In this month’s SolarKal blog, we take a look at an exciting opportunity for real estate owners in several states across the country – leasing your roof for solar – that allows building owners to switch to commercial solar systems without investing any CapEx.
What is a solar roof lease, and why should C&I customers be paying attention?
A Solar Roof Lease is an agreement between a solar provider and a commercial property owner to install commercial solar panels on the roof of the building. The solar provider installs, owns, and maintains the solar panels, and the commercial property owner earns a fixed monthly lease payment for hosting the solar panels. The solar owner then sells the power offsite, via various programs such as “Community Solar.” Often these programs are highly competitive, as they’re limited in size and require an application to get into the program.
A Solar Roof Lease provides several benefits for commercial property owners, including:
Fixed monthly payments that boost the property’s net operating income and allow for predictable budgeting
A long-term tenant on your roof with low to no vacancy risk
A strong sustainability story since the power often goes to the surrounding community
No upfront investment required, with maintenance and service provided by the solar provider
Here’s how a Solar Roof Lease typically works for commercial properties:
After conducting a full site feasibility analysis, SolarKal will tap its solar marketplace of 200+ vendors to competitively bid for the project, resulting in apples-to-apples bids comparing everything from annual roof lease rates, to local experiences with the utility, to the approach for getting into the program.
Our team then helps you negotiate the roof lease agreement with the winning solar provider to ensure you’re protected throughout the term.
The solar provider will then handle all the necessary application process and further site due-diligence.
After the installation is complete, the solar provider will maintain and service the commercial solar panels throughout the lease term, including any necessary repairs or replacements.
At the end of the lease term, the commercial solar panels can either be removed by the solar provider or the lease can be extended for an additional term.
Overall, a Solar Roof Lease can be a smart choice for commercial property owners who are looking to increase their bottom line without any investment, or for owners who might not be able to take advantage of tax incentives offered by the government. By partnering with SolarKal on a Solar Roof Lease, property owners can benefit from clean, renewable energy without the capital investment or ongoing maintenance requirements of owning commercial solar panels outright.
What are the best states for Solar Roof Leases?
Several states across the US offer community solar programs for C&I property owners, though not all roof leases are created the same. As you can see in the table below, expected annuities vary by market, with New Jersey, the New York City metro area, and Massachusetts offering the highest lease rates. Don’t let this dissuade you however if your property isn’t in one of these three states- several others offer attractive returns as well, and our job at SolarKal is to secure clients with the highest possible annuity with the right vendor.
In addition to the states listed above, it’s worth calling attention to new opportunities arising in an already promising solar state- California. Several months ago, the state passed a new law to kickstart a community solar program across the state. The program details are still being worked out, and it’s expected the program will open up sometime next year; however, there is work we can do ahead of time to help our clients to the front of the line for the program. If you have large commercial or industrial properties in California, now’s the right time to begin the process of implementing commercial solar.
So, what does this all mean?
If you own property in any of the above community solar states, it’s worth learning more about how a Solar Roof Lease can add to your bottom line and provide a fixed annuity for the next 20 years. If you’re interested in learning more about how your organization can leverage solar to make progress on its sustainability goals while saving thousands of dollars annually, get in touch with a SolarKal solar advisor today!