If you’re a commercial property owner considering solar but feeling deterred by the high cost of replacing your aging or deteriorating roof, solar might actually help pay for it. Roof replacements are a major CapEx expense, but a solar lease can provide upfront payments that help fund the work — turning a routine cost into a strategic investment.
Generally, a solar lease provides a steady, long-term income in the form of annual lease payments over the life of the agreement, which typically is around 20 to 25 years. However, in this scenario, where roof capital expenditures are required, a solar developer can advance a portion of said lease payments to offer an upfront payment that covers a part or all of the roof replacement costs.
SolarKal has extensive experience arranging these types of solar lease transactions for commercial property owners. Here’s how it works: The developer calculates the net present value (NPV) of the 20-plus years of lease payments. The NPV is the value of all future lease payments over the entire life of the investment discounted to the present. A portion of that NPV, typically anywhere from 60% to 80%, is paid upfront after certain project milestones, and the remaining is reserved for ongoing annual lease payments. This method allows commercial property owners to access future lease income, helping to offset a necessary roof replacement without the need to secure external capital.
There are multiple factors that can influence how much of the roof cost can be covered.
A benefit of replacing the roof with solar in mind is that it gives the solar developer and roofing partner the opportunity to coordinate goals, making the process smoother down the line. The input from a developer can aid the roofer in selecting roof specs that work best with solar. The developer can in turn select the appropriate mounting systems. Having both parties involved can simplify the construction timeline and improve vendor management.
If you are planning a roof replacement and have been considering making the switch to solar energy, you may be able to finance the system without paying extra out of pocket. A well-structured solar lease gives you the upfront payment required to cover roof work while preserving a long-term lease income.
Consult with your SolarKal advisor to explore whether this structure could work for your property. With the right financial strategy, your rooftop can generate clean energy, help fund critical upgrades and reduce your long-term OpEx — without requiring upfront capital.
A proposed federal budget bill currently under Senate review includes changes to the Investment Tax Credit (ITC), which may impact the financial structure of third-party-owned solar projects, including those that fund roof replacements. While these changes are not yet law, timing could be a factor. SolarKal is actively monitoring developments and working with our partners to guide clients accordingly.
