Photovoltaics and heat pumps in a rented building: contracts, cost allocation and data room review

Photovoltaics and heat pumps in an Austrian apartment building sit on two different legal layers. Photovoltaics are an electricity generation plant; their framework comes from the Electricity Act (ElWOG 2010). A heat pump is a heat generation plant; its framework comes from the Rent Act (MRG), the Heating and Cooling Costs Act (HeizKG) and the specific heat supply or contracting agreement. Both layers are often marketed together but follow separate rules.

This article sets out the review axes for owners, sellers and buyers. It covers the shared generation plant under section 16a ElWOG 2010, the heat pump in the interplay of MRG and HeizKG, the limits on cost pass-through and the records that should sit in the data room before a binding price commitment.

Why photovoltaics and heat pumps need separate legal review

Photovoltaic and heat pump projects are often marketed jointly but follow different legal regimes. Photovoltaics produce electricity and are passed on to participating units under section 16a ElWOG 2010. A heat pump produces heat; its operation and distribution to users follow the MRG, the Heating and Cooling Costs Act (HeizKG) and any heat supply or contracting agreement. Treating both layers as one confuses electricity and heat economics and makes income assumptions vulnerable.

In practice this calls for separate files. The electricity file contains the plant concept, participation agreements, grid access data and meter readings. The heat file contains the heating plant, HeizKG billing, heat supply contract and the tenancy law classification as maintenance or investment. The topic page apartment building purchase provides the framework for the data room and the sale contract.

Section 16a ElWOG 2010: shared generation in a residential building

Section 16a ElWOG 2010 allows a generation plant to be operated jointly with the occupants of a residential building. The rule confirms that participation of authorised persons is voluntary, that the residual electricity supply can still be sourced from a freely chosen supplier and that the electricity produced is distributed among participating units under an allocation key defined in advance. Network operator, technical setup and data exchange follow the associated ElWOG 2010 rules and implementing regulations.

In practice, a landlord who wants to supply photovoltaic electricity to participating units needs an express participation agreement. It covers the allocation key, the kilowatt-hour price for the internally supplied electricity, the settlement mechanics and the termination rights. Without such an agreement, the landlord cannot simply charge tenants for photovoltaic electricity because the tenant's electricity supply remains a separate supplier relationship.

The data room should contain the plant concept, the grid operator registration, the participation agreements and the billing data for recent periods. The data room completeness check helps organise the records systematically.

Heat pump under MRG and HeizKG

A heat pump is not a generation plant within section 16a ElWOG 2010; the participation model for electricity does not apply to heat distribution. The heat layer is governed by the MRG and by the HeizKG. Where heat is distributed to users from a central plant and at least four units share a common heating system, the HeizKG rules on consumption cost allocation, standing cost share and billing by the heat supplier apply.

For the landlord, the MRG creates specific ties. Operating expenses of the central heat supply fall under section 24 MRG in combination with the HeizKG in the full-application area; they are not part of the service charge catalogue in section 21 MRG. Investments in a new heat pump form a separate layer: where the measure qualifies as maintenance under section 3 MRG, it can be financed from rent reserves or through a procedure under section 18 MRG. Where it does not qualify as maintenance, it usually remains a landlord investment without automatic pass-through to running rents.

In practice, the heat supply or contracting agreement, the HeizKG billing and the tenancy law classification of the plant must be kept apart. A new heat pump arrangement cannot be treated like a photovoltaic participation; distribution to users follows its own, partly mandatory rules.

Cost allocation: limits of section 21 MRG and investment/operation split

Section 21 MRG contains the closed catalogue of service charges for the full-application area. It covers neither the investment in a photovoltaic system nor the investment in a heat pump. Ongoing operation of the central heat supply also does not fall under section 21 but follows section 24 MRG together with the HeizKG. A landlord who passes photovoltaic or heat pump investments into the service charge bill risks refund claims.

Three layers should therefore be separated. First, the investment costs that stay with the landlord or are financed through the permitted MRG instruments. Second, the ongoing operating and consumption costs of the central heat supply, governed by HeizKG and section 24 MRG. Third, the contractual layer where the heat is procured from an external contractor with its own price formula.

For tenant communication it should be clear which position rests on which basis. The topic page rent roll and lease agreements provides the base logic for income and allocation in the stock.

Participation agreements and heat supply contracts

On the photovoltaic layer, participation is regulated in a voluntary agreement between landlord and participant. For residential tenants within the MRG, consumer protection rules apply on top; clauses must not unfairly disadvantage the participant. Key points are the allocation key, the price per kilowatt-hour, the term, the termination rights and the treatment on move-out or plant failure. Automatic continuation on a sale should be handled with caution.

On the heat layer, the heat supply or contracting agreement sits between owner and contractor. It covers standing and working charge, maintenance, plant access, remaining term and return at the end of the contract. The contract does not automatically pass with the property; the contractor's consent is usually required for a transfer. Without it, the seller remains bound after closing without having the economic benefit.

Sale contract and data room: concrete review points

For an acquisition of an apartment building with photovoltaic or heat pump plant, any permits, notifications and grid access records should be complete. The data room should also contain the plant concept, maintenance and service contracts, contracting agreement, participation agreements, HeizKG billing and meter readings. Subsidy notices should be included with their project-specific commitments; these commitments can trigger repayment claims on changed use, early removal or a change of owner.

In the sale contract, assurances on permit status, contract status and subsidy commitments should be drafted precisely. Blanket guarantees on income effect are of limited value; more precise are unit-level undertakings on specific documents, on the transferability of contracting agreements, on the handover of meter readings and on responsibility for open invoices. For an initial framing of time frame and risk the apartment building risk check helps.

For the handover, meter readings, contract states and open positions should be captured at the effective date. The topic page handover and effective date covers the associated positions and their treatment in the sale contract.

Practical process and next steps

The starting point is a stock take of the electricity and the heat side. On the electricity side, the plant concept, the participant circle, the grid registration and the participation agreements are recorded. On the heat side, the heating plant, HeizKG billing, heat supply or contracting agreement and tenancy law classification are reviewed. On both sides, subsidies and their project-specific commitments are documented.

For a sale, contracting and participation agreements are enhanced with transfer clauses, the contractor's consent is prepared and a meter reading is scheduled. For an acquisition, a list of open questions is drawn up and its answers sought before the price commitment. BRANDAUER Rechtsanwälte advises owners, sellers and buyers on photovoltaic and heat pump matters and links the legal review with the economic view.