Why tenants can now install solar on leased warehouses
The shift from landlord resistance to landlord facilitation happened between 2019 and 2023. Three factors drove it: (1) MEES EPC B by 2030 — landlords now need tenants to co-invest in energy improvement; (2) Institutional ESG mandates — REIT and fund asset managers face their own Scope 1/2/3 disclosure requirements and benefit from tenant solar installations; (3) BBP Green Lease Toolkit — the Better Buildings Partnership published standardised lease addendum language that both institutional landlords and tenants can accept without bespoke negotiation.
The BBP Green Lease Toolkit process
Prologis, Tritax Big Box, GLP, Blackstone Real Estate, Segro, Royal London Asset Management, M&G Real Estate, and most other institutional landlords now have standard internal processes based on the BBP Toolkit. Typical consent process: (1) tenant submits MCS-certified installer's scheme design with structural survey; (2) landlord's property manager reviews against standard BBP addendum; (3) landlord provides written consent with standard conditions (insurer notification, re-instatement obligation, monitoring data share obligation); (4) installation proceeds. Timeline: 4-8 weeks for institutional landlords; 1-4 weeks for private or family landlords.
Tax allowances for tenant-installed solar
100% Annual Investment Allowance is available to the tenant-installer, the same as for owner-occupiers. The AIA applies to the company that funds and installs the system, regardless of whether they own the freehold. For a £900k install: £225k year-one tax shield (£900k × 25% corporation tax). The one condition: the system must be used in the tenant's trade — standard for any commercial solar install. Within Freeport zones, Freeport ECA stacks on top of standard AIA for eligible tenants.
What happens at lease end
Three standard outcomes at lease end for tenant-installed solar: (1) Remove and reinstate — tenant removes the system and reinstates the roof to original condition. (2) Leave in place at agreed value — landlord pays an agreed sum for the system and it remains on the building. (3) Transfer to new tenant — successor tenant takes over system ownership and the operational benefit continues. Most BBP-aligned leases allow all three options, with the preferred outcome negotiated at lease renewal. IWA-backed warranty (10 years) travels with the system, so new building owner or tenant retains workmanship cover.
When PPA is better than ownership for tenants
PPA (Power Purchase Agreement) is the right structure for tenants with: (1) lease term under 7-10 years remaining (too short for capital purchase payback); (2) off-balance-sheet preference (IFRS 16 operating lease treatment); (3) loss-making entity that cannot absorb AIA tax shield. For tenants with 10+ years remaining on lease, ownership or asset finance typically outperforms PPA — you retain the residual asset value (50%+ of original capex at end of useful life) and all AIA tax benefit. We model both routes in every desk feasibility.
Common questions
Can my landlord refuse solar PV consent?
Under most modern commercial leases with institutional landlords, consent cannot be unreasonably withheld for solar PV projects that comply with BBP Green Lease Toolkit standards. Some older leases have broader landlord consent provisions — check your specific lease terms. Where consent is unreasonably refused, tenants may have remedies under the Landlord and Tenant Act 1954.
Does the solar system have to be removed at lease end?
Only if the lease requires reinstatement. Most BBP-aligned lease addenda allow negotiation at lease end. In practice, the system has commercial value and landlords often prefer the tenant to leave it in place (at agreed value) or for the incoming tenant to take it over.
Can I claim 100% AIA as a tenant?
Yes. AIA applies to the company that funds and installs the system, regardless of freehold ownership. The system must be used in your trade — standard for any commercial solar install. First £1m of qualifying capex gets 100% AIA; above £1m falls into 50% FYA.