Commercial roof leasing for solar energy – increased yield for WA Perth property owners with no upfront cost

If you’re a commercial property owner or commercial property manager you probably keep an ear to the ground for new and innovative ways to maximise yield. Make sure you’re across solar roof leasing as it is an easy way for you to make additional income and increase the value of your investment. 

Commercial property owners can earn rental income by leasing out building rooftops for solar power generation to energy retailers like Amanda Energy (which has an Electricity Retail Licence, is a CEC approved Solar Retailer and is an expert in customising solar roof lease agreements in WA). The energy retailer rents your rooftop, farms the sunshine and supplies electricity to your tenants. 

The property owner does not need to make any financial outlay in order to receive rent. There are no upfront or ongoing costs, your commercial energy retailer owns and operates the solar power equipment and meets all costs associated with installation, operation and maintenance of the system. 

How does solar roof leasing work for property owners?

Energy retailers offer secure long term solar leases (typically 10 to 15 years with further options) to rent the rooftop of your commercial property. Rent is usually paid to you monthly in equal instalments at the beginning of every month. 

How does roof leasing work for tenants? 

The energy retailer that holds the roof lease will supply your commercial tenants with power, which will come from the solar installation as well as the grid. The tenants will pay the standard grid rate for all of the electricity they consume (regardless of source). This means a portion of their supply will be green power without the price premium.  

Your retailer can invoice your tenants directly for the entire electricity account, or supply meter data so your property agent can invoice the tenants. This provides ongoing savings as there are no monthly sub meter reading and report costs.

Key benefits of leasing your rooftop for solar power generation

With Perth being one of the sunniest cities in the world, receiving more than 8 hours of sunshine per day (annual average), it makes sense for property owners to take advantage of the opportunity to rent their rooftops for commercial solar power generation. Here are a few key benefits of solar leasing for building owners: 

1. Increased Yield. You receive additional rental return via lease of your unused rooftop, and the additional secure rental return can boost the value of the building, giving you an immediate increase in asset value.

2. No Capital Outlay. There is no capital outlay for the solar system, technology risk, maintenance or operational costs.

3. No Ongoing Management Costs. The energy retailer manages your embedded network by managing the main and sub meter readings.

4. Effortless Bill Management. The energy retailer manages energy bills and payments on your behalf, so your cash flow improves and your exposure to risk of tenant default on the electricity account is removed.

5. Boost your Green Rating. Installing solar increases NABER & Green Star Ratings.

6. Avoid Installation Cost. Developers – If you engage the energy retailer at the construction stage, they can save you thousands by installing and paying for your electricity meters to all tenants.

How much rent does a solar lease generate?

The rent depends on the tenants you have. The more electricity they use, the higher your rent return. To give an indication of likely returns, a roof lease rate is in the order of $50/sqm/yr.

A minimum of about 500sqm of roof area is required to accommodate a 100kw solar system, while a 40kw system requires about 200sqm.

The energy retailer is responsible for the solar system, manages your embedded network and provides all the meter readings on a regular monthly basis free of charge.

Additional gains from solar leasing

Given building value is influenced by its potential rental income, having a 10 – 15 year solar lease on the rooftop can greatly appreciate the value of your building – potentially 10 – 15 times the rent from solar.  With a secure long term lease bringing in annual income, the saleability of the property will also be enhanced.

Your building will also receive an increase in its NABERS and Green star ratings from solar. Your yield from tenants might also increase as you improve your NABERS rating. 

Will a solar lease work for me?

A solar lease will suit you if you on-charge tenants for electricity, even if your tenants don’t have a submeter. (Normally tenants will have a submeter, but in some instances they might have their own main meter but are still invoiced by the property manager.) 

Large power use activities, such as service stations, shopping centres and other retail, offices and industrial developments are ideally suited to solar leasing.  

Solar leasing might tick a box for the tenant too as their electricity bill will be made up of a combination of solar power and grid electricity, so their business will be accessing green power for part of their consumption without paying a green power premium. 

What happens if the solar panels or inverters fail?

The commercial solar pv system is owned, maintained and operated by the energy retailer. If there are any ongoing repairs or replacement of parts needed, then these will be attended to and paid for by the energy retailer. The solar system is constantly monitored, and a notification is activated if there is a fault so there is minimum solar production downtime.

How do I get started with a commercial solar lease?

Simply contact your commercial energy retailer or your property manager. The energy retailer will ask you to provide agreement to analyse the consumption data at your site. For new developments without consumption data, data can be modelled for the tenants. This will allow your energy retailer to calculate the correct size and location of the solar generator and the location of the inverters. You’ll then be presented with a tailor-made solar roof lease for your commercial property.  

Leasing your rooftop for solar is a great opportunity to utilise your asset fully and boost your property yield. It provides the added benefits of savings on meter reading fees and management costs, and removes the risk of business tenants not paying their electricity account.