Solar panels: a bright idea?

Renewable energy groups are becoming ever more active, with solar panels still being a popular way for businesses to achieve a decreased spend on energy, whilst helping to reduce CO2 emissions. 

Emma Ellinor, partner in the real estate team at Wilkin Chapman, shares an overview of what to consider if you have been approached by someone to install solar panels on your building.

Picture the scene

You run your business from a commercial building which has a roof space large enough to support solar panels. You have been contacted by a company or community group to see if they can put solar panels on your roof, which will provide you with cheap electricity and allow the company to make a return on selling any ‘spare’ electricity into the grid. 

There are several key points you will need to consider, both from a practical and legal perspective.

What to consider

Each project will differ and may have its own issues to resolve, but for each scheme, you will need to consider the structural capabilities of the building, whether planning permission is required, whether the landlord’s consent is needed (if you are a tenant yourself), and whether you need to notify (or seek permission from) your mortgage lender or insurer.

There are some standard landlord and tenant principles which apply in all commercial leases (subject to negotiation each time), but there are also some specific points which will be included in a solar lease. The lease should cover:

• A definition of the property – being the airspace above the building

• Installation of the equipment

• Planning consent

• Insurance obligations

• Repairs – of the equipment and the building, separately

• Renewables benefits

• Grid Connection Agreements

• End of lease obligations

You also need to enter into a separate agreement with the tenant to govern the terms under which they will supply, and you will buy, electricity, called a Power Purchase Agreement. This agreement should include:

• The price for metered energy and terms for review of the price

• The level of output from the equipment

• The duration of the agreement – linked to the length of the lease

If you are looking to enter into a solar arrangement and want to ensure you are covered against unnecessary risks, contact Emma Ellinor at Wilkin Chapman LLP on 01472 246638 or email emma.ellinor@wilkinchapman.co.uk or visit wilkinchapman.co.uk