Leased factory roof? Resolve the property rights before you commit to solar.
Many UK manufacturers lease their premises rather than own them. Rooftop solar can still reduce electricity purchases, but a promising roof survey and attractive payback are not enough: the tenant, landlord and any solar funder must agree who can install, own, access, maintain and ultimately remove or transfer the equipment.
This practical guide is for factory directors, finance teams, facilities managers and commercial landlords. It provides general information, not legal advice. Ask a commercial property solicitor to examine the actual lease and proposed contracts.
Start with the lease, not the panel layout
Check who owns the property, what the tenant’s demise includes, who controls the roof and whether alterations need formal consent. Review the lease’s alterations clauses, access rights, roof repair obligations, restrictions on granting third-party rights, superior leases and any break clauses. An informal agreement in principle is not the same as an executed licence for alterations.
For the wider technical and commercial decision, see our solar panels for factories guide.
Three ways to structure solar on a leased factory
1. Tenant-funded solar
The manufacturer pays for the installation and uses the electricity behind its own meter. This may work well where substantial daytime consumption coincides with a sufficiently secure remaining lease term. Agree who owns the equipment, maintains it, insures it and pays for removal or transfer at the end of the tenancy.
Do not calculate returns on an assumed 25-year occupancy if the tenant can only rely on a much shorter term. Model the period of secure occupation and include realistic early-exit costs.
2. Landlord-funded solar
The building owner invests in the system and agrees how electricity is supplied or charged to the occupier. Specify metering, pricing, maintenance, roof repairs and what happens when tenants change. Avoid counting the same solar benefit twice through electricity charges, rent and service charges.
3. Third-party PPA or rental
A specialist provider may fund and operate the panels while the factory buys the electricity through a power purchase agreement (PPA). The provider’s roof rights and the occupier’s electricity contract may need separate agreements. Examine PPA length, indexation, minimum purchase commitments, transfer rights, access, maintenance and termination charges.
Our factory solar PPA versus purchase guide explains the trade-offs. Neither structure is automatically cheapest.
Who pays if the roof needs replacing?
Before installation, commission a roof condition and structural assessment. A roof with limited remaining life may need refurbishment before a long-life PV array is installed. Examine waterproofing, mounting methods, access and warranties.
Contracts should specify who may request temporary removal, who pays for lifting and reinstating panels, notice periods, liability for damage and how lost generation is treated. Emergency repairs and planned replacement may need different arrangements. Read our factory roof suitability guide for the technical considerations.
Match the solar agreement to the tenancy
A 20- or 25-year solar contract can outlast a factory lease. A break clause, business sale, lease assignment, relocation, redevelopment or insolvency may change who occupies the premises and buys the electricity.
Ask what happens if the tenant leaves or the landlord sells: can the PPA transfer to a new occupier, whose consent is needed, is there a termination payment, can the equipment remain, and who must make good the roof? Do not assume the operator will remove the panels free of charge.
Insurance, lenders and other consents
The building insurer, mortgage lender or superior landlord may have relevant requirements. Agree who insures the building, solar equipment and third-party liabilities; who arranges electrical inspections and safe roof access; and how fire safety and incident response are managed. Check whether the installation affects existing property insurance or financing.
Planning and DNO approval still matter
Landlord consent does not replace planning and electrical compliance. Permitted development rights have conditions, and rules vary between UK nations and building types. Check the position with competent advisers before committing to construction.
Grid connection is another early-stage consideration. Proposed inverter capacity, export and the factory’s existing electrical infrastructure affect the distribution network operator (DNO) process. See our factory solar DNO and G99 guide.
Calculate savings for the party paying the bills
The tenant’s actual electricity demand, not simply the landlord’s roof area, drives the potential avoided grid purchases. Use half-hourly electricity data to estimate self-consumption and export. Test actual import tariffs, finance costs, maintenance, the lease term and likely operational changes.
For illustration, if solar avoids 160,000 kWh of electricity purchases annually at a genuinely avoidable rate of 20p/kWh, gross avoided purchases equal £32,000 a year before maintenance, financing, metering, fees, tax and other costs. This is not a forecast: site-specific generation and consumption must be modelled.
Start with our commercial solar calculator, then commission a site-specific appraisal that includes early-exit scenarios.
Ten checks before signing
- Obtain the signed lease and demise plan.
- Confirm roof rights, alterations permission and access.
- Identify superior landlord and lender restrictions.
- Agree equipment ownership and electricity/export benefits.
- Commission structural, roof-condition and electrical assessments.
- Match finance or PPA obligations to realistic occupancy.
- Document roof repairs, panel removal and reinstatement.
- Clarify insurance, liability and maintenance.
- Check planning, DNO, metering and export arrangements.
- Have the solicitor, insurer and finance team review the full contract package.
Frequently asked questions
Can a tenant install solar panels on a rented factory?
Potentially, yes, but it depends on the lease, roof rights, consents and commercial structure. Occupying the factory does not automatically grant unrestricted rights to alter its roof.
Who owns the panels when the lease ends?
The answer should be documented explicitly. Equipment ownership, fixture rules, the lease and any PPA or roof agreement may all matter. Obtain legal advice.
Can the landlord sell solar electricity to the tenant?
Potentially, subject to suitable electrical, metering and contractual arrangements. Agree pricing, maintenance and the treatment of a change in occupier.
Is a PPA suitable if the lease is short?
Not automatically. A long PPA may create early-exit exposure. Review transfer and termination terms before signing.
Make the property agreement part of the solar design
A viable leased-factory solar project needs the building, electricity demand and legal rights to align. Even a large roof and attractive projected savings cannot compensate for unclear ownership, access or lease-end responsibilities.
Considering solar for a leased manufacturing site? Contact Commercial Solar Systems to assess your electricity profile, roof and funding options, and involve your property adviser early.
