How Solar Panel Initiative Helps Commercial Landlords

A RECENT INITIATIVE by City of Melbourne set to accelerate the rollout of Solar Cells on commercial buildings across Australia.

You may not realise, but Australia has the highest number of solar panels on residential rooftops per capita in the world. However, solar panels on commercial buildings in Australia are few and far between -- with plenty of roof space not generating any energy.

The main cause for this discrepancy is lease agreements typically placing the cost of installing energy efficient features on landlords.

These installations reduce tenants' power bills and outgoings; and yet, provide no immediate financial benefit to the landlord.

Lack of Financial Foresight

When no financial arrangement has been made regarding the installation of energy efficient features, disagreements often arise between tenants and landlords as to who should bear the cost.

Further issues are also caused by the complexity of Environmental Upgrade Agreements (EUA) which stymie efforts towards utilising renewable energy.

However, this trend is set to change with a mechanism designed by City of Melbourne which, if successful, could boost the rollout of solar panels on commercial buildings across Australia.

The City of Melbourne has designed a mechanism which provides landlords with access to solar and other energy efficient upgrades ... paid back via their council rates.

Making It Really Simple

As part of the initiative, ARENA and Sustainable Melbourne Fund are embarking on a $915,000 project to simplify the funding system and EUA between the property owner, council and bank.

The aim is to streamline and standardise EUA contracts so it becomes as easy as 'filling out a form'.

EUAs are already being used in five local authorities in New South Wales (North Sydney, Parramatta, Newcastle, Lake Macquarie and Blacktown) and can potentially be utilised by all commercial buildings and businesses including breweries, hotels, retail shops in addition to the food manufacturing and agricultural sector.

If successful, these measures will be mutually beneficial. Landlords will benefit from an upgraded building without incurring any expense as the financial burden is placed on tenants.

On the other hand, tenants benefit from lower power bills and outgoings with the cost of energy efficient measures being offset via council rates.

Bottom Line: These measures are set to roll over 15 Victorian Councils. And if successful, it may well help accelerate the efficient use of rooftops for renewable energy on commercial buildings, mutually benefiting both landlords and tenants.

Disclaimer: If you think a similar situation may apply to you, then you should contact us for detailed legal advice relating to the particular facts and circumstances of your property or lease agreement. This article is not intended to provide such detailed and specific advice. And, you should not act on the basis of any matter contained in this article without first obtaining more comprehensive professional advice.