The four things your commercial tenant may not have considered about solar power.
As energy prices rose in 2022, commercial tenants became displayed increased interested in investing in solar energy systems.
“We have had many businesses request landlord approval for solar systems, by tenants keen to, reduce their energy costs and as a sustainability initiative”, said Tracy Preston, Head of Asset Management at MMJ Wollongong. “As property professionals, we are keen to foster the upgrade of existing building stock to achieve sustainability outcomes, but it is imperative that the importance of fit for purpose design is not overlooked”.
“Tenants are often handed a specification for their solar project by a solar sales company, with little or no regard to the individual needs of the business, nor with consideration to the built environment that will support the system”, said Miss Preston. “For that reason, we ask tenants to give consideration to the a range of often overlooked factors when proposing landlords approve solar installation requests”.
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Has the business considered how it can reduce its electricity consumption? At the core of achieving sustainability outcomes, is to first seek to consume less energy. Outdated fit-out lighting, old or poorly maintained equipment and poor operational control over energy consumption, can lead to unnecessarily high electrical bills. First, ensure that tenants have thoroughly checked where and how they can reduce their energy consumption.
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Has the business considered the times of day they consume the most energy and will they need battery storage? Many off the shelf solar systems are not specified with battery storage to store solar energy. Tenants should ask their designer to consider how much energy they consume in daylight hours verses night hours, to ensure that the system is designed to best suit their needs.
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How will the roof continue to be maintained once the solar panels are installed? Tenant installed systems become part of the fitout of the tenancy. Where maintenance is required to the building structure, it is usual that the landlord would require the tenant to temporarily move the solar panels so that maintenance can occur. This needs to be considered as an ongoing possible cost to the tenant. Best practice will result in an operational plan being agreed between the parties before installation, as to the responsibilities of each, in the event that work needs to be done to the structures to which solar equipment is affixed.
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Has the tenant consulted their insurer for advice about increased insurance requirements? The risk of electrical fault including fires has been proven to be evident, especially with solar installations on roof tops that are exposed to the elements. It is common that landlords will seek updated tenant insurance policies to cover this risk at the tenants costs and arrangement.
“The most important thing”, said Miss Preston, “is that the landlord and tenant take the time to arrive at an agreement between the parties, ahead of installation, so that there are no surprises down the line. Our experience enables us to assist our clients and tenants reach mutually beneficial arrangements in this area. The complexities should not be overlooked and while solar systems representatives may encourage fast decisions for a sale, we prefer to facilitate a considered approach, which will yield much better outcomes for both tenant and landlord in the long term”.