While buying green energy via PPAs (power purchase agreements) is now a common route for those seeking to clean up energy supplies – and corporate PPA announcements in Europe alone broke records in 2020 - the falling cost of solar technology and installation is fueling interest in on-site renewable energy provision.

Despite recent cost increases due to rising prices of materials including polysilicon, solar energy is around 82 percent cheaper than a decade ago, according to the International Renewable Energy Agency.

“Rooftop solar that can primarily serve the underlying building with surplus energy exported to the grid, avoids network costs, minimises losses and is proving to be more financially viable today than just a few years ago,” Readhead says. “The key is in getting the balance of energy use right; how much energy does a landlord, tenant or owner occupier need, the agreed price or avoided cost of the energy – and, practically, can their roof accommodate panels?”

Aside from size, other practical issues exist, such as the viability of putting solar panels on a roof which itself may require replacing in a few years’ time.

“Current discussions with one institutional client centre around this very point,” says Readhead. “Is it better to wait to install solar panels, rather than being in a situation where the entire system needs to be temporarily removed to allow roofing work to go ahead?”

Another plus point is potentially turning excess energy into additional income.

While a larger solar array that generates more power than required allows energy to be sold to the grid, there may be the option of supplying green power to other parts of an investors’ own investment portfolio and supporting wider sustainability objectives.

“For occupiers too, getting renewable energy directly from the landlord is an attractive option, typically requiring direct PPA agreements on mutually beneficial terms,” adds Readhead.

“Occupiers share similar green ambitions, so the putting in place of contractual agreements that help both sides is a win-win. But it’s something that we’re yet to see become mainstream.”

Securing green onsite energy supply could equally help existing buildings to compete for the best tenants.

“Occupiers will continue to seek the best and latest on offer in terms of renewable energy to help them meet their own sustainability commitments,” says Readhead.