BY ANTHONY MAGUIRE 

On the face of it, installing solar PV is a straightforward process. You put some panels on your roof, connect them to your electricity supply and hey presto – you’re generating clean, low-cost power at the point of consumption.

However, for a combination of reasons, from regulatory limitations to complex billing arrangements, even modestly sized rooftop solar PV installations can take years to get off the ground.

Nowhere is this more evident than in the retail space, where the split responsibilities between who owns the asset, and who is responsible for consuming the electricity creates endless headaches for well-meaning asset managers with ambitious carbon reduction programmes.

In shopping outlets, landlords are often only responsible for the electricity that is consumed from external lighting in the car park, and perhaps a small management office. So how to deal with these instances where you have several buildings, with lots of different retail tenants all responsible for a small proportion of that consumption?

At Longevity Power we wrestle with these kinds of questions on a daily basis as we try and find solutions that satisfy for our client’s renewable energy goals.

The Importance of Clear Communication

The level of tenant engagement required ultimately depends on the nature of the building. If it is a large, enclosed shopping centre with considerable common parts electricity consumption, it is quite possible that the landlord may not need to elicit the permission from the tenants at all. Depending on the service charge terms, they may be able to simply recharge the generated power at the same price as the existing electricity tariff.

However, where there is minimal common parts consumption, such as in a shopping outlet or a retail park, the landlord must essentially seek to sell the generated electricity to the individual tenants. Naturally, this makes things inherently more complex. The landlord now needs to secure the buy-in of potentially hundreds of tenants, negotiate the terms of a power purchase agreement contract, and get comfortable with the fact that the length of any such contract is likely to be considerably shorter than the 25-year minimum lifespan of the solar PV system.

Win/ Win/ Win: Redevco and Bouwinvest Case Studies

Any one of these issues can be enough to derail a solar PV project and seeing a project through to completion requires a strong conviction in the importance of the underlying agenda. One company that has demonstrated such a conviction is Redevco which, at the point of writing, has 18 solar PV installations installed, certified and operational across their retail portfolio, accounting for a total of 4.5 MWP of capacity.

Redevco clearly communicate the win / win / win nature of such an arrangement. The tenant wins because they are able to procure renewable energy at a discount as well as benefitting from the marketing and the reputational benefits, Redevco wins as they lower their scope 3 CO2e emissions and the investors win because they receive a steady, reliable return on investment. Every new tenant at participating sites receives a free proposal outlining the potential savings that they could achieve. Once the level of interest at the centre has achieved critical mass, Redevco installs the system, painstakingly connecting each separate solar PV system up to every participating tenant’s individual electricity supply.

Likewise, Bouwinvest, who has 10 operational solar PV installations and is aiming for 1 MWp of capacity by the end of 2022, stress the importance of clear communication with tenants. To ease the administrative burden of producing a bespoke business case for every single tenant, Bouwinvest has created three business cases that are broadly applicable to every type of tenant. All tenants in participating centres, from small clothing units to large F&B retailers, could receive if interested the appropriate business case and are able to see the indicative savings that they could achieve.

Tenant engagement is just one piece of the puzzle. However, it is absolutely crucial in a retail context when primary environmental impact of the asset sits beyond the landlords’ direct operational control. The likes of Redevco and Bouwinvest have demonstrated that by clearly and transparently marketing the benefits, retail outlets can become a crucial source of distributed renewable generation.  

For more information on solar PV in the retail context, please contact Anthony Maguire at [email protected].