A very common question is whether tenants can have solar systems installed on their leasehold property? Installing commercial solar systems on leased buildings is feasible, but it involves careful consideration of legal, structural, and financial factors.
Key Considerations:
- Lease Agreement Review:
- Landlord Consent: Most lease agreements require landlord approval for structural modifications, including solar panel installations. This often necessitates a “Licence to Alter,” which may involve additional costs such as legal and surveyor fees.
- Lease Clauses: Examine the lease for clauses related to alterations, maintenance responsibilities, and reinstatement obligations to ensure compliance and prevent future disputes.
- Structural Assessment:
- Roof Suitability: Conduct a structural survey to confirm the roof can support the additional weight of solar panels. This assessment is crucial to ensure safety and compliance with building regulations.
- Planning Permission:
- Permitted Development: Many commercial solar installations are considered permitted development and do not require planning permission. However, if the building is listed, located within a conservation area, or if the installation exceeds certain size thresholds, planning permission may be necessary.
- Financial Arrangements:
- Cost Allocation: Determine who will bear the installation and maintenance costs. Options include the landlord funding the installation and selling the generated electricity to tenants, or tenants financing the installation themselves.
- Power Purchase Agreements (PPAs): These agreements allow a third party to install and maintain the solar system, with the tenant purchasing the generated electricity at a predetermined rate. PPAs can be beneficial for tenants and landlords seeking to avoid upfront costs.
- Legal Documentation:
- Supplementary Agreements: Draft additional agreements to outline responsibilities for installation, maintenance, and eventual removal of the solar panels. This documentation helps prevent disputes and clarifies each party’s obligations.
Benefits:
- Cost Savings: Solar panels can significantly reduce electricity bills, with potential reductions ranging from 50% to 90%.
- Environmental Impact: Utilising renewable energy sources aligns with sustainability goals and can enhance corporate social responsibility profiles.
- Energy Independence: Generating on-site electricity reduces reliance on external energy suppliers and can provide a hedge against energy price volatility.
Conclusion:
While installing solar panels on leased commercial buildings is achievable, it requires thorough planning and collaboration between landlords and tenants. Engaging legal and structural experts is advisable to navigate the complexities and ensure a successful installation.