Commercial solar: a bright future

Solar panels on commercial buildings

Why Aren’t There More Solar Panels on UK Commercial Buildings?

Have you ever wondered why commercial buildings in the UK don’t have more solar panels? I think it’s fair to say lots of people know how great solar power is – it’s renewable, sustainable, and helps combat climate change. But when it comes to commercial buildings, solar panel adoption has been slower than expected. So let’s take a look at the challenges holding us back and discuss the bright future that’s just around the corner.

What’s the hold-up?

Depending on the length of their lease, tenants can be hesitant to invest in solar panels, especially if they won’t be around to enjoy the long-term benefits. Meanwhile, landlords can be reluctant to invest in improvements that don’t directly increase the property’s value or bring immediate financial returns.

A full repairing and insuring lease structure is very common in the UK which requires tenants to maintain and repair the property during their lease. Tenants don’t want to be told they have damaged their building by the installation of solar panels.  In extreme cases, it might even mean that tenants have to remove the solar panels at the end of their lease if the landlord doesn’t want them.

If a building owner is nervous of the works required to install solar panels they might refuse permission for the tenant to install the panels in the first place.

Some property fund managers can be a bit hesitant about embracing renewable energy technologies. If they’re unsure about the long-term benefits and returns on investment, it might stop them from allocating funds for solar panel installations on commercial properties.

Different priorities and objectives for landlords and tenants can create challenges when it comes to property improvements like solar panel installations. Tenants are interested in reducing energy costs, while landlords are focused on property value and rental income.

Installing solar panels can create complications with insurance policies, as they can increase the risk of property damage or loss. This might lead to higher insurance premiums, which can deter both landlords and tenants from going solar.

But there’s good news!

As more and more PV systems are installed, landlords, tenants and fund managers increasingly recognise that the benefits of solar panels are significant and many of the issues highlighted above can be resolved with sensible drafting of documents and a good understanding of the technology.   

If landlords install solar panels they can use a power purchase agreement (PPA) to sell the electricity to the tenant.  This enables the landlord to get a return on their investment, the tenant to benefit from discounted electricity prices and both to enhance their ESG credentials.

Solar power can lead to significant energy cost savings, making properties more attractive to tenants potentially increasing rental and capital values. Plus, the electrification of transport, heating, and industrial processes means we need more sustainable energy sources, making solar power more appealing than ever. Not to mention the energy crisis driving utility prices skywards.

At ChargeWorks we think it very likely that these benefits will gather momentum as tenants seek out property with solar or at least a landlord that is sympathetic to installing solar.

Even the Government has, at long last, started to recognise that solar PV offers many advantages and should be supported.  This positive policy background plus new financing models, and advances in solar panel technology make the case even more compelling. In the coming years, we can expect to see a significant increase in solar panel installations on commercial buildings across the UK.