When to Start Solar Billing: VNEM Credit Timing Guide for Asset Owners (2025)

Multifamily solar projects offer some of the most attractive $/kWh returns—and as electricity prices continue to rise, these returns will only get better. The key to unlocking this value lies in thoughtful operational design—especially when it comes to the timing of tenant billing.

One of the most common questions we hear from our customers launching Virtual Net Metering (VNEM) projects is: “When should I begin billing my tenants for solar?”

Timing is everything: while your solar system begins generating energy immediately upon receiving Permission to Operate (PTO), there’s typically a delay before VNEM credits actually appear on individual tenant utility bills. For property owners and solar developers, deciding when to start solar billing isn’t just a matter of cash flow—it directly impacts both tenant relationships and your bottom line.

So, what’s the best move? 

Should you begin as soon as your solar installation gets Permission to Operate (PTO)?

Or, wait until VNEM credits actually appear on tenant utility bills?

In this guide, we’ll explore the pros and cons of each billing strategy and help you choose the approach that maximizes both tenant satisfaction and financial returns for your multi-tenant solar investment.

Understanding the Solar Credit Delay 

Before we break down each billing strategy, it’s important to understand why this credit delay occurs. When your solar system receives Permission to Operate (PTO), it begins generating energy and feeding excess power back into the grid. However, utility companies need time to calculate and apply these “generation credits” to individual tenant accounts. In this processing period—typically around 2 to 6 months—tenants won’t see any solar savings reflected on their utility bills, even though the system is actively reducing the property’s overall energy costs. 

The complexity increases in states like California. In a dual billing structure, where the tenant receives two bills—one from their provider (e.g. PG&E, SCE, or SDG&E) and a separate one from the property owner, confusion and frustration can quickly arise among tenants. Clear and proactive communication about this delay becomes essential to mitigate confusion and preserve tenant trust.

Option 1: Billing When VNEM Credits Appear

Benefits of Delayed Solar Billing for Tenants. Waiting to bill until VNEM credits appear creates perfect alignment between what tenants pay and what they save. This immediate, tangible connection between savings and costs helps reinforce the positive value of your solar program. 

The Challenge of the “Waiting Period.” However, this approach introduces a tricky “waiting period.” After working hard to enroll tenants into your solar program, there’s typically a 2 to 6 month period where tenants don’t see any benefits (no bills, no savings). The lull can create confusion, leading tenants to question whether your solar program is working as promised.

Once VNEM credits finally appear, you’ll need to bill tenants retroactively for months of solar generation. However, hitting tenants with a potential multi-hundred dollar bill can feel jarring—especially if communication hasn’t been clear throughout the process. Tenants may not entirely understand why they’re being billed, perhaps leaving them to feel that they’re unfairly charged or question the value proposition of solar. For some tenant demographics, a large retroactive bill can also present real financial strain and create additional collection challenges.

Moreover, the extended waiting periods may cause initial enthusiasm about solar energy to wane. Without ongoing reinforcement or communication of visible benefits, tenants may lose interest in the environmental and financial advantages of your solar program.

Finally, while the solar system is effectively delivering electricity and generating credits, you’ll absorb all solar-related costs (e.g. loan payments, maintenance) without collecting any solar payments from your tenants. For asset owners with multiple solar installations or limited capital reserves, carrying these costs can strain cash flow and delay additional investment opportunities. 

Option 2: Start Solar Billing From Day 1 of PTO

Benefits of Immediate Solar Billing. Starting solar billing from Day 1 of PTO allows asset owners to recoup their investments immediately, providing consistent cash flow to manage ongoing solar system costs (e.g. loan repayments and maintenance expenses). This method prevents tenants from facing large, retroactive bills. From a tenant’s perspective, receiving consistent $75 monthly charges is often more manageable than a sudden $450 bill covering six months of service.

The Communication Challenge. However, there may be skepticism from the tenant’s perspective, as they’ll receive solar bills prior to any solar credits being reflected on their statements. This can damage tenant relationships and undermine their perception of solar. Tenants often ask: ‘Why am I being billed if I don’t see the savings yet?’

Thus, for this approach, asset owners must collaborate with their billing partner and property management in proactive communication and resources to educate their tenants. This includes providing comprehensive information on how solar billing works and when tenants can expect to see their credits reflected, along with communicating realistic timelines / expectations. 

Key Factors For Property Owners to Consider

When deciding when to start solar billing, consider the following factors: 

1. Tenant Experience & Trust. Regardless of which billing approach you choose, prioritizing tenant trust and experience is key to the success of the solar program. Transparent, understandable billing methods lead to higher tenant engagement and long-term program success.

2. Operational / Communication Complexity. Consider your team’s capacity for handling the additional communication and education required for immediate billing versus financial planning required for delayed billing. Proactive and clear tenant communication requires dedicated resources, training, and ongoing support. 

3. Revenue Timing. Think about your preference for when to recognize revenue—not just your ability to “afford” waiting. Delaying billing aligns tenant charges with their visible savings, but it postpones incoming cash flow. Billing sooner means you start seeing solar revenue right away, which can help boost returns and provide financial momentum for your solar investment.

Moving Forward with Confidence

Ultimately, the decision of when to start billing tenants isn’t one-size-fits-all. It’s shaped by your property’s specific needs, your operational bandwidth, and the strength of your billing partner. 

Regardless of which approach you choose, the most successful solar billing programs are built on a foundation of transparency, proactive communication, and a commitment to tenant trust—all while driving sustainable financial returns.