Should you install solar on your commercial property?

By Greg Bell

The so-called "green movement" has really taken hold in the past several years, becoming the sort of mainstream trend that's increasingly difficult to ignore. With so many properties across Australia – including both residential and commercial buildings – now installing solar and wind power, it is time for those who own commercial properties to at least examine their options for doing so.

Certainly, any property owner who pulls the trigger on such a decision today wouldn't be alone in doing so, according to Commercial Real Estate. All over Australia, companies have increasingly turned to solar to cut their energy costs – accounting for a 400% increase in installations from 2016 to 2019. Last year alone, businesses created a market that saw solar power generation meet 10% of Australia's entire daytime business energy need – and demand is only on the rise.

As a commercial property owner, the big question you have to ask yourself is whether such an investment is right for you.

First things first

Obviously, installing solar power on any commercial property you own is going to come with a cost, and you need to figure out how you will handle that financial burden. In many cases, you may choose to simply pass that cost on to a tenant in the form of an increase in their rent, which could, in theory, be negated or even surpassed by their energy savings. However, such a decision might not be right for all commercial properties – some may not use enough energy to really make such an investment worth it, either for the property's owner or its current and future tenants, according to Solar Quotes.

For that reason, you may need to crunch the numbers and determine whether such a move makes sense based on not only the power usage of a given building, but also how much a solar installation will cost. The cost of grid electricity a commercial property currently pays may be important to consider as well, especially because there are some companies that will instal solar power and essentially rent it to a business over a period of several or more years, rather than making them pay for the equipment upfront.

What's the benefit?

While there are some clear cost benefits to installing solar in the long run, commercial property owners might also want to think about the potential benefits that come in other ways. For instance, depending on the kind of building or the tenants that might end up occupying it, a solar setup could be a major selling point that makes a property more attractive, even if the rent is slightly higher, Origin Energy noted.

That may be true whether you buy the system outright or rent-to-buy, because neither the building nor the panels are going anywhere, but arrangements can be made to ensure any tenant is set up to take full advantage of the system.

Final considerations

When you make the decision to instal solar panels, there may be a number of hurdles you have to clear or plan for, Linkilaw advised. These include getting your plans approved by the proper authorities, checking with your current tenant or tenants to see how they would feel about such a decision (as well as whether installation is permissible under your current lease agreements), updating your insurance policies and setting up plans for maintenance.

While this is certainly not the kind of decision you should make lightly or without a lot of consideration, it's also one that can really benefit you, your tenants and the environment in the long run. As such, it's something you should at least examine to determine whether it's right for you.

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