Rooftop solar panels on commercial real estate buildings present massive potential for creating revenue streams for landlords from existing assets, while saving tenants money and helping them achieve their net-zero goals.
But for landlords seeking double-digit returns and stable long term revenue, the project financials rarely stack up. This contributes to today’s low 2% adoption rate of UK Commercial and Industrial (C&I) solar projects.
Conventional consultants suggest maximising project performance by right-sizing solar to match the needs of on-site tenants, limiting exposure to low grid export tariffs. But this approach often results in a problematic mismatch: the on-site tariff required for a profitable project is too high for tenants to agree to.
Up-sizing a solar project can align incentives by increasing revenue while also improving tenant tariffs. By generating more energy, it also future-proofs the asset with headroom for expansions, like on-site EV chargers. But, how can that be done profitably?
A guaranteed export tariff
For building owners to make these larger solar PV projects profitable there’s a vital requirement: a guaranteed, fixed, long-term export tariff.
A fixed, 10 year export tariff creates revenue certainty in the face of energy market volatility and unexpected events such as tenant voids. It can improve the financials such that landlords can offer tenants more competitive on-site tariffs. Up-sizing with a guaranteed fixed tariff reduces long-term risks and aligns the interests of landlords and tenants, strengthening their relationship and the likelihood of project success.
How does a guaranteed, fixed rate work?
Export can be guaranteed by selling to a network of energy buyers, rather than directly to the grid. Landlords can think beyond individual buildings and balance energy supply and demand across and beyond their real estate portfolio. For example, if one building in the network has excess energy, it can enter an agreement where it offsets against the energy needs of another building where production may be lower, or a building that is not a candidate for on-site solar.
Overcoming analysis paralysis
Building owners that recognize the value of solar often fall at the first hurdle due to the complex and costly nature of feasibility studies. Intricate financial models of costs, revenue and payback terms must account for variables such as on-site and export tariffs, tenant lease terms, procurement and installation costs, as well as the energy generation potential and forecasted demand of the building.
Given the complexities, landlords typically outsource the analysis of solar installations to consultants, incurring substantial costs for feasibility studies, legal & scaffolding, planning and designs that contribute to the high on-site tariffs required for profitability.
Simplifying this process can reduce overall costs and encourage more C&I landlords to explore solar as a revenue-unlocking tool.
A fresh take on solar PV
Unused commercial roof space can offer significant untapped revenue potential if landlords adopt a new approach to solar project planning.
A guaranteed, fixed, long-term export tariff from a network of energy buyers and sellers, powered by simplified feasibility study for an up-sized system design, can yield significantly higher solar revenue for owners and meaningful energy procurement savings for tenants.
This could incentivise more building owners to evolve from conventional methods and up-size their solar ambitions, boosting the value of their real estate assets, supporting their tenant relationships and their sustainability goals.
InRange is creating a new energy asset class from the built environment, unlocking new revenue streams for landlords and saving energy costs for tenants. InRange provides guaranteed 10-year fixed export tariffs, selling surplus energy to buildings within their network through the InRange Marketplace. InRange’s AI-powered platform simplifies feasibility studies for quicker, more efficient and cost-effective assessments, empowering landlords to make faster, more accurate decisions across a portfolio.