Landlord FAQs - Top Questions About Installing Solar on Your Property

Contents

1. My tenant wants to put solar on the roof. What is the benefit to me as a landlord? 

2. What are my rights as a landlord if my tenant signs a PPA, and then breaks their lease before the end of that agreement? 

3. How will the installation of solar panels affect the structural integrity of my roof? Will any reinforcements or modifications be needed, and if so, who will bear the cost? 

4. How will the installation impact property insurance, and does the tenant have liability insurance for the solar panels? 

5. What are the maintenance requirements for the solar panels, and how will the tenant handle them? 

6. How will the solar panels be connected to the electrical system of the property? 

7. Is there a separate meter for the solar-generated electricity, and how will billing be handled? 

8. How will the solar panels impact the visual aesthetics of the property? 

9. My site is heritage listed. Can my tenant still install solar? 

10. What happens to the solar panels if the tenant decides to vacate the premises before the end of the lease term? 

11. I’m a landlord – can I install solar and recoup my investment by charging the tenant? 

12. What about warranties? 

Still have questions? Our team are waiting to discuss them with you. Get in touch today https://www.smartcommercialsolar.com.au/contact-us  

My tenant wants to put solar on the roof. What is the benefit to me as a landlord? 

For landlords, there are benefits to having solar installed on your property, whether roof or ground mounted. These include:  

• Making lease agreements more attractive and encourage tenants to stay longer.  
• Lower costs of capital and higher market value of property.  
• Property will attract businesses with sustainability goals seeking buildings with lower energy demands – this may allow increased rental yield. 

What are my rights as a landlord if my tenant signs a PPA, and then breaks their lease before the end of that agreement? 

Before proceeding with a Power Purchase Agreement (PPA) that affects a leased property, all tenants must seek permission from their landlord. This process should be formalized through a Letter of Consent (LOC) and an amendment to the main lease, known as a Letter of Amendment (LOA) which outlines the responsibilities regarding property restoration upon lease expiry or termination. This condition is also typically outlined in the main lease agreement. 

Once you as the landlord agrees to the LOC and LOA in principle, your tenant can progress to the next stage, and you both have legal protection in case of tenant turnover before the PPA contract expires. 

Upon tenant turnover, the outgoing tenant typically transfers the PPA agreement to the incoming tenant. In cases where there is no incoming tenant, the landlord assumes responsibility for the agreement unless otherwise agreed upon. If not agreed upon, the outgoing tenant is liable for settling the remaining balance of the PPA. 

PPA durations can be tailored to match the remaining lease period. For instance, if the lease has 8 years remaining and the PPA spans 10 years, adjustments can be made to align the durations. 

How will the installation of solar panels affect the structural integrity of my roof? Will any reinforcements or modifications be needed, and if so, who will bear the cost? 

All systems are accompanied by an independent structural certificate prior to installation. If structural upgrades are required, the cost of them can be factored into the PPA or upfront cost which is payable by your tenant. 

We use existing screw lines or non-penetrative clamps to install solar racking to ensure there is no new penetrations to the roof sheet. 

How will the installation impact property insurance, and does the tenant have liability insurance for the solar panels? 

The solar system itself is insured through the warranties on the panels and other equipment – scroll down to discover standard warranty periods. 

In terms of insurance and liability, the tenant must add the solar facility to their existing liability policy that they have over the site. Given the relatively small capital value of the solar system in comparison to the value of the building, insurance premiums are not likely to change materially. 

Additionally, many insurance companies now include solar equipment as standard – we advise tenants to check their inclusions to determine if this is the case. 

What are the maintenance requirements for the solar panels, and how will the tenant handle them? 

Through a PPA (Power Purchase Agreement) all operations and maintenance needs for the system are covered for the term of the agreement. 

For systems purchased outright or otherwise financed, the responsibility for operations and maintenance rest with the owner of the system, in this case your tenant. 

We offer a comprehensive, state-of-the-art maintenance service that gives our customers complete visibility of their solar system's performance and costs around $900-$1200 per year. Over 70% of our solar customers choose to continue engaging us to maintain their system after electrification and handover. 

How will the solar panels be connected to the electrical system of the property? 

The solar panels on your roof connect to an inverter, which converts DC power from the panels into AC power. The inverters connect into your switchboard with a circuit breaker, in the same way as any other appliance or equipment. The size of the system will dictate the size of the circuit breaker required - if your switchboard requires more space or a new section for the circuit breaker, we can handle that as part of the installation. 

Is there a separate meter for the solar-generated electricity, and how will billing be handled? 

We will install metering on the solar system for monitoring and maintenance purposes. If the system is purchased under a PPA, we will use this meter for billing as well. Your existing electricity meter will continue to operate as before, but with less power coming in from the grid, so the bills will be less. If your existing electricity meter needs upgrading to handle solar power, your retailer will cover this. We will notify your electricity retailer at the end of the solar installation so that they can assess whether the meter is up to date. 

How will the solar panels impact the visual aesthetics of the property? 

It’s increasingly common to see solar panels on properties, and they’ve come to signify sustainability and responsibility to many people. What this means is that solar is no longer considered an ugly or even remarkable building feature.  

However, if visual impact is still a concern, there are design options which make solar panels less visible. For example, panels can be fitted flush to the roof, be kept out-of-sight of public view or even integrated into roofing materials in the case of new builds or renovations. 

My site is heritage listed. Can my tenant still install solar? 

Most likely yes, but there may be restrictions around where panels can be installed. If your building is listed as being one of heritage significance on the local council's heritage register, you or your tenant may need to seek approval before having solar installed. 

What happens to the solar panels if the tenant decides to vacate the premises before the end of the lease term? 

In almost all cases, the tenant forfeits their rights to the system and the energy it produces when they vacate the premises. If a tenant who paid for it wanted to take the system with them, it would be cost-prohibitive and void all warranties. As such, tenants generally leave the system on the roof for the following tenant. 

There is a possibility that if you needed to evict your tenant ahead of the lease period, the tenant could factor in the lost value from their investment in any financial arrangements you come to. In this instance, there may be an exit fee for the system. 

I’m a landlord – can I install solar and recoup my investment by charging the tenant? 

Yes, we can help facilitate monthly reporting which will enable you to invoice your tenant on a monthly flat fee or per kWh basis. This type of agreement can be structured in a number of ways to benefit both the landlord and the tenant. We can assist with this by performing an analysis on your energy usage. 

Our Woree Plaza project is an example of a property owner installing solar as a managed asset. We installed a 200kW system for the QLD shopping centre which offset the consumption of the entire site by 24% and was financed over 5 years. During the 5-year term, the project was cash flow positive, which means it had a positive impact on Woree Plaza’s day-to-day cashflow. When the system was paid off, the free electricity generated was passed onto the centre’s tenants through reduced rent or fees.  

In this way, solar not only reduced energy costs for Woree Plaza, it became part of their marketing to new tenants, who were attracted to the centre due to reduced operational costs. 

What about warranties? 

All installations are backed by our standard 5-year warranty which covers the building integrity of areas we’ve worked on. 

In addition, the solar panels and other equipment come backed by their own standard performance warranties, e.g.  

• Panels – 12-year product, 25-year performance warranty 
• Racking – 25 years 
• Inverter – 10 years