Installing renewable energy systems offers a significant advantage for attracting tenants and reducing electricity costs. However, the specific benefits can vary greatly depending on the type of system installed. Understanding the differences between Front-of-the-Meter (FTM), Behind-the-Meter (BTM), and Community Solar (CS) systems is crucial for making informed decisions.
Even though electricity flows along the path of least resistance, renewable energy is credited to end-users based on utility meters and renewable energy certificates (RECs). This can lead to confusion between the physical consumption and the accounting of renewable energy, along with different economic outcomes.
Below, we’ll define FTM, BTM, and Community Solar systems, outline their benefits and drawbacks, and help you determine which system is best suited for your needs.
Defining FTM, BTM, and CS Systems
FTM, BTM, and Community Solar are terms related to electrical grid infrastructure and its connection to renewable energy sources. For FTM and BTM systems, the designation reflects the relationship between where energy is produced and how it’s credited. Community Solar (CS) uses a subscription model for sharing electricity, making it behave similarly to BTM systems in many ways. All three can be part of an integrated renewable energy solution.
What is an FTM (Front-of-the-Meter) System?
An FTM, or Front-of-the-Meter system, is a setup where energy is produced on-site but credited for use elsewhere. The energy is fed into the grid before it reaches the customer’s meter, meaning the utility company takes control of it before it can be credited to the building or facility.
For instance, a property owner might lease land or rooftop space to a distributed energy company that installs and maintains solar panels. The energy produced is sold to the utility company, and the owner receives lease payments.
FTM systems often operate on a large scale, generating substantial amounts of energy. However, because all energy is sold, the property owner or tenants don’t directly benefit from the electricity produced. This usually translates to less direct economic benefit for the host site, because it cannot offset utility charges or earn renewable energy credits to support ESG goals.
What is a Behind-the-Meter System?
A BTM, or Behind-the-Meter system, involves energy being produced and consumed on-site. Like FTM, “Behind-the-Meter” indicates the positioning relative to the utility meter and the grid. Here, the renewable energy system operates behind the utility’s meter, offsetting the site’s energy usage and reducing charges like transmission, distribution, and demand fees, which can account for over half the utility bill.
Property owners installing BTM systems often partner with a distributed energy company to finance, install, and maintain rooftop solar panels and energy storage. Tenants can directly benefit from the power captured and stored. These systems can also be paired with EV charging stations. The IEA reports that electric vehicles will represent over 60% of vehicle sales by 2030, totaling over 350 million vehicles. Integrating BTM systems with EV charging stations adds a forward-thinking value that enhances property value.
Installing a BTM system minimizes the need for utility system upgrades to support increased load, while also offsetting utility operational charges associated with EVs, such as time-of-use charges and demand charges.
A challenge with BTM systems is setting them up for multi-tenant residential properties without a master meter, which can be more complex than setting them up for single-tenant properties. It may require submeters in each unit or a “virtual net metering” system. Some states offer incentives to offset these costs.
What is Community Solar?
Community Solar (CS) provides an alternative to FTM and BTM configurations. These systems are generally installed on large plots of land or rooftops and are designed to credit multiple users within a specific utility area. They cater to subscribers, and excess energy is diverted to utility companies. CS systems are unique because the energy is distributed through a subscription model.
Typically, CS systems are on a single property. The land owner can be the main subscriber, utilizing up to 40% of the system’s annual energy production and benefiting from the savings from community solar credits. Nearby residential or commercial customers within the same utility service area can subscribe to receive clean electricity and a discount on their utility bills through energy credits, typically saving around 10% with no upfront cost.
Community Solar offers significant economic and environmental benefits, improving access to solar energy, particularly for low-to-moderate income households, without relying solely on rooftop installations. Property owners gain site lease payments, access to the CS’s energy production, and a valuable tenant amenity.
FTM vs BTM vs CS: Which Renewable Energy System is Right for You?
Deploying renewable energy systems on residential, commercial, and industrial properties provides benefits such as lease payments, reduced energy bills, increased energy resilience, property incentives, and support for ESG and regulatory goals. The choice between FTM, BTM, or CS depends on the property owner’s goals and the property’s characteristics.
Consider the property and its use case when selecting the most suitable electrical grid infrastructure. The layout and available space are key factors:
- Residential Properties: Owners can use solar to offset common area load and engage tenants, offering a competitive advantage. These systems work well with EV charging stations, which attract tenants and raise property value. CS benefits multiple residential or commercial properties and entire communities.
- Commercial & Industrial Properties: Buildings with ample flat rooftop space are ideal for solar panels, reducing HVAC expenses. This can lead to higher lease payments, increasing property value. BTM systems lower energy costs and enhance energy resilience, protecting businesses from blackouts and brownouts, reducing downtime, and increasing efficiency.
While FTM systems have value, integrated renewable energy solutions provide more direct benefits for ESG goals. By connecting solar panels with property functions, you can leverage revenue opportunities, reduce energy costs, and increase net operating income and asset value.
Considering a move towards renewable energy? Catalyze develops, builds, finances, owns, and operates renewable energy assets on real estate, acting as long-term tenants. Our financing capabilities allow property owners to avoid upfront capital expenditures while capturing the financial and operational benefits of onsite renewable energy.
