Reference

Commercial property solar glossary

The 38 terms a commercial property owner, landlord or investor needs to make a confident solar decision — from the split incentive and MEES to FRI leases, AIA and CRREM.

Split incentive: The mismatch under a typical FRI lease where the landlord pays for an improvement (solar) but the tenant — who pays the energy bills — captures the saving. Resolved through common-parts supply, a landlord–tenant PPA, a roof lease, or green-lease cost sharing.
FRI lease (full repairing and insuring): A commercial lease where the tenant bears repair, insurance and outgoings including energy. Because the tenant pays the bills, solar economics for the landlord must be engineered through structure rather than the meter.
MEES (Minimum Energy Efficiency Standards): Regulations making it unlawful to let commercial property in England & Wales below EPC E (since 1 April 2023 for existing lets). A tightening to EPC B by 2031 for buildings over 1,000 m² is proposed but not yet law as of June 2026.
EPC (Energy Performance Certificate): A modelled A–G energy rating for a building. The lettability floor for commercial property is EPC E. Solar PV typically lifts a commercial EPC by one to three bands.
Stranded asset: A property that can no longer be lawfully let, or that the market discounts heavily, because it fails current or expected minimum energy standards — a transition risk for owners and lenders.
Green premium / brown discount: The rent and capital-value uplift associated with better-rated, lower-carbon buildings (green premium) and the corresponding discount on poorly-rated stock (brown discount). JLL found +11.6% rent and +20.6% capital value for BREEAM-certified prime Central London offices.
CRREM (Carbon Risk Real Estate Monitor): The market-standard tool that sets 1.5°C-aligned, asset-level decarbonisation pathways; a building is "stranded" once its carbon/energy intensity exceeds its pathway.
GRESB: The dominant ESG benchmark for real estate, used by 150+ institutional investors to screen and price capital. On-site renewable generation feeds the Performance component.
SFDR / TCFD: Fund-level sustainability disclosure regimes (Article 8/9 classification under SFDR; climate-related financial disclosure under TCFD). On-site solar is Scope 2 abatement that feeds these reports.
Self-consumption: The share of solar generation used on site rather than exported. It is the single biggest driver of return because self-consumed units displace grid power at full retail price (~24–28p/kWh) while exports earn only the SEG rate.
Smart Export Guarantee (SEG): A supplier-set tariff (not a government rate, not the closed Feed-in Tariff) paid for surplus exported to the grid, typically 12–16p/kWh on the best fixed rates. Eligible up to 5 MW.
REGO (Renewable Energy Guarantee of Origin): A certificate issued per MWh of renewable generation that can be sold separately from the power as a modest additional revenue stream (~£15/MWh in early 2025).
PPA (Power Purchase Agreement): A contract to buy solar electricity, usually below the grid price. A landlord–tenant PPA re-couples cost and benefit; a sleeved PPA delivers generation via a supplier where the lease term is shorter than the PPA term.
Private wire / behind-the-meter: On-site generation wired directly to the building that never touches the public grid, avoiding distribution and standing charges — the basis for selling solar to a tenant.
Roof lease / airspace lease ("sell the roof"): A lease of the roof to a third-party developer who funds, owns and maintains the array. The owner takes rent plus a tenant power discount with no capex. A registrable legal interest with SDLT and Land Registry consequences, needing lender and insurer consent.
Licence (vs lease): Contractual permission to install equipment that, unlike a lease, does not create a registrable legal interest or grant exclusive possession.
Green lease: A lease (or addendum) with clauses allocating who installs, who pays and how energy savings are shared. The BBP Green Lease Toolkit caps a tenant's contribution at its own savings.
Service charge: The mechanism for recovering building running costs from tenants. Under the RICS Service Charges standard (2nd ed), the initial capital cost of new plant such as solar is generally NOT recoverable.
Common parts: Landlord-controlled areas and services — lifts, communal lighting, HVAC, pumps, car parks, EV chargers. Solar offsetting common-parts power is captured directly by the landlord with no split incentive.
Annual Investment Allowance (AIA): A capital allowance giving 100% first-year tax relief on qualifying plant up to £1m per year (permanent). The route by which commercial solar gets 100% relief — including for landlords.
Full expensing / 50% First-Year Allowance: Full expensing gives 100% first-year relief on main-rate plant. Because solar is special-rate, it attracts only the 50% First-Year Allowance under full expensing — companies only, and not for assets bought to lease.
Special rate pool: The capital-allowances pool for integral features, including solar PV, written down at 6% per year after any first-year allowance.
s.198 election: A CAA 2001 fixtures election agreed between buyer and seller of a property containing fixtures (such as solar) to fix the value transferred — required or capital allowances can be lost on a purchase.
Business rates exemption: Rooftop solar and co-located battery storage are exempt from business rates in England until 31 March 2035, so they do not raise the rateable value.
Permitted development (Class J): The right to install rooftop solar on a commercial building without full planning permission, subject to a 56-day prior-approval step. The 1 MW capacity cap was removed in December 2023.
Prior approval: A light-touch determination (56 days) by the local planning authority on the design, appearance and glint/glare of a permitted-development solar installation — simpler than a full planning application.
Class OA (solar canopy): The permitted-development right for solar canopies over non-domestic off-street car parks (max 4 m high, 10 m from a dwelling), turning parking into generation and EV amenity.
Article 4 Direction: A local planning authority direction that withdraws permitted-development rights in a defined area — common in conservation areas; always check before relying on PD.
G99 / G98: Engineering Recommendations governing DNO grid connection. G99 applies above ~50 kW (virtually all commercial systems) and requires DNO approval before energising; G98 covers smaller installations. The G99 process is now the main delivery bottleneck.
DNO (Distribution Network Operator): The regional operator of the electricity distribution network. Commercial solar above ~50 kW needs DNO approval, and grid capacity is often the binding constraint on project timing and size.
Ballasted mounting: A flat-roof solar mounting system held by weight rather than penetrations, preserving the roof membrane warranty — the most common configuration on commercial roofs.
BS EN 1991: The structural Eurocode used to assess whether a roof can carry the additional load of a solar array — a standard precondition of any commercial install.
Dilapidations & reversion: Lease-end obligations covering reinstatement and the return of the asset. Critical where a 20–30 year roof lease outlasts the occupational tenancies beneath it.
Void period: A period when a unit is empty and the landlord pays the energy and rates with no rent. Solar on common parts cuts holding costs during voids and improves the EPC for re-letting.
kWp (kilowatt-peak): The rated peak output of a solar array. UK commercial rooftop yields roughly 950 kWh per kWp per year.
BREEAM In-Use: A sustainability assessment scheme for existing buildings; on-site renewable generation earns energy-category credits that support rent and value.
BESS (Battery Energy Storage System): On-site storage that raises self-consumption (to 60–95%), can earn grid-services revenue where a route to market exists, and is exempt from business rates with co-located solar to 2035. Triggers insurer notification for fire risk.
Scope 2 emissions: Indirect emissions from purchased electricity. On-site solar directly reduces a building's Scope 2 footprint, feeding tenant and fund net-zero reporting.

Commercial Solar Across the UK