Living in an era where the UK has concerns about the security of energy supply, rising energy costs, and the need to meet environmental considerations, looking to innovative energy back-up alternatives makes sense.
Since the shock of the war in Ukraine, it has become increasingly clear that the way UK energy is generated and distributed is not going to be all that sustainable long-term. Lack of investment has left the country vulnerable to future supply shocks, the global supply chain system is too unstable to be relied on and there's little time left for the government to rebalance.
The country's reliance on fossil fuels is considered damaging to the environment and the UK's legally binding Net Zero target for 2050 means that viable and sustainable alternatives must be found.
Individual businesses also are under pressure to reduce their carbon footprints and meet emission targets dictated by UK legislation, as set out in the domestic and non-domestic Minimum Energy Efficiency Standard (MEES).
These regulations set a minimum energy efficiency level for private residential and commercial buildings, measured, monitored and controlled by the Energy Performance Certificate (EPC) regime.
Over recent years landlords, tenants and company managers have spent much time and energy thinking about these issues and how they can (1) meet the regulatory requirements in the must economical and efficient way, (2) reduce energy costs and (3) secure long-term supplies.
Potential future energy shocks and disruptions mean that these possibilities cannot be ignored. They would be very costly to any business operation, and potentially fatal, so the hunt for viable back-up alternatives cannot be delayed.
For commercial buildings, depending on size, location and orientation a large roof space often lends itself ideally to the siting of solar panels. These panels sited on rooftops are usually unobtrusive and every effective. As they are coming down in price through economies of scale, they offer an increasingly less expensive, clean and reliable alternative energy source.
There are vast swathes of commercial roof-spaces across the UK ideally suited to capturing the sunlight necessary to produce clean energy; energy used to power equipment, light buildings, to feed back into the grid for financial returns, or store in batteries to use when the sun doesn't shine.
Attractive for tenants
Commercial buildings of the future need to be sustainably energy efficient, they also need to be attractive to tenants, if they are to let easily and quickly. This is major concern for landlords. It means that substantial investment is needed, and it means investment is needed soon if these buildings are to be compliant.
A matter of some urgency
The next two or three years will be crucial in making the right decisions as to what's needed for your commercial buildings. With inflation pushing up prices by the day, and your competitors looking at similar solutions, it would be wise to act sooner rather than later.
It's pretty obvious when you look at the amount of square footage represented by rooftops on commercial buildings, some of which occupy vast areas, solar is an ideal solution. Using this roof space as opposed to having large swathes of solar farms occupying green fields, it means we can greatly reduce the impact on our visible environment and on agriculture.
There is already an increasing trend for businesses to adopt this solar rooftop solution. It might mean a substantial initial investment, but the payoff is substantial; it has the potential to increase the value of a commercial buildings as well as the desirability of a building for tenants. Landlords / tenants would receive substantial savings in their on-going energy costs.
International commercial law firm Hill Dickinson LLP's Sam O'Doherty, writing for Lexology.com says :
'By generating their own electricity, businesses are able to significantly reduce their reliance on the national grid, and therefore reduce their energy bills. This is particularly important for businesses that operate during daylight hours, being the time that the solar panels will be generating the most electricity. An optional extra could be storing this energy on-site, but alternatively feeding it back into the grid can reap further financial benefit where certain schemes [Government schemes] can provide financial incentives for businesses that generate their own renewable energy, which can help to offset the initial cost of the installation.
'By generating their own renewable energy, businesses can substantially reduce their carbon footprint which will contribute to the UK's efforts to tackle climate change. This is particularly important for businesses that operate in sectors with high carbon emissions, such as manufacturing and transportation, or where premises are comprised of multiple units that generate additional emissions through intensive use or by the use of vehicles to/from them.
'Businesses that use rooftop installations to generate their own renewable energy are seen as more environmentally friendly and socially responsible'� which can be attractive to potential buyers or future tenants. Rooftop solar panels can act as a marketing tool, demonstrating a business's commitment to sustainability and helping to attract customers or clients who value environmentally friendly practices.'�
Recent studies over a number of years have shown that substantial savings can be made when businesses have solar panels on the commercial buildings. According to one study by the The Solar Trade Association (STA) a 20 per cent saving on energy costs is possible, and a study by the Carbon Trust found that the average payback period for rooftop solar installations was between 6 and 8 years.
A more recent study by the STA in 202 found that on average a 50kW rooftop solar installation in the UK can generate savings of around �8,000 to �10,000 per year, whereas larger installations of up to a 250kW installation can potentially generate savings of up to �40,000 per annum, according to Lexology.com.
According to Sam O'Doherty there are several government schemes and grants available to businesses to financially assist with commercial solar rooftop installations? These include:
Smart Export Guarantee (SEG)
'This scheme requires energy suppliers to offer a tariff for the excess energy generated by small-scale, low-carbon generators, including rooftop solar installations. This means that commercial landlords can sell the excess energy generated by their rooftop solar installations to energy suppliers and receive payment for it.'�
Renewable Heat Incentive (RHI)
'This scheme provides financial incentives to commercial landlords who install renewable heating systems, including solar thermal systems. The scheme is also open to non-domestic properties and provides payments for up to 20 years. The amount of payment received through the RHI is calculated based on the amount of renewable heat generated and is paid quarterly. The payments are designed to cover the cost of the installation and provide a return on investment for the property owner.'�
'This scheme provides loans to commercial landlords who want to install energy-efficient measures, including rooftop solar installations. The loans are provided by the Carbon Trust and are designed to help businesses reduce their energy bills and carbon emissions.'�
'This scheme provides up to �10,000 of capital contribution towards the installation of energy-efficient equipment, including rooftop solar installations. The scheme is open to small and medium-sized businesses in the UK and is designed to help businesses reduce their energy bills and carbon emissions. The Fund also provides free energy assessments, training, and advice to those businesses.'�
'This scheme provides grants to businesses in the UK to support the development of energy-efficient technologies and processes. The scheme is open to businesses in the industrial sector, including those that install rooftop solar panels, and provides up to 50% of the project costs. To qualify, the premises must be used for an industrial business (such as engineering or manufacturing), must provide a demonstrable commitment to carbon reduction and must meet certain, IETF specific eligibility criteria.'�
Feed-in Tariff (FIT)
'This applies once energy is being generated from a rooftop installation. FIT acts as a guarantee for commercial landlords that they will receive a set price for the electricity they generate and feed back into the grid. Steady income, and also the assistance offered by regular payments in offsetting installation costs associated with renewable energy systems, can often be what makes an installation financially viable for commercial landlords.(Note that FIT is not currently deemed compatible with SEG).'�
Through the operation of the FIT, return on investment can be pretty much immediate once an installation is completed. Landlords / tenants can immediately monetise the energy their solar panels are generating by selling their excess energy generated back into the grid. They will receive credits for this and therefore only pay for their net energy usage.
After taking all the measures they reasonably can to reduce their carbon dioxide emissions (carbon footprint), UK businesses that are producing excess carbon dioxide are required to purchase carbon credit offsets '� often from forestry companies. These carbon credit tradable permits allow businesses producing their own clean energy via solar panels to earn money in this way as well.
Improved environmental credentials and business reputation
Sometimes overlooked in all this scenario is the businesses' reputation and the improved 'image'� value of property owners and businesses investing in these energy saving innovations '� businesses are increasingly being judged on their contribution to energy saving and environmental protection.
With acknowledgments to Hill Dickinson LLP, Sam O'Doherty, and Lexology.com