As commercial and industrial real estate faces rising costs and increased vacancies, property owners are seeking innovative solutions to improve profitability. Community solar offers a compelling opportunity to generate revenue, reduce carbon footprints, and attract tenants by transforming unutilized spaces into value-generating assets.
The commercial real estate market is encountering significant challenges. Prolonged high interest rates, increased operating costs and decreased revenue are squeezing profitability. In 2023, commercial space utilization in key markets like Washington, DC, and Baltimore dropped by 1.4 million and 1.1 million square feet, respectively. This trend, combined with increasing insurance costs, is putting additional pressure on property owners. While industrial warehousing and distribution facilities have shown stability, the overall real estate landscape remains tough for most owners. In this difficult environment, it’s crucial to explore strategies that can offset these negative trends and create new revenue streams. One such strategy is community solar.
The Community Solar program allows property owners to lease a portion of their property—typically rooftops, but also parking lots or open fields—for solar installations. These installations generate renewable energy for the grid, and in return, property owners receive lease payments from a third party that builds, operates, and maintains the solar assets. This energy is usually sold at a 10–20% discount to local subscribers, creating value in the community and promoting access to clean energy.
Figure 1: Lease property to a third party to finance, design, install, operate, and maintain solar assets to generate passive revenue
Depending on the agreement, property owners may also retain or sell the renewable energy credits (RECs) generated by the installation. With various structure options available, owners can tailor the arrangement to maximize financial and environmental benefits.
Earn up to $1.00 per square foot of leased space
Community solar enables commercial and industrial real estate owners to turn vacant or underutilized spaces into valuable, income-generating assets. Leasing unused roof space or open land for solar installations can generate between $0.50 and $1.00 per square foot, helping to alleviate financial pressures. Additionally, this contributes to growing demand for ESG (Environmental, Social, and Governance) initiatives, which are increasingly important to both investors and tenants. Here are some key benefits community solar offers to property owners:
Solar installations can reduce energy costs and, through leasing agreements, generate additional revenue.
Solar power is clean and renewable, helping reduce the property’s carbon footprint while contributing to a sustainable energy grid.
A commitment to sustainability can serve as a powerful marketing tool, appealing to prospective tenants who prioritize environmental responsibility.
Solar installation is up 29% over this time last year according to SEIA and community solar is expected to more than double by 2028. If you aren't looking at the opportunity that community solar presents, you could be leaving money on the table. Now is the ideal time to consider community solar. Federal incentives, such as those provided by the Inflation Reduction Act (IRA), along with technological advancements, have made solar installations more financially viable than ever. The decreasing cost of solar equipment, combined with favorable leasing terms, creates a powerful tool for property owners looking to enhance their bottom line while improving sustainability.
In states like New York, Illinois, and New Jersey, community solar projects are already gaining traction. These projects show how real estate owners can leverage available incentives to create new income streams by transforming underutilized spaces into value-generating assets.
“We were presented with many options to put solar on our roof, but it wasn’t until Centrica Business Solutions proposed this Community Solar project that all the pieces fell into place. The ability to reduce our own energy cost, reduce our carbon footprint and offer the local community similar advantages is a compelling option we couldn’t ignore. Centrica Business Solutions has proven to be an excellent partner on a very exciting project.”
Maryland is emerging as a leader in community solar, driven by progressive policies and a growing demand for renewable energy solutions. The state’s Community Solar Program, bolstered by the passage of the Brighter Tomorrow Act in May 2024, has positioned Maryland at the forefront of making solar energy accessible to a wide range of participants, including businesses, nonprofits, and residents. The program’s shared solar model enables broader participation, while enhanced incentives like 150% SREC credits and tax abatement have made community solar an appealing option for commercial and industrial real estate owners.
Working with both an experienced financier and construction company is instrumental in a successful community solar project. Centrica Business Solutions and Dispatch Energy provide a full-service solution to deliver revenue from unused space with very little lift on the part of commercial real estate owners. We have partnered to take care of everything from the lease, construction, utility approvals and commissioning and will provide operations and maintenance for the duration of your lease. You will earn revenue without the hassle of maintaining a solar PV system.
"Our partnership with Centrica allows us to pass the monetary benefits of state and federal community solar incentives to real estate owners. Our product, which is both meaningful and scalable, provides a boost to net operating income by ensuring increased revenue with no additional operating costs and minimal transaction cost"
- Richard Dovere, CEO Dispatch Energy
Community solar offers an innovative solution to many of the challenges facing real estate owners today. By leasing space for solar installations, property owners can unlock new revenue streams, support ESG goals, and differentiate their properties in the market. It's a win-win opportunity—both financially and environmentally. Now is the time to explore the potential of community solar for your real estate portfolio.
Meghan Cunningham
Meghan Cunningham is Head of Marketing, North America for Centrica Business Solutions. Meghan has more than 10 years of B2B marketing experience and is passionate about bringing sustainable energy solutions to pioneering customers who want to make a difference in their business and the world we share.
Adam Woda
Adam Woda is a Director for Dispatch Energy. Adam has six years of experience in energy efficiency and renewable procurement. He is passionate and knowledgeable in project finance and development, energy policy, distributed energy resources, community generation, offshore wind, and energy valuation.
