ESG: A Comprehensive Guide To Solar PVs

With energy costs surging northwards and carbon emission issues getting more complicated, landlords and tenants are looking to explore new energy resources. One option that's getting increasingly popular is installing a solar photovoltaic system. Many commercial landowners are seriously considering this option which can be installed on the roof. There are reports that large numbers of real estate consultancy services have already started using these systems on industrial properties. A stumbling block in this arrangement is the clauses in the agreement between landlord and tenant explicitly relating to dilapidations and PV systems. The parties concerned must discuss these issues before the installation. Experts suggest that the landlord and tenant should consider who will be responsible for dilapidations before, during, and after the installation.

Who has the right to install solar PV; landlord or tenant?

Before installation, it must be decided who has the right to install the Solar PV system. Traditionally, the tenant is responsible for maintaining the roof covering, but they have no rights to the airspace above it. This can lead to maintenance issues and must be discussed.

What is the life expectancy of solar PV?

Also, the PV system has a life expectancy of 20-25 years, a short lease may only be five years. So, a landlord must also take into account future considerations. Then there are issues like the tenant having an air conditioning system or other roof equipment. Can the landlord move them away to install solar PV?

An important aspect to consider before installation is the structure and condition of the roof. Can it take the additional load? If the structure needs repair or alteration to accommodate the additional load, the same must be mentioned in the lease. If the landlord uses a third party to install a solar PV system, dilapidations can become more complicated. A provider could install a system for free, then supply cheap energy to the tenant. In such instances, the landlord must ensure that the terms of access with the third party and the tenant do not clash.

Who has access to maintain solar PV; landlord or tenant?

Once a PV system is installed, access must be provided to the roof to maintain it. Generally, the landlord can inspect a property but cannot have an automatic right to access it to maintain a PV system. This issue must be discussed and sorted out before installation. After installation, and a few years later, the roof's condition comes under consideration. Both parties must consider insurance and damages. If the roof is damaged through screw holes or because a panel has come loose, there must be clarity on who is liable for repairs.

When it comes to removing a PV System, the key dilapidations concern is whether a tenant-installed PV system needs to be removed when the tenant decides to leave. While there is no doubt about the benefits of a PV system, the landlord might want a departing tenant to remove it for specific reasons, such as the landlord needing an upgraded system to provide additional power. Encouraging a tenant or landlord to install a less bespoke system can be the ideal solution. Also, it is more sustainable to retain an existing system where possible. Installing a PV system benefits far outweigh the problems for both the landlord and tenant. They must make the proper considerations when a lease is drawn up so that issues can be proactively addressed.

Do you need a specialist lawyer or solicitor to draft solar PV clauses in a lease?

The answer is yes. Ringley Law drafts leases and acts for both landlords and tenants and can help you through the maze of legalese when it comes to solar PV clauses.

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