intercepts the main supply to your business? No use you have a panel but your lease says you may not interfere with the electrics.

Etc etc  - you get the drift.

Now, from identifying the terms of the lease as the starting point, you are ready to find the relevant terms.

So go and find the relevant small print in your lease (dealing with fixtures, fittings, appendages, your right to make alterations etc etc) and check it and then you try and apply the thinking/scenarios I set out above and assess your panel problem in light of that.

BUT BEWARE- the lease may incorporate certain standard rules applicable to the Business Park. You need to check them as well.

If you conclude that panels are not contractually permitted, end of story. If they are, likewise end of story.

If by this time you are not sure, well then in all probability a lawyer will not be sure either. Your lease is ambiguous. No doubt you have money to burn so then you go see a lawyer, pay him a fortune, piss of your landlord, end up in court and possibly get evicted.

An observation: Is it really worth your while to have panels?  A few batteries as a UPS is perhaps sufficient?

 

 

 

 

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As to the question of if the landlord can sell your his solar electricity legally, probably yes provided it is below 1MW/h.

This article gives a bit more detail:

https://www.businessinsider.co.za/residential-complexes-can-now-rent-solar-panels-and-pay-for-the-electricity-instead-of-the-hardware-heres-how-it-works-2019-12

As for fitting your own panels - your lease agreement will provide the answer. You do not own the roof or any other part of the building. You can only do what the lease agreement does not prevent you from doing. If it is not specific then common law would ask you to consult the land lord. If he says "no". That's that. You do have the option not to renew the lease.

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just playing eskom devil's advocate 

what if you argue that (some of) the terms of the contract are actually setting a condition that, even though you agreed to it, is in itself not lawful (insert correct legal term and/or Latin here 😉)  ?  So to keep this sort of on topic... I am prohibited from using my own alternative energy source while somewhere NERSA allegedly states that everyone should have fair access to it? ...too bad, you should have checked before you signed?

Or

if the landlord cannot supply the power required and my business is affected negatively. The landlord is not in a position to expand solar (budget constraints) but I can afford to install my own solar - yet the landlord refuses me permission and points to the clause that says I am not allowed to make a hole in the roof/interfere with the electrics?

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. I am prohibited from using my own alternative energy source while somewhere NERSA allegedly states that everyone should have fair access to it? ...too bad, you should have checked before you signed?

No. Assuming that the NERSA provision grants you a right that stems from legislation (in this case the Electricity Regulation Act), then that right takes precedence over the agreement. Unless legislation specifically permits it, parties are not at liberty to contract out of legislative rights. Eg you cannot agree with your employee that he will not go to the CCMA when you dismiss him unfairly.

if the landlord cannot supply the power required and my business is affected negatively. The landlord is not in a position to expand solar (budget constraints) but I can afford to install my own solar - yet the landlord refuses me permission and points to the clause that says I am not allowed to make a hole in the roof

If the landlord was contractually obliged to supply he will be in breach. You then place him on terms and failing his compliance you may cancel the agreement or (usually) reduce the rental and (always) sue for your damages (to find alternative accommodation and maybe having to pay a higher rental etc). Typically you just stop paying the rental and set it off with a counterclaim should he sue you for it.

But, say you do not want to cancel. You want to stay and put up panels to cure the landlord's default.  But this is in conflict with the lease that prohibits it. Then what?

Well I do not know!  I suspect you cannot break the lease simply because the landlord is doing so. Your remedies are to cancel and/or sue for damages and/or reduce rental. Not to unilaterally afford yourself rights you do not have.

You getting this advice for free and usually one gets exactly what you pay for, so beware 😄

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8 minutes ago, Clivevan said:

. I am prohibited from using my own alternative energy source while somewhere NERSA allegedly states that everyone should have fair access to it? ...too bad, you should have checked before you signed?

 Unless legislation specifically permits it, parties are not at liberty to contract out of legislative rights. Eg you cannot agree with your employee that he will not go to the CCMA when you dismiss him unfairly.

But, say you do not want to cancel. You want to stay and put up panels to cure the landlord's default.  But this is in conflict with the lease that prohibits it. Then what?

Well I do not know!  I suspect you cannot break the lease simply because the landlord is doing so. Your remedies are to cancel and/or sue for damages and/or reduce rental. Not to unilaterally afford yourself rights you do not have.

So while this is all speculation (which is a close relative of assumption and we all know what assume did..?) I suspect the OP is aiming/hoping that NERSA/Energy Regulation Act does the eloquently phrased "parties are not at liberty to contract out of legislative rights" part.... but there is obviously the other side of the coin "Unless legislation specifically permits it" (which NERSA/Energy Regulation Act might well do... I am not bored enough to read it in full). 🙂

23 minutes ago, Clivevan said:

You getting this advice for free and usually one gets exactly what you pay for, so beware 😄

but a fool and his money are soon parted ... so getting advice for free should mean I am not a fool?... 😉

but for clarity the "advice" does not apply to me and I am not related to or arguing in favour of the OP.

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