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The time to implement solar on commercial buildings is now. According to the International Energy Agency (IEA), “solar power is now the cheapest electricity in history.” Simultaneously, many real estate owners and lease holders are currently looking to implement solar panels on their buildings to meet corporate sustainability goals and reduce costs.

Many large corporations do not own all of the real estate they occupy, and thus, they must enter lease terms with lessors. Commercial Real Estate owners favor long lease terms and increased lease rates. Long-term leases, which are typically over five years, are favored by landlords due to their predictability. Landlords are typically more accommodating to businesses with long-term leases on their properties.

Corporate lessees have the ability to own onsite solar assets, even though they do not own the property. Many leases that are already in place include the roof of the building. If not, lessors are typically open to leasing the building roof space for a nominal amount of money. Lessees can approach lessors with a plan to lease the roof for a fee and extend their lease term in order to install solar. Language around the removal of the system should also be included if the lessee's term is up with an option to sell to the lessor.

Solar is advantageous to both lessors and lessees. Installing solar systems, according to the US Department of Energy, can reduce operating expenses by lowering electricity costs and reducing the exposure to volatile energy prices. Solar can improve marketability for lessors by reducing its exposure to volatile energy prices. Due to the lower operating costs, adding solar can also improve tenant retention. Solar, in addition to lowering electricity costs, can support corporate ESG and sustainability goals for lessees.

Corporations that own solar can provide significant returns, increasing cash flow while helping them achieve ESG goals. Lessors increase lease terms and increase property net operating income. It's a win-win for everyone.
 

SolBid