Commercial Property

Tenant or Landlord: Who Pays for Solar and Who Benefits

Guide · Commercial solar & battery · ~5 min read

Solar on a leased building raises an obvious question: if the landlord owns the roof but the tenant pays the power bills, who fronts the cost and who reaps the reward? Getting this sorted upfront makes solar work for both sides.

The core problem: split incentives

On an owner-occupied site, the maths is simple: you pay for the system and you keep the savings. On a leased site, ownership and consumption are separated, which is where deals stall.

The landlord owns the roof and the building but often doesn't pay the electricity bill. The tenant pays for power but doesn't own the asset and may not stay long enough to see a return. This is the classic split-incentive problem, and it's the reason plenty of good solar sites sit empty.

• Landlord: owns the roof, sees a building asset upgrade, but may not use the power.
• Tenant: pays the power bills, wants lower running costs, but doesn't own the system.
• Neither wants to fund an asset the other benefits from.

Option 1: Landlord funds, tenant pays a green charge

The landlord pays for the installation and treats it as a capital improvement to the building. In return, the tenant pays for the solar power they use, typically at a rate that sits below the grid tariff.

This suits landlords who want to add long-term value to the asset and tenants on longer leases who want lower bills without capital outlay. The commercial terms belong in the lease or a side agreement, not a handshake.

• Landlord recovers the investment through an agreed solar charge or rent adjustment.
• Tenant benefits from power that's usually cheaper than the grid.
• The building's value and appeal to future tenants can improve.

Option 2: Tenant funds the system

Where the tenant is a large energy user on a long, secure lease, it can make sense for them to fund the system directly and keep all the savings. This works best when the remaining lease term is long enough to justify the outlay.

The catch is make-good and ownership at end of lease. Agree early whether the system stays with the building, is removed, or is bought out by the landlord. Put it in writing before anyone drills a bracket.

• Tenant keeps the full benefit of lower bills for the life of the lease.
• Needs landlord consent to alter the roof and structure.
• Settle end-of-lease ownership and make-good obligations upfront.

Where batteries and energy arbitrage change the sums

Solar alone shifts the conversation around daytime consumption. Add a battery with AI-driven energy arbitrage and the value stack grows: the system can charge when power is cheap and discharge or export when prices are high.

That extra revenue and saving can help justify the investment for whichever party funds it, and gives you more room to structure a deal that's fair to both. How much it's worth depends on your tariff, network and load profile, which is exactly what a site review is for.

• A battery can offset expensive peak periods, not just daytime use.
• Energy arbitrage can add a revenue line that sweetens the funding case.
• Value depends on your tariff and site, so real numbers come from a review.

Getting the agreement right

Whatever the split, the terms need to be documented. Cover who owns the system, who maintains it, how power or savings are shared, what happens at end of lease, and who carries responsibility for the roof penetrations and structure.

This is a commercial and legal question as much as a technical one, so involve your property and legal advisers. It isn't financial advice from us, but a clear agreement protects both parties for the long haul.

• Ownership and maintenance responsibilities.
• How solar power or savings are shared or charged.
• End-of-lease treatment: stays, goes, or is bought out.
• Roof, structural and make-good obligations.

How ATI helps you land the deal

We work with both landlords and tenants across Australia, using our own in-house, CEC and SAA accredited team, no subcontractors. We scale from small rooftop systems up to megawatt commercial installs, including projects like the 415kW rooftop at DB Santasalo in Bulli.

A site review gives you the technical facts each party needs to negotiate fairly: what the roof can carry, what the site consumes, and where solar, battery and energy arbitrage stack up. If you're weighing solar on a leased building, get in touch and we'll take a look.

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