How solar can work for commercial tenants who don't own their premises, and how to approach the conversation with a landlord - covering lease considerations, the business case, what needs to be in a lease addendum, and when to get legal advice.
Key findings
- Most commercial and industrial tenants can install solar with landlord consent. The legal barrier is often lower than tenants assume.
- Solar increases property value, reduces operating costs, and improves the asset's appeal to future tenants. The case for consent is often strong.
- Both parties need legal advice before signing a lease addendum covering solar.
- If the landlord installs and on-sells, how savings are shared and who receives the feed-in tariff must be agreed in writing first.
- The instant asset write-off can apply to tenant-installed solar where the tenant is the asset owner.
Most tenants are closer to solar than they think
The belief that solar requires ownership is common and largely incorrect. Some leases prohibit structural alterations; most are silent on solar specifically and require landlord consent. Read yours carefully first.
The business case for your landlord
Don't ask for a favour - present a case that shows why consent is in the landlord's interest.
What the landlord gains
- Increased property value and appeal to future tenants.
- Improved NABERS rating affecting financing and asset value.
- A tenant-maintained system at no cost to the landlord.
- At lease end the system passes to the building as a long-term asset.
What the tenant gains
- Direct reduction in electricity costs from day one.
- Cost certainty against rising grid prices for the life of the system.
- ESG and sustainability reporting data from day one.
- Potential instant asset write-off on the installation cost.
What the lease addendum needs to cover
- Asset ownership - tenant, landlord, or shared (determines who claims depreciation, STCs and maintenance).
- What happens at lease end (transfer at agreed value, included in renewal, or removed - define now, not later).
- Maintenance responsibility - typically the tenant for tenant-owned systems.
- Feed-in tariff entitlement - must be specifically negotiated if connected through the landlord's meter.
Sources
- Australian Tax Office - Instant asset write-off, ato.gov.au · ato.gov.au
- Australian Government - Solar for rentals and multi-occupancy properties
- Australian Energy Regulator - Exempt seller guidelines