Solar photovoltaic (PV) systems have emerged as a promising avenue for landlords seeking to enhance property value, reduce energy costs, and meet sustainability goals. Hedley Jones, Partner and Head of ESG Refurbishment and Development at Workman, breaks down the complexities and identifies the benefits to property investors.

The economics of solar PV are becoming increasingly attractive. Typical payback periods are now under 10 years post-capex, and with rising energy prices, this timeline is likely to shorten. Yet the path to successful solar PV implementation is often fraught with complexities that can overwhelm even the most enlightened investors. Additionally, contrary to many initial expectations, solar PV hasn’t been the instant win many investors hoped for.

The barriers, particularly for occupied units, are fairly significant. Challenges to both delivery and operation of PVs are often multifaceted, ranging from legal hurdles to insurance concerns, alongside the more broadly recognised practical considerations of installation. However, the process can be expedited by exploring a range of proven solutions – for example, integrating PV during new builds or comprehensive refurbishments.

The key is simplicity: many landlords are installing PV as they would another building service, with occupiers benefiting from and maintaining the system, much like other building infrastructure with the capex reflected in reduced voids and improved rents.

No one-size-fits-all solution

We work with a range of institutional investors to assess the value and practicality of PV implementation across  varying portfolios, with a focus on breaking down these complexities. This approach involves carefully mapping out different scenarios for different property types, demonstrating that there’s no one-size-fits-all solution.

The scale of the system is highly dependent on a number of site factors. But the general principle is to maximise onsite use of the generated energy offsetting the costs of grid energy, whilst achieving a more efficient energy use, without the grid transmission losses. A 10-panel installation can typically generate 3,200kWh/yr on site; based on current carbon emission factors, this equates to carbon savings of 617kgCO2/yr.

Using an example asset, potential energy and carbon impacts could look like this:

What issues should investors consider ahead of delivery?

Building safety remains a significant concern, and recent high-profile incidents have rightly led to strict installation and insurance guidelines. Panels must be positioned specific distances from party walls and roof lights and require specialised technology to cut power in case of fire alarms. Materiality is an important consideration to ensure combustible elements are avoided.

Roof space is another critical factor: the presence of large volumes of roof lights and tall thin office blocks with small roof footprints pose challenges around competing demands for roof plant and amenity space. Concurrently, investors often question the longevity of solar installations – and while manufacturers typically guarantee panels for 25 years, real-world performance could extend to 40+ years.

It is vital to use Whole Life Carbon Assessment to understand the long-term environmental benefits, balancing the reduction in operational carbon against the upfront embodied carbon from installing the panels. It’s also important to note that onsite renewable energy is a key part of the UKGBC framework for demonstrating net zero carbon by reducing reliance on grid energy.

Beyond building safety, there are several additional practical considerations that asset managers should consider before implementation. First, it may be more viable to instruct architects or developers to consider the integration of PV systems during redevelopment phases, or during comprehensive retrofits, as they often allow for full control over roof space. This control allows AMs to minimise extensive and costly occupier negotiations. Concurrently, before undertaking significant refurbishment works, asset managers should engage in a full evaluation of each scheme’s legal and insurance requirements. We’re aware this can differ significantly from asset-to-asset, and AMs should not assume that their liabilities are equal across portfolios.

From a design perspective, assessing roof space and building orientation, with a focus on ensuring safe access for ongoing maintenance, is critical – particularly if loss of energy from PV panels is likely to cause a noticeable impact on building operation. Additionally, the well-documented issues with the UK’s energy networks, often means that a detailed analysis of grid connectivity alongside – any local planning considerations – is now necessary to deliver viable PV schemes.

Whilst the installation of PV panels is often coupled with other, more traditional, building service upgrades, the complexities of delivery may also require the use of expert teams – especially on larger assets. This expert advice, beyond ensuring adherence to industry recognised quality and performance standards, may also asset managers to more accurately quantify potential energy savings, building utilisation and payback periods – ahead of delivery. If integrated into facilities or centre management strategies, robust in-use monitoring and continuous maintenance post-installation will extend long-term operational efficiency and asset performance – therefore reducing the need for expensive and carbon intensive replacements.

By Hedley Jones, Partner and Head of ESG Refurbishment and Development

Find out more: ESG Services