Rising energy costs are a landlord's problem too

Business electricity costs have risen 25% since February, and government is cushioning very little of it. Occupiers rarely invest in buildings they do not own, and third-party solar developers struggle to work on leasehold property. That leaves landlords as the natural funders of on-site power. With solar PV, and battery storage where the demand profile suits, they can cut what occupiers pay for electricity, strengthen the case for renewal and earn a return of more than 10%. The structures are proven. The question is which buildings to start with.

Occupiers are on their own

A typical 12-month electricity contract for a small industrial and commercial site now costs about £638,500, up 25% since February, according to Cornwall Insight. Gas costs for the same site are up by a similar amount. The main driver is wholesale gas, pushed up by the conflict in the Middle East. Charges for network upgrades and for balancing the electricity system are rising too.

Many businesses renew their supply contracts in October, so a large number of occupiers are now fixing at these higher prices.

Government support is narrow. Around 500 energy-intensive businesses get relief on policy costs through the British Industry Supercharger. The British Industrial Competitiveness Scheme will extend relief to around 10,000 businesses from April 2027. Even so, Cornwall Insight estimates that nearly 90% of business energy consumption receives no support on policy costs at all.

High bills will continue to weigh on investment decisions, after all it's hard to commit to expanding your business when you've no idea what your energy bill will look like next year.

JACOB BRIGGS, ENERGY USERS LEAD, CORNWALL INSIGHTS, 25TH OF AUGUST 2026

Cornwall Insight lists on-site generation alongside hedging and fixing early as the main ways businesses can reduce their exposure.

Why the landlord should fund it

On-site solar works best when whoever pays for it benefits over its full life. In leased property, that is rarely straightforward.

Occupiers. They will very rarely commit capital to solar on a building they do not own. The system stays with the building when they leave, and the payback period often runs beyond their next break or lease expiry.

Third-party developers. They usually need a lease of the roof for 20 years or more. Most occupational leases have far less unexpired term, and landlords are reluctant to give a third party control of the roof beyond the existing lease. Many projects stall at this point.

Landlords. They take a longer view. Funding a project futureproofs the building and creates an income stream, or added value, that valuers and onward purchasers can capitalise. It also gives the landlord something of measurable value to offer the occupier.

Three ways to fund on-site power

Syzygy pioneered the structure for landlords to fund solar PV in collaboration with their occupiers in 2010, while keeping the lease clean full repairing and insuring (FRI). We have now completed more of these projects for landlords than any other advisory business in the UK. There are three routes.

• Sell the power. The landlord funds, owns and maintains the system, and sells the power to the occupier under a power purchase agreement (PPA) at a price below its supply tariff. The occupier saves with no capital outlay.
• Recover the cost through the rent. Where the occupier is a heavy energy user and will consume most of the output on site, the landlord can rentalise the investment instead. This works where the occupier's saving on its energy bill is larger than the increase in rent.
• Use it in a regear. An offer to fund an installation can strengthen lease regear negotiations. It is unlikely to replace other incentives, but a quantifiable annual saving in operating costs is attractive to occupiers, as are the decarbonisation benefits they can pass on to their own customers.

What the numbers look like

At Wolverhampton, a 1.2MWp landlord-funded rooftop system saved the occupier about £140,000 between October 2025 and September 2026.

For the landlord, well-chosen projects return more than 10% (internal rate of return, IRR). The best candidates have large, sound roofs, occupiers who use most of the power in daylight hours, and a lease position that allows the documents to be agreed.

Storage. Battery storage improves the case where demand peaks in the evening or spikes sharply. It moves surplus solar to the hours when grid power costs most. It should always be tested against the site's half-hourly data.

Room to grow. A report commissioned by Real Estate:UK and written by Cushman & Wakefield found that less than 10% of suitable commercial roof space has solar, against potential for more than 60GW, Solar Power Portal reported.

Why now

Occupiers are fixing supply contracts in a high market, and for most of them support is either absent or a year away. Every month without on-site generation is a month at grid prices. Surveys, network applications, lease and PPA documents and installation all take time, so projects started this winter can be generating by next summer.

The first step is a portfolio review. Twelve months of an occupier's electricity bills and basic building data are enough to show where the savings and returns are, and which of the three routes suits each building. If you would like us to review your portfolio, get in touch.

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