Office Investment, London — 260 kWp, Green-Lease Structured

This is a representative project profile, not a named real client. It is drawn from the structures and figures we work with on multi-tenant office investment assets so you can see how the commercial case is built and where the value lands. Numbers are illustrative and rounded; the design and lease mechanics are real.

The asset is a single multi-let office building held by an investor for income, let to an ESG-focused FTSE tenant on the upper floors with a managed common-parts area below. The investor’s question was not “how much will solar save the bill” — the occupier pays the energy bill, not the landlord. The question was an asset one: how to fund roof-mounted generation, lift the EPC, and use the project to support a green-lease renewal that the tenant’s own sustainability reporting was already pushing towards.

The investor and tenant-ESG driver

Two forces met on this roof. The investor was watching EPC risk on the income. The building sat at EPC C. Letting below EPC E has been unlawful in England and Wales since 1 April 2023, so C is compliant today — but the proposed EPC B minimum for privately-rented non-domestic buildings over 1,000 m² (interim government response, 18 June 2026, subject to secondary legislation and cost-effectiveness tests) puts a B-rated asset on safer ground for the next letting cycle and the next valuation. We were careful with the tenant that “EPC C by 2027” was scrapped and “EPC B by 2030” was never law; the case stands on the value side, not on a regulatory deadline.

The tenant brought the second force. As a listed occupier with public net-zero commitments, it needed verifiable Scope 2 progress and on-site renewable supply it could name in its reporting. That made the landlord’s roof an asset the tenant actively wanted access to — the rare case where the split incentive works for you, because both parties want the same outcome for different reasons.

The structure

We split the system across the two demands rather than forcing one ownership model over the whole roof. The investor funded the 260 kWp installation and retained ownership of the asset.

• Common-parts supply covers the landlord-controlled load — lifts, lighting, HVAC plant, the managed areas the investor already pays for through the service charge. Solar displaces grid electricity here at roughly 24–28p/kWh, recovered cleanly through the service charge with the tenant’s agreement.
• A landlord-to-tenant PPA sells the larger share of generation to the FTSE occupier at a rate below their grid price. The tenant gets cheaper, demonstrably on-site renewable power and a Scope 2 line they can evidence; the landlord earns a return on capital from a creditworthy counterparty.
• A green-lease addendum wraps both. It sets the PPA terms, data-sharing for the tenant’s reporting, a metering and maintenance protocol, and a cost-recovery mechanism that survives a tenant change. This is what turns a one-off install into a durable, lettable feature of the building.

Commercial solar carries 0% VAT, and the investor claimed the Annual Investment Allowance against the special-rate (integral-features) asset. Rooftop solar is also exempt from business rates in England to 31 March 2035. We sized the system to the building’s daytime office load — a single daytime occupier typically self-consumes a high share — and self-consumption, not export, is the return driver. SEG export at roughly 12–16p is a top-up, nothing more.

The green premium context

The honest version of the value case is that solar lifts a commercial EPC by roughly one to three bands and is one input among several — it is not a guaranteed jump. Here it carried the asset from C to B alongside other measures.

On the premium itself, we attribute every figure. JLL’s analysis of prime central London offices (BREEAM-certified stock, 2017–21) found green certification associated with around +11.6% on rent and +20.6% on capital value, and roughly +4.2% rent and +3.7% capital value per EPC band. Knight Frank’s London office work puts the rental premium in a +3.7% to +12.3% range. These are associations in prime central London offices, not a promise for every building — but for an income asset that the investor intends to hold and re-let, a defensible move toward the green end of that evidence is the point. The breakdown is set out in our green premium and asset value guide.

Outcome

• System: 260 kWp rooftop, generating about 247,000 kWh a year at the ~950 kWh/kWp UK yield.
• Blended annual benefit across landlord and tenant: in the order of £60,000 a year, split between common-parts grid displacement and the PPA margin.
• Simple payback to the investor: around 6.8 years, helped by the AIA claim and the rates exemption.
• EPC: C to B.
• A Scope 2 / ESG documentation pack delivered to the tenant — generation data, supply attribution, and the metering basis — supporting both the tenant’s annual reporting and the green-lease renewal conversation.

The pack is the quiet win. It gave the tenant something to put in front of their own board, and it gave the investor a renewal lever: a building that already does what the occupier’s sustainability policy requires is a building they are slower to leave.

Illustrative quote

“We came at this as an asset decision, not an energy one. The roof now earns, the rating moved to B, and the lease renewal conversation starts from a position where the tenant’s ESG team is on our side. That is worth more than the headline saving.” — illustrative, representative of the investor view on this structure.

This profile sits alongside our work on office investment property and the wider ESG, GRESB and net-zero fund context that drives so many of these decisions. If you hold a let office asset and want to model the structure, the EPC move, and the blended return for your specific building, request a quote and we will engineer the ownership and lease structure so the right party pays and the right party benefits.