Installing Solar on a Leased Warehouse: The Green-Lease Guide for Tenants and Landlords

A tenant can install solar on a leased warehouse with the landlord’s consent, usually via a green-lease addendum aligned with the BBP Green Lease Toolkit. Where the lease or contract is short, a Power Purchase Agreement (PPA) lets a third-party funder own the system while the occupier buys cheaper daytime power with no capex and clean end-of-lease treatment. This guide unpacks the awkward bit everyone skirts around: on a leased shed, the party who pays for solar and the party who benefits from it are often not the same, and getting the deal done means solving that split before anyone touches the roof.

Why this matters: most big-box logistics floorspace is leased

The single biggest reason warehouse solar stalls is not the roof, the grid or the price. It is tenure. The occupier who would pay a lower energy bill frequently does not own the building, and the freeholder who owns the roof does not pay the electricity bill. Economists call this the split-incentive problem, and in UK logistics it is the norm rather than the exception.

Modern distribution stock - the big-box units clustered around the M1, M6, the Golden Triangle at DIRFT and Magna Park - is overwhelmingly held by institutional landlords (Prologis, Tritax, GLP, Blackstone and their peers) and let to operators on full-repairing-and-insuring (FRI) leases of three to fifteen years. The 3PL running the unit, the e-commerce operator fulfilling orders, the estate manager overseeing multi-let sheds - these are usually tenants. So “we don’t own the roof” is not a fringe objection; it is the starting position for most prospective warehouse solar projects.

Ignore it and you get paralysis: the tenant wants cheaper power but will not fund an asset they cannot take with them, and the landlord will not fund a system whose savings flow to a tenant who might leave. Fortunately this is a solved problem - tenant-installed solar is now standard practice on UK logistics leases, with a well-trodden route through it.

Who pays versus who benefits

Start by being precise about the four things a warehouse solar deal actually allocates:

• Who funds the capital - the tenant, the landlord, or a third-party PPA funder.
• Who receives the energy saving - whoever pays the electricity bill for the demised supply, almost always the occupier.
• Who owns the physical asset - and therefore who claims the capital allowances and carries the maintenance obligation.
• Who carries the risk at lease end - removal, transfer, or hand-back of the system.

On an owner-occupied shed all four sit with one party and the decision is simple. On a leased warehouse they fragment, and the structure you choose is just a way of re-bundling them so the numbers work for both sides. There are three common answers:

1. Tenant-funded, tenant-owned - the occupier pays for the array, keeps every kWh of saving, and claims the tax reliefs. Works where the lease is long enough (typically eight-plus years unexpired) to recover the capex comfortably. Needs landlord consent and clear end-of-lease treatment.
2. Landlord-funded - the landlord installs solar as a building improvement to lift the EPC and asset value, then recovers cost and shares benefit through the service charge or a rent adjustment. Common on multi-let estates and at lease renewal.
3. PPA / third-party funded - a funder owns the system and sells the power to the occupier below grid price. No capex from either party, and the cleanest fit for shorter tenure. More on this below.

The right answer depends on who has the longer horizon and the appetite for capex. Our job is to model all three side by side with the numbers for each, so the choice is made on evidence rather than assumption. You can run indicative figures on our cost page before any of these conversations start.

Getting landlord consent

Whatever the structure, a tenant putting solar on a roof they do not own needs the landlord’s permission. Most modern warehouse leases contain alterations and additions clauses that require the landlord’s consent for works to the structure or exterior - and a rooftop array is unambiguously that. Trying to install without consent risks breach of covenant and a dilapidations claim at lease end.

In practice, consent is documented in one of two ways: a formal licence to alter (a standalone deed sitting alongside the lease) or a green-lease addendum that varies the lease terms to accommodate the solar. The addendum route is now the preferred mechanism because it does more than grant permission - it settles the ownership, maintenance, insurance, metering, and end-of-lease questions in one document, so nothing is left to argue about later.

Institutional landlords are well used to this. The large REITs and funds that own most logistics stock have standard positions on tenant solar and increasingly welcome it, because a well-installed array improves their asset. The friction is almost always in the detail - roof warranty, structural loading, reinstatement - not in the principle. Engaging the landlord early, with a proper design and the fire, structural and insurance work already in hand, turns a months-long negotiation into a straightforward one.

The BBP green-lease addendum

The reference standard for these clauses is the BBP Green Lease Toolkit, published by the Better Buildings Partnership. It is the document institutional landlords and their advisers actually use, which is precisely why aligning to it de-risks the negotiation - both sides recognise the language.

A green-lease addendum for a rooftop solar project typically covers:

• Grant of rights - the tenant’s right to install, own, operate and access the PV system on a defined area of roof for the term.
• Ownership and title - confirming the array remains the tenant’s (or the PPA funder’s) chattel and does not become a landlord fixture, which protects the right to remove or transfer it.
• Roof and structure - non-penetrative clip-fix mounting to preserve the roof warranty, a structural loading assessment, and responsibility for any roof works during the term.
• Insurance - how the PV is insured, and confirmation that the landlord’s buildings insurer has given pre-design sign-off (warehouse insurers such as Allianz, AIG, Zurich and FM Global all have specific rooftop-PV criteria).
• Access and cooperation - reasonable access for install, monitoring and maintenance, and a data-sharing clause so both parties can report on energy and carbon.
• End of term - whether the system is removed, left in situ, or transferred, and on what basis (covered in detail below).

Aligning to the toolkit means you are not inventing bespoke terms that a landlord’s solicitor has to review from scratch. That alone can save weeks.

Service-charge recovery on multi-let estates

Where the landlord funds the solar - most common on multi-let industrial estates, where several occupiers share one roof or a run of units - the mechanism for recovering cost and sharing benefit is usually the service charge. This is genuinely fiddly and worth getting right, because service-charge recovery is only fair, and only defensible at rent review, if the tenants actually receive value for what they are charged.

The principle: the landlord installs the array as an estate improvement, then either recovers the capital cost through the service charge over time (with tenants receiving cheaper power via a private-wire or embedded-network arrangement in exchange) or bills the generated electricity to occupiers below grid price, retaining a margin that services the investment. Either way, generation has to be metered and allocated fairly across demised and shared supplies, or a tenant can reasonably object that they are subsidising an asset they do not benefit from.

The RICS service-charge code expects charges to be reasonable, transparent and to deliver value to occupiers, so the arrangement should be documented in the lease or a variation, with the metering and billing basis spelled out before install - not retrofitted afterwards. Our guidance on the multi-let leased warehousing vertical covers the private-wire and embedded-network options in more depth. The underlying rule is simple: agree who pays and who benefits, in writing, first.

Rent-review considerations

A question that surfaces in any leasehold solar deal: does the array affect the rent? It can, and it cuts both ways, so it is worth flagging before you commit.

If the tenant installs and owns the solar, the value it adds is the tenant’s improvement, and it should be disregarded at rent review. Standard institutional leases already disregard tenant’s improvements when assessing open-market rent - but this only holds if the improvement was made with the landlord’s consent and the lease disregard is properly drafted. This is a concrete reason to get consent in writing via the addendum: without it, a tenant risks paying higher rent on the uplift its own capital created. The addendum should explicitly record the array as a tenant’s improvement to be disregarded.

If the landlord funds the array, the improved building - better EPC, lower running costs, a green premium - may legitimately support a higher rent at review or renewal. That is the landlord’s return on the investment, and it is one reason landlord-funded solar makes commercial sense on stock they intend to hold and re-let.

The point for both parties is to decide the rent-review treatment up front and record it, rather than leaving it to be fought over years later when the numbers are large.

PPA versus ownership for short tenure

The hardest case is the short lease or short customer contract - the 3PL on a five-year contract, the operator with four years unexpired. Capex against that horizon rarely stacks up on a self-funded basis, and this is exactly where a Power Purchase Agreement earns its place.

Under a PPA, a third-party funder installs, owns, insures and maintains the system. The occupier signs up to buy the power it generates at a fixed per-kWh rate set below the grid import price, for a defined term. The key features for a leased, short-tenure operator:

• No capital outlay from the tenant, and the arrangement typically sits off balance sheet.
• Cash-positive from day one - the occupier pays less per kWh than they would to the grid, so the saving starts in month one rather than after a payback period.
• Term alignment - the PPA can be written to match, or to transfer at the end of, the customer contract or lease, so tenure risk sits with the funder, not the operator.
• Clean end-of-lease treatment - because the funder owns the asset, the removal, transfer or novation obligation is theirs and is defined in the PPA and the green-lease addendum from the outset.

The trade-off is that the funder - not the occupier - claims the capital allowances and takes the residual value, so the lifetime economics are less generous than owning outright. That is the price of removing the capex and tenure risk. For an owner-occupier or a tenant with a long unexpired term, ownership (cash or asset finance) almost always wins because they keep every kWh of saving and claim the reliefs: solar bought by a company is special-rate plant qualifying for the Annual Investment Allowance (100% first-year relief up to £1m), which a profitable company can set against tax in year one. Note this is the AIA route - full expensing does not apply to solar, and commercial solar carries 20% VAT, reclaimable by a VAT-registered business, not the 0% domestic rate. For a 3PL on a short contract, the PPA is usually the cleaner deal. The full tax and funding picture is set out on our grants and funding page, and the 3PL-specific structuring on the 3PL and contract logistics vertical.

End-of-lease treatment

The question that quietly derails deals if it is not settled up front: what happens to the panels when the lease ends? Get this wrong and a tenant either has to pay to strip a perfectly good array off the roof, or forfeits an asset they paid for. The addendum should specify one of three outcomes clearly:

1. Removal and reinstatement - the tenant (or funder) removes the system and makes the roof good at term end. Cleanest for the landlord but wasteful, and it destroys the residual value of the asset. Non-penetrative clip-fix mounting makes reinstatement genuinely straightforward, which is one reason we specify it as standard.
2. Transfer to the landlord - the array stays and title passes to the landlord, usually at an agreed value or for nil consideration if fully depreciated. The landlord inherits a functioning system on an improved building; the tenant avoids removal cost.
3. Novation of a PPA - where a funder owns the system, the PPA and the roof licence are novated to the incoming tenant or to the landlord, so generation continues uninterrupted and no one strips the roof.

There is no universally right answer - it depends on the remaining asset life, who values it most, and the condition of the roof. What matters is that the outcome is agreed and documented in the addendum before install, with the reinstatement basis, any transfer value, and the novation mechanics all spelled out. Leaving it to lease end guarantees a dispute.

Bringing it together

Solar on a leased warehouse is not a technical problem; it is a structuring problem. The array, the sizing, the grid connection and the fire-safety design are the same whether you own or rent. What differs is the allocation of cost, benefit, ownership and end-of-lease risk between tenant and landlord - and every one of those is now a solved, standardised negotiation: get landlord consent via a BBP-aligned addendum; decide who funds and who benefits (tenant-owned for long tenure, landlord-funded on multi-let, PPA for short contracts); settle rent-review treatment and end-of-lease terms up front; and meter generation fairly where a service charge is involved.

Handled properly, none of this adds more than a few weeks to a project - and it unlocks the largest, cheapest energy saving on the site: a roof that is currently doing nothing. With TNUoS network charges rising around 60% in April 2026 and retail customers pushing Scope 3 targets down the supply chain, the operators who solve the lease question first lock in the lowest power cost on the estate.

If you occupy or own a leased warehouse and want to know how the numbers and the lease structure work for your specific site, request a quote - we will size the system from your half-hourly data, model ownership against a PPA side by side, and provide the green-lease addendum template ready to put in front of your landlord.

All figures in this guide are indicative and planning-grade. Tax, lease and grant treatment depends on your specific circumstances - take professional advice before committing. Sources: BBP Green Lease Toolkit, gov.uk Annual Investment Allowance, Ofgem Smart Export Guarantee, RISCAuthority (RC62 rooftop PV guidance).