Installing Solar Panels on Commercial Property: Issues for Landlords and Tenants
Commercial landlords and landowners looking to make their properties more environmentally friendly may be considering the installation of solar panels on commercial property. The popularity of this was demonstrated in 2023, when there was a significant increase in commercial installations, leading to an additional 1GW of new solar capacity.
Whilst environmentally this may be of significant benefit if these properties are let, then landlords will need to consider how best to future-proof their leases to allow for the installation of solar panels without risking their investment.
Issues to consider in regard to solar panels on commercial property:
- Will the electricity generated by the roof panels be used to serve the property itself, be for the communal benefit of a wider estate, or will it be sold to the national grid? In other words, will the tenant affected actually benefit from the installation of solar panels on commercial property?
- Has the roof of the property been demised to the tenant? With a full repairing and insuring lease, the tenant will be responsible for the maintenance and repair of the roof. The addition of solar panels on commercial property could make this more difficult or expensive. There is also the added risk that the panels could damage the roof, particularly in bad weather.
- As well as the installation of the panels themselves, landlords will also need to install ancillary equipment such as inverters and connecting media within the tenant’s demise.
- Who is liable if there is a fault in the equipment causing damage or injury? Tenants will undoubtedly want to ensure that the landlord retains liability for the installation and any risk of damage. The landlord will then need to review their insurance arrangements accordingly.
- Where there are solar panels on commercial property, tenants will also want to exclude from their repair obligations any consequential damage or disrepair to their demise arising from the installation of the panels.
- Where the roof is communal (such as in a shopping centre), landlords will have control and responsibility for the roof as part of the common parts of the building/estate. In this situation, tenants will want to ensure that the capital cost of the installation is excluded from the service charge and that any ongoing maintenance and repair costs are either excluded (where the landlord is selling the electricity to the grid), or remain reasonable and ideally less than the electricity saving.
All these issues should be carefully considered when agreeing on heads of terms for a new lease, as well as the renewal of an existing lease, where a landlord wishes to reserve rights allowing the installation of solar panels on commercial property in the future.
The commercial property team at GA Solicitors in Plymouth is experienced in advising commercial landlords and tenants on the risks involved with installing solar panels on commercial property and can assist with the above issues and more. Ranked in The Legal 500, you can be assured you will receive excellent legal advice and the highest levels of client service.
Contact the team today on 01752 203500 or enquiries@GAsolicitors.com. You can also email me directly via david.stone@GAsolicitors.com.
Do also read our recent articles about repairing obligations and Martyn’s Law which you may find useful.
All content on this website (inclusive of guides, blogs and imagery) is strictly copyrighted by Gill Akaster LLP, trading as GA Solicitors. It is not to be used by any third party without prior contact and permission. Any requests for content should be sent to katy.mckenna@GAsolicitors.com.