Here, Damian Baker, Founder & Managing Director at RenEnergy, explores how local authorities can lead the way in solar PV adoption across leasehold properties
As both landlords and tenants, councils occupy a distinctive position in the commercial property landscape. With net-zero targets looming and operational budgets under pressure, solar photovoltaic (PV) deployment offers a strategic opportunity to reduce costs, enhance public asset value, and demonstrate climate leadership.
The best of both worlds
Councils typically own a substantial portfolio of commercial properties, including retail units, offices, industrial estates, and market halls. They then lease these sites out to businesses that become their tenants. Conversely, when acting as tenants, councils rent commercial spaces such as offices, service centres, and depots from private organisations and pay rent to a landlord. The duality of councils means they are in a prime position to drive solar uptake across their portfolios, as landlords and tenants.
In their role as a landlord, councils can invest in retrofitting the buildings they own and bundle solar installations into their lease agreements. As tenants, councils can push their landlord to install solar on buildings they rent. Councils are typically stable tenants that can significantly incentivise landlords to invest in solar, knowing that the investment is fit for the future.
The key question councils will be asking is why. Why should they invest in solar, and what will the technology do for their business prospects?
The promise of solar PV for councils
With great power comes great responsibility.
In 2019, the Conservative government put in place the first legally-binding net-zero target from a G20 country. The Net Zero Strategy set out policies and proposals to decarbonise all sectors of the UK economy and achieve net zero emissions by 2050. (1) Following their landslide win in July 2024, the Labour government made clear its ambition to make the UK a ‘clean energy superpower’. Starmer’s government vowed to establish GB Energy and make the UK the ‘green finance capital of the world’. This led swiftly to the introduction of modifications and interim targets to accelerate the transition to net-zero emissions.
One of the key commitments made by the Labour government is the pledge to decarbonise the electricity system by 2030, five years sooner than the previous target of 2035. These plans emphasise the importance of renewable energy development in achieving the UK’s emissions-reduction and net-zero targets. This is where councils can use the promise of solar PV to support wider governmental targets and encourage other landlords and tenants to invest in solar energy generation.
Local councils need to be aware of key regulatory changes related to solar PV deployment, such as the Clean Power 2030 Action Plan (2), which may further encourage councils to invest in the technology by amending planning permissions and funding models.
In short, councils may be well-versed in legislation changes, but they need to turn pledges into action. That’s exactly what Broadland and South Norfolk District Council did when they acquired The Horizon building, originally developed by Aviva, with the UK’s first commercial solar carport. By working with RenEnergy, the council transformed the building into a low-carbon, energy-resilient headquarters using solar PV alongside a new heat pump installation – saving 74,250kg of CO₂ over the course of one year.
Every penny counts
Arguably, one of the biggest drivers of solar PV adoption is the technology’s reduced operational costs. In recent years, electricity prices have increased significantly. For cash-strapped councils acting as tenants, solar PV can reduce their bills, and as a landlord, it is an investment. In the instance where councils are operating as a landlord and own the solar PV, there are multiple methods for how the financial benefits of the technology can be allocated.
If the lease agreement dictates that the landlord covers the costs of utilities and charges the tenant a fixed fee for their energy within their lease payments, it is up to the landlord whether they solely benefit from the reduced energy costs and continue to charge the tenant a fixed fee. However, councils can bundle solar installations into lease agreements to make their offerings more attractive to potential tenants.
A power purchase agreement (PPA) is another option for councils acting as landlords. In this case, the council would pay for and own the solar asset and sell the generated energy to the tenant at a reduced cost (lower than the market rate), while receiving the revenue from selling the surplus energy back to the grid. In this scenario, both the landlord and the tenant benefit from installing solar PV.
PPAs are a great financial model for councils that are trying to attract businesses into commercial leasehold agreements. Since the council owns the solar PV, the tenant doesn’t have to worry about the complications associated with removing the systems. The solution is also ideal for tenants (councils) who may not have the upfront CAPEX to cover the installation costs themselves.
Broadland and South Norfolk District Council purchased a building that had a solar PV system installed by the previous owner. The site’s 788 kWp system generates over 594,000kWh annually, highlighting how strategic investment in renewables can turn passive real estate into desirable, future-ready infrastructure.
In the scenario where a council is acting as a tenant and renting commercial space from a landlord, they could obtain a License to Alter. This allows them to install and own the solar PV while receiving all of the financial returns from the asset (unless otherwise agreed with the landlord).
Improving EPC ratings
Since 2023, the UK government has proposed several reforms to the minimum energy efficiency standard (MEES). [3] In February 2024, the Secretary of State for Energy Security and Net Zero announced that the required energy performance certificate (EPC) rating for landlords letting non-domestic property to tenants will increase from band E to band C by 2028. This will serve as an interim target to achieve a minimum EPC of band B by 2030.
By improving a property’s EPC rating, commercial spaces with solar panels can often command higher prices. This is good news for councils acting as landlords who can negotiate more expensive leaseholds. It also means that for those acting as tenants and renting commercial spaces, they can demonstrate their sustainable decision-making and set a positive precedent for other local authorities.
Opportunity and responsibility
As councils straddle the position between tenant and landlord, both opportunities and responsibilities arise. By leading the way in solar PV, they can set a precedent in the commercial leasehold property landscape. On the other hand, first movers can take advantage of the cost savings and sustainable credentials that the technology is synonymous with.
Solar energy is an investment that could reduce bills, improve a building’s EPC, and demonstrate the technology’s benefits to the local market. Councils can and are leading on net zero; now they must turn ambition into action.
