JLL: Commercial Landlords Eye Solar Energy, Despite Challenges, Questions

(Image courtesy of Markus Spiske/pexels.com)

JLL, Chicago, found in a recent survey that 43% of commercial landlords globally would like to increase solar photovoltaic (PV) panel coverage to reach 50-75% of their portfolio.

However, JLL notes there’s uncertainty in valuation processes for those that choose to do so.

As solar panel adoption currently stands–about 75% of landlords have between 5-25% of their portfolio equipped with solar panels.

Between 2010-2020, the cost to install PV panels fell by 90%, driven by better manufacturing and efficiency. Another factor–modern PV panels have better life expectancies than older forms of the technology.

PV is anticipated to have the highest share of future power generating capacity, JLL said. It is expected to overtake natural gas in 2026 and coal in 2027.

However, installing PV has numerous challenges. Not all buildings are appropriately situated or laid out to be a good fit.

There’s also that question of how it impacts valuations.

“Income  generated by installing PV panels has a fundamentally different investment and risk profile to real estate–something that is not yet consistently accounted for in valuations,” JLL wrote. “To date it has been common for valuers to view additional PV income as similar to rental income and capitalize this at the same rate.  PV income, however, is a fundamentally different investment with complexities that need to be modelled into the income stream. This includes a variety of ownership structures, which can impact the potential income, up front and maintenance costs and overall risk profile of these assets.”