The UK’s commitment to net-zero emissions by 2050 has made renewable energy vital for sustainable development. Commercial property investors, tasked with retrofitting existing stock, are at the forefront of this change.
Increasingly, Landlords view solar installations as a strategic investment with strong returns, driven by rising EPC requirements, green lease options, and the demand for sustainable energy.
This article lays out how commercial Landlords can access the significant return on investment that solar developments deliver with consistency and efficiency.
Empty rooftops represent a missed opportunity to harness solar radiation already present and generate profits. A 1,000m2 rooftop(typical for medium commercial buildings in the UK) can generate 150,000kWh annually, worth £37,500 at 2025 electricity prices, with a 33.5% return on investment.
Landlords can install solar on their rooftops and sell power back to the occupants, either through a newly formed Power Purchase Agreement(PPA) or through existing service charge or energy recharge mechanisms under the lease. Excess energy generated that the occupant does not use can be sold back to the grid under a variety of different mechanisms. With paybacks of between 3 and 5 years for most Landlords, the opportunity is significant.
For any installer to provide certainty over costs and performance, a site survey must be carried out. This gives the surveyor the opportunity to confirm measurements, investigate the current electrical systems status and identify any specific design requirements.
A structural survey by an independent surveyor, though not always legally required, ensures the design and roof structure are suitable for long-term installations. The solar installer will be able to work with the structural surveyor, providing them the designs, the methods of fixing and calculations of the additional loads placed on the structure.
Your local Distribution Network Operator (DNO) assesses how the installation might impact the grid and whether it can accommodate the additional generation. The output of this study will be permission to connect the system to grid and details of any restrictions and requirements that your solar installer will need to adhere to. This process is often called G99, named after the Engineering Regulation (EREC) that applies.
Most installations fall within permitted development, however certain parameters must be met, and larger systems are likely to require prior approval from the Local Planning Authority.
Solar installers normally self-certify the compliance with Building Regulations; however, clients can insist on the appointment of a third-party inspector to provide further comfort over the installation quality and compliance.
Your solar installer should be able to arrange and conduct all the above on your behalf and is included in any Absolar installation proposal.
Grid permissions are often the lengthiest part of a project, taking up to 3 months for projects over 50kW. For smaller installations, these permissions may be quicker or even pre-authorised for smaller projects. Whilst frustrating, the 3-month lead time does allow for other permissions and planning to take place so does not necessarily represent lost time.
The installation is dependent upon project size, however a typical 100kW project is complete within four weeks, allowing for scaffolding erection and disassembly as well as all the roof works and project completion stages.
As most of the work happens on the rooftop, the ground space needed for a project is equivalent to 3 - 5 parking spaces. This is for the set-up of a scaffolding tower and temporary placement of equipment such as a telehandler and skip.
Additionally, wall or roof space is needed for the installation of solar inverters, often around 1.5m x 1.5m. In the past, inverters were mostly mounted indoor. However, modern inverters are better built and waterproof, and therefore it becomes more common to install inverters onto external walls, saving space and reducing impacts of cabling and access.
“Whilst our work starts, yours won’t stop.”
A well-coordinated installation should not cause disruption to the daily operation of a business and Absolar we pride ourselves on delivering to that statement.
This is achieved by logistics planning before each project to prepare equipment off-site; using AI to scan the building and identify obstacles and skylights; drawing the optimal cable routes hence minimising internal activities; and consulting with clients and building users to understand operational routines.
A minority of buildings require a power shutdown at the end of the project to make the final connection into the building’s electrical system. Experienced solar engineers can minimise the duration needed, often completed in less than 1 hour and in evenings or weekends.
For most people, the main impetus of getting solar is to improve sustainability. We recognise this and make sure that all products used in projects are ethically sourced. Prior to collaborating with a supplier, we would ask for a copy of their Ethical Trade Audit Report, examining their datasheets and warranty documents.
Even though MCS (Microgeneration Certification Scheme) certification is not required for products used in most commercial projects due to their size being larger than 50 kilowatts, we still use, and only use, MCS compliant products, as they have satisfied the scrutiny of MCS certification, projecting quality and reliability.
Solar installations are construction work, and therefore The Construction (Design and Management) Regulations 2015 (“CDM”) applies. Fundamentally this places requirements on you as the client to ensure that the full suite of Health and Safety requirements are complied with. Whilst the installation phase safety requirements are paramount, so is ensuring that the systems design allows for safe use and maintenance for the whole systems lifetime. As a result, we recommend you only appoint a solar installer who operates as the Principal Designer and Principal Contractor for any project, adopting the responsibilities and compliance requirements.
The first and most crucial step is to obtain and review the Risk Assessment and Method Statement (RAMS) from the solar installer that is fit for purpose – rather than generic – and tailored to the building and the site environment. The measures are applicable not only to the solar installer themselves, but also for all parties involved, including scaffolders and site deliveries.
Working at height requires safeguards like edge-protected scaffolding and skylight covers to prevent damage or falls. These areas can often be overlooked by solar installers used to a more residential focus and is something particular to look out for.
Given the limited disruption that a solar installation causes, there is no need for a building to be vacant during the installation.
Once established that a commercial solar installation is viable, exploring finance options becomes the next priority. Funding the project through cash reserves ensures the shortest possible payback period and maximises the returns on investment.
Asset finance, secured on the solar system, avoids impacting property finances or funding covenants, making it appealing to commercial landlords. The finance term is often matched or longer than the payback period meaning positive cashflows are achieved quickly or even on day one.
NatWest, a leading Asset Finance provider, partners with Absolar’s Remote Solar Survey to help you compare financial outcomes with or without finance.
Similar to vehicle leasing, solar leasing programmes offer access to solar energy without owning the equipment for a fixed cost. For commercial Landlords, however, there is an additional level of complexity as most leasing agreements are designed for end energy users, e.g. the Tenants, and the terms are affected by their energy usage, meaning little opportunity to generate an investment return.
A PPA is a financial arrangement tailored for solar projects, having the solar system installed and owned by a third-party developer, whilst the users will only pay for the electricity generated by the solar system at a below market level, as opposed to a fixed monthly rate. This is rarely of interest for Landlords since it provides the investment return to the third-party investor.
There are extremely limited grants available owing to the strong financial performance of solar technologies on their own, however particular sectors such as agriculture or certain Local Authorities often do have limited opportunities to apply for. Your solar installer will be able to assess eligibility and assist in the grant application.
When self-financed or with the use of a loan, investment allowances are often available to the Landlord (dependent on individual circumstances) to further reduce the net impact of capital expenditure.
Solar is a reliable and mature technology, hence expected warranty terms are often high. Solar panels themselves should carry a 25 or 30-year performance warranty and a 25-year product warranty, reflecting the low likelihood of issues.
The inverters can often be provided with a standard 5 or 10-year warranty and you should ensure these are extended to a 15 or 20-year warranty as part of the proposal to ensure coverage for any potential issues.
The solar installer themselves should provide a 10-year turnkey warranty, meaning they are responsible for the workmanship and fixing any issues that may occur over that period.
Any solar energy generated and not used will automatically flow back to the grid, without an export agreement arranged, you will be providing this energy back for free. Commercial export agreements are significantly more complex than residential agreements and can involve up to thirty different parties throughout the entire process, including your smart meter provider and data monitoring party. We therefore recommend you appoint a solar installer or agent familiar with these arrangements to maximise returns and that they are reviewed on a regular basis.
As a guide, it can often take 6 months to set up the initial export agreement owing to inefficiencies in the smart metering and wider energy industry when setting up new connections and contracts for the first time.
Solar systems require little maintenance, however annual inspections are required like any electrical system. Often Landlords can pass this requirement to Tenants.
Cleaning of the system can ensure optimum performance together with limiting the potential of any future issues such water or dirt pooling. Some clients carry out cleaning on an annual basis whilst others opt for a longer 4-yearly timetable depending on the project specifics.
Management of a solar system can be of particular importance to Landlords as effective solar system management maximises ROI by ensuring accurate tenant billing, securing export payments, and identifying revenue opportunities.
Request a Remote Solar Survey
Commercial Landlords can find out their buildings’ solar potential from Absolar’s Remote Solar Survey technology. Simply enter the address of your building, and a survey report will be sent to you within two working days providing the estimated installation cost and investment return.
Request a Remote Solar Survey here
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