55% of commercial property is let, rather than owner occupied. A huge contrast to residential where almost 75% of properties are owner occupied. 40 years ago, the average commercial let agreement was 25 years, in 2020’s the average was just 7 years.
Energy Consumption
Commercial properties excluding factories accounted for 9% of the UK’s total energy consumption, with the heating and lighting in factories bringing the total up to to 10% of the UK energy consumption.
The same properties also account for 12% of the total direct and indirect CO2 emissions, according to data published by the Committee on Climate Change.
While most commercial landlords are acutely aware of their properties impact on the environment, with emissions falling in this sector year on year, factories are still an outlier due to their enormous consumption.
The UK Commercial Sector's Switch to Renewables
With such huge consumption figures, it’s easy to understate the monumental effort to switch the industry to green energy sources. Nevertheless, it’s has to be done to secure the future of the sector…and it will be done.
The IRENA report from 2014 predicted that renewables could account for 27% of global manufacturing energy consumption sources by 2030, which would increase to 34% if net-zero targets are met by the industry.
What is stopping us?
For some commercial landlords, it’s as easy as changing your supplier to switch to renewable sources. For others, it requires a specialist solution. Such as developing your own renewable generation, or by signing Power Purchase Agreements.
A Power Purchase Agreement is a way to install solar panels on your commercial unit without paying an initial upfront investment. They are funded by the power the panels generate. This power is purchased by the tenant. An agreement is signed for a predetermined length of time, which is a factor in how cheap the electricity rate is. After the agreement, the solar panels belong to the building owner who can then sell the electricity back to the tenant for an additional income.
Develop an Additional Income Source
Increase the Value of Your Unit
Improve the Attractiveness to Future Tenants
Other Options
For an immediate uplift of income, commercial landlords can choose to fund the installation of solar panels on their property through a commercial finance agreement or self-funding the project. This way commercial landlords can immediately sell the electricity the panels generate back to the tenant. For industrial tenants who use several megawatts every year, this is a substantial income for a landlord. Alternatively, commercial landlords can increase the rent in-line with the reduced operating costs.
