The market opportunity being missed?

Andrew Bolitho

Andrew Bolitho

Uncertainty surrounding the policies that support Solar PV has led to a decrease in confidence the investment for the commercial market. However, innovative investment models prove that Solar PV is a viable option for eager Energy Managers keen to find the next ‘silver bullet’ beyond lighting.

A major barrier preventing widespread deployment is the relationship between tenants and landlords. GAIA’s been work with clients and landlords to create model that overcomes the tenant/landlord barriers. Our projects have created a “win/win/win” situation for tenant, landlord and the environment.

The basic principle:
The landlord purchases and installs the PV system. Once the system is installed, the tenant purchases renewable energy from the landlord for the remainder of the lease via an agreed Power Purchase Agreement. The current lease remains the same, there’s no increase to the dilapidations risk and roof maintenance maybe included within the installation.

The benefits:

  • Asset sweating: Increased asset income and EPC improvement; ideal for compliance to Minimum Energy Efficiency Standards.
  • Incumbent Tenant – Achieves a lower energy cost, typically 25% less, decarbonisation from using renewable power and no upfront investment or liability.
  • Future Tenants – Will achieve an improved building with cheaper energy than can be supplied from the grid.
  • Environment – All Tenants are reducing carbon emissions.

The results?
Typically, Landlords who view property as long term investment are reaping a 7 year ROI. Thereafter they’re earning money from the Tenant for 18 more years alongside the Feed in Tariff. The property asset value has also increased alongside the Energy Performance Certificate making the asset more appealing for prospecting new Tenants.

Are Solar PPAs for you?

Here are 4 questions to consider. If your answers are yes, then maybe Solar PPAs are for you.

  1. Is your estate dominated by leasehold assets?
  2. Have you any established leasehold assets with 8 or more years remaining?
  3. Do you have an established carbon reduction goal?
  4. Would your leasehold sites have an EPC rating better than E?

GAIA supports energy professionals to exceed their goals. Whether one to one coaching, training or contracted energy professionals.