The Money Making Overhead

The Money Making Overhead

The publicity around slashed subsidies over the past few years and the ever-changing nature of the technology have caused many to view roof-top solar generation as a ‘wait and see’ business proposition. However, beyond the hype there remains a compelling logic in buffering your business against the volatile energy supply market and in potentially transforming electricity from a costly overhead to a secure income stream.

Installation costs halved between 2010–12 and are continuing downward, while the Government remains eager to incentivise the commercial roof-top sector. So although the technology may become even more affordable in future, if your technical and tax appraisals add up it makes sense to investigate roof-top installations now, before the subsidy environment alters again.

“Rent a Roof” schemes are available for commercial properties with a fixed (low) price for electricity being guaranteed for the owner via a private Power Purchase Agreement (“PPA”). Alternatively if you have access to the necessary capital then it may be attractive to own the equipment yourself and benefit directly from the free power and feed in tariff income.

In either scenario it will be essential to ensure that legal pitfalls are avoided. For example, mortgage lender’s consent must be obtained in advance, and the terms of any Installation Contract or PPA should be checked. Additional care is needed to review roof-top Leases as their terms will bind future owners and may thus affect the capital value of the building. If the building is owned leasehold, then the freeholder’s consent may well be required.

For further information, please contact Tom Brearley, property specialist in the Energy & Renewables Team at Michelmores, by telephone on 01392 688 688 or by email, or your usual Michelmores contact.