Often landlord’s take advantage of the opportunity to install these systems as part of a refurbishment following expiry of a lease, and prior to re-letting. But what about those growing situations where either landlords or tenants (or both) see the benefit of installing PVs mid-way through the term. There are plenty of factors to consider in such cases; notably related to leases, loading and longevity.
Leases
Most existing full repairing and insuring (FRIs) leases will not have considered the complexities around who has the right to install PVs. Aside from agreement on installation rights and costs, various other factors will need to be taken into account and agreed supplemental to the lease.
Who will take ownership of the service agreement, who will carry out maintenance, will a power purchase agreement (PPA) be required, and what are the access rights? These all need to be considered prior to the installation.
In addition, will the tenant retain responsibility for repair of the roof itself following installation, or will that obligation shift to the landlord? Will there be a reinstatement obligation at lease end or does the landlord accept the installation will be of benefit to a future user? There is no simple answer to these points, but a definite need to address the questions as part of the negotiation and legal process.
Longevity
It makes little sense to install a PV system, with a 25-year life span, on a roof which is likely to need significant repair works in 5 years. In that case, a typical solution would be to overcoat the roof to give a guarantee of equal length. Who pays for this futureproofing in a situation where the tenant is responsible for repair, but will take no benefit beyond the end of their lease. It will obviously come down to lease length and negotiation between the parties, but it is key to ensure the costs or roof repair (in addition to PV installation) is well understood and considered from the outset of these discussions, as it can be an expensive afterthought.
Loading
In all cases the loading capacity of the roof and structure will need to be assessed to ensure they have the ability to support the proposed installation. If strengthening works are required, there is a further question on costs, but also as to the logistics of undertaking this work in a fully operational building. Another point which needs careful consideration in terms of access rights and minimising disruption to business operations.
In summary, there are a huge number of factors to consider if contemplating PV installation on occupied buildings. Likewise, when a lease is being agreed and this may become an option in the future. In such cases, these provisions can be drafted from day one to ensure there is a clear understanding by both landlord and tenant should either wish to install PVs during the term.
