Positive impact of solar on the performance of commercial property

New research from JLL, in conjunction with Solarcentury, highlights the positive impact of solar on the performance of commercial property.

The report finds that installing roof top solar is beneficial because it can reduce running costs, help meet government targets for improved performance of buildings and can increase the value of the property through providing additional income streams.

This has been determined through market research, analysis of the experience of commercial properties that already have solar roofs and a review of valuation methodology. Historically, a lack of knowledge has typically resulted in a variety of approaches to valuation. The report demonstrates that the Discounted Cash Flow method is the most appropriate, reflecting the most robust analysis of the relevant associated revenues and costs relating to solar.

Meanwhile the report identifies the rising cost of energy and changes in legislation as two key factors encouraging landlords and tenants to install solar; specifically, this relates to the projected 60% increase in the industrial price of electricity in real terms by 2024 as well as the EU 2019 zero carbon requirement for commercial buildings.

Frans van den Heuvel, CEO at Solarcentury comments, “Whilst most of the growth to date in the rooftop solar market has been at the domestic and utility scale, there is strong evidence that commercial and industrial customers are now turning to solar, helped by the fact the technology is ready and now importantly, attitudes are changing too. A new wave of leading brands are going solar – Sainsbury’s, Google, Mars, IKEA and Apple among them – and this is undoubtedly stimulating the market. And with over 80% of the British public consistently supportive of solar, consumer awareness for companies choosing solar will only increase.”

Paul Crewe, Head of Sustainability, Engineering, Energy & Environment at Sainsbury’s, said, “Sainsbury’s is now the largest multi-roof solar panel operator in Europe, having successfully installed 135,500 PV panels on the roofs of over 218 properties, and we will have 170,000 panels generating 40 MW by spring 2015. This is key to enabling us to take control of our energy costs and minimise our environmental impact and achieve the environmental commitments we made in our 20 by 20 Sustainability Plan. Supermarkets have the equivalent of football fields on their roofs, many of them underutilised so it is ideal for turning that space into something positive.”

Chris Strathon, Director in Valuation at JLL, added: “This is the first in-depth research into understanding the impact of solar and it is clear the majority of commercial roof space is untapped as an additional revenue provider. The research is timely given the recent surge in demand for solar on commercial roofs, driven by new legislation and increasing awareness of the opportunity to monetise the large unused roof spaces of commercial properties.

“We believe rooftop solar on commercial property adds value by improving the marketability of a property to occupiers who are driven by cost or CSR objectives, and additional income which is received via power purchase agreements and government-backed tariffs.”

For full report, please click here.