Incorporating renewable energy into a leased property can seem like a complicated task. However, there is a solution for organizations that rent their facilities and wish to lower their carbon footprint with renewable energy technology: Green Leases. All green leases are uniquely tailored to fit the needs of the tenant and landlord in order to facilitate energy efficient interest and installation.
What are Green Leases?
Green leases are lease agreements that realign cost structures to include sustainability or renewable energy measures. Commercial leases typically include a principal-agent or split-incentive problem, which discourages investing in energy efficient measures for a facility. This means that in a typical commercial lease, the party providing capital for an energy project would not aptly benefit from the energy project they funded. The opposite is true in for a green lease agreement. Like a commercial lease, however, green leases can either be gross or net leases.
Overall, a green lease does not differ too much from a standard one. The main differences between a green and standard lease are the inclusion of sustainability goals, and financial incentives that will benefit tenant and landlord alike.
Benefits of Green Leases
Realigning cost structures in green leases benefits building owners and their tenants. Both parties will benefit in the form of saved money and an efficiently operating building. Installing solar technology will also benefit the community overall and may attract likeminded people as potential future tenants. Green leases can be tailored to fit the specific needs and goals of each party as well. With the cost sharing structure, landlords can benefit in the form of an asset with increased value while passing off some or all of the cost of installing renewable energy on their property to the tenant.
Things to consider
When it comes time to decide whether or not you should invest in solar energy with a green lease, there are some things to consider as the tenant. The first thing you should take into consideration is how long you have left on your lease. Green leases would be an ideal solution for people who have 10 or more years left on a lease. This is important to consider because the investment may not be worth it if you do not plan on staying in the same place for a while.
It is also important to speak with your landlord to make sure that he would be willing to enter into an agreement like this. Your landlord may also be privy to whether or not the building or facility will be able to structurally hold the solar technology.
Interested in starting a solar project?
Interested starting a solar project and the ways in which you can fund it? EnergyLink team members are experts in the designing, building and funding processes of solar project installation are are happy to help you get started. Click the button below to get started and explore funding options or speak to a team member at (866) 218-0380.
