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Commercial solar - rooftop development in Scotland

Arguably commercial rooftop solar presents the greatest opportunity for renewable development in Scotland with thousands of hectares of south or west facing rooftops available, which would otherwise be considered 'dead space'. 

In fact longer daylight hours allow Scotland to compete favourably with England and Wales, who benefit from marginally better levels of irradiation. Research produced by the European Commission shows that solar PV in Edinburgh can generate 96% of the energy that the same installation would generate in Birmingham.

Rooftop solar installations with a generating capacity of up to 50KWs benefit from permitted development rights in Scotland and therefore avoid the need for planning consent. The Scottish government has already consulted on removing the capacity threshold. We understand that they are currently addressing aviation concerns raised through the consultation process before deciding on whether to implement the changes. 

A favourable outcome would increase the scale of commercial rooftop that can be deployed quickly; cutting some of the red tape and easing the burden on local planning authorities. 

The benefits

There are a number of benefits associated with deploying rooftop solar projects, including:

  • the ability to use an existing grid connection where the power will be used by the building owner/ occupier (direct wire projects. 
  • the ability to connect smaller projects direct to the grid without obtaining grid consent (G83/2 connections); 
  • the availability of a Feed in Tariff, albeit at a significantly digressed rate;
  • projects are able to pre-accredit which can speed up the development process and give early certainty in terms of Feed in Tariff rates; and
  • there is a healthy appetite for funding rooftop projects. This is particularly noticeable on a portfolio basis, where the risk from offtaker default on revenue streams is spread across multiple sites.

And of course, whilst not the primary motivator, there is a degree of green kudos attributable to companies and institutional investors for installing solar on their buildings. We've seen a positive impact on valuations in the Scottish market for buildings with solar technology.

The legal challenges

There are of course legal challenges associated with rooftop development, all of which can be overcome with some foresight and careful drafting.

In particular, protections are required when relying on the building owner's grid connection to ensure continuity of supply. A strategy is also required for insolvency of the power offtaker; the lease should allow for termination where there is a material breach by the offtaker of the terms of the power purchase agreement. 

The ideal rooftop lease would include rights for the project to be reconfigured as an export only project, allowing for a new grid connection. Linked to this is the reliability or covenant strength of the power offtaker - if selling power to the tenants of a building under a long term power purchase agreement, how likely are they to stick around or are they at risk of insolvency? 

Whilst there are fewer title issues associated with rooftop development than ground mounted projects, it is important to be clear on who has rights to the rooftop and air space. This is particularly important when the building is not owner occupied. We also need to be mindful of the need for consent, where there is a standard security in place over the building. The consent may come with conditions and the timings associated with a funder review of the legal documents should be factored into the development process. 

It is clear that the process for rooftop solar development in Scotland is easing. Coupled with public support for solar deployment on commercial rooftops and falling technology costs, the future for rooftop solar in Scotland is bright.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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