Renting your roof for solar is a way to generate additional income with minimal effort on the part of the property owner. All that is required is suitable unused roof space capable of housing solar panels. Residential property owners are likely better suited to a traditional rooftop solar installation, but for owners of larger commercial properties, a solar roof lease could be a great way to add a new revenue stream.
Many commercial buildings, industrial buildings, shopping centers, and large retail operations are great candidates for a roof rental.
15 - 25 years is the standard term for a solar lease agreement. The long-term nature of this commitment should be carefully considered when evaluating whether or not it makes sense to lease your rooftop for a solar installation. YSG does have a sample roof lease agreement that we share with others. Feel free to contact us for more information and we will happily provide you with the sample roof lease agreement that you can review.
Before the actual lease agreement, most solar developers will require an option to lease the rooftop. This is a necessary precursor to the actual lease agreement as it facilitates the site visit, which determines if the rooftop is suitable for a solar panel installation. Additionally, the developer will want to clarify that the property owner is allowed to lease the roof space.
The lease option period should be long enough to allow for the inspection, as noted above, as well as granting the developer enough time to enter into a Feed in Tariff (FiT) program, or a power purchase agreement (PPA) with the utility company, or a community solar program.
If all goes well in the lease option period, then the developer may decide to exercise the option and lease the rooftop for a solar project. Generally, the terms of this rooftop lease will have been agreed upon by both parties and outlined in the lease option agreement.
Both parties, the tenant and the landlord, will have certain requirements in terms of insurance. The landlord will require that the tenant has insurance on its facilities, as well as adequate liability insurance. Additionally, the tenant will require that the landlord has insurance on its building and public liability insurance. Depending on the specifics of the lease, both parties will likely require certain releases, waivers and indemnities.
This can apply to any lease, not just a solar rooftop lease. The tenant may want the landlord to obtain agreements from mortgage lenders, stating that the tenant remains in possession of the leased roof space, notwithstanding a mortgage default, and that the lenders recognize the lease and the rights of the tenant with respect to the lease.
The tenant will want the right to register a notice of its lease on the title to the landlord’s property. This is important for the tenant to secure financing, and to protect its investment in the event of a sale/mortgage/any other disposition of landlord’s interest in the building. In addition, the landlord will require the tenant to agree to attorn to its mortgagee and any purchaser of the property.
After reviewing all the items to consider with a roof lease, it's important to understand that ‘Roof into Revenue’ is not a simple process. YSG will help you understand a solar site lease, including the top 10 disadvantages and top 10 advantages.
To read the full YSG Solar guide to renting your roof for a solar panel installation, head over to our blog post at this link. We cover all the benefits of renting your roof for solar, explain how the process works, and answer some of the most frequently asked questions about solar roof leasing.
If you’re interested in leasing your roof for solar, then reach out to YSG today. Send us an email, or call at 212.389.9215 and we will discuss the viability of installing solar on your roof. We’ll guide you through the entire process from start to finish, ensuring the best deal.
YSG Solar is a project development vehicle responsible for commoditizing energy infrastructure projects. We work with long-term owners and operators to provide clean energy assets with stable, predictable cash flows. YSG's market focus is distributed generation and utility-scale projects located within North America.
