How Malaysian factories can add rooftop solar via solar leases/PPAs—key contracts, approvals, roof rights, risk allocation, and banker/landlord consent.
Renewable Energy on Industrial Roofs: Solar Leases & Legal Structure
Rooftop solar helps factories cut electricity bills and hedge against tariff volatility. Most corporates choose between a Solar Lease or a Power Purchase Agreement (PPA)—both avoid upfront capex while a third-party investor funds, installs and operates the system.
1) Commercial Models at a Glance
| Model | Cashflow | Who owns the system | Common Term | Pros | Watch-outs |
|---|---|---|---|---|---|
| Solar Lease | Fixed monthly rent for use of the system | Solar investor (lessor) | 15–25 years | Budget certainty; simple billing | Indexation/escalation clauses; minimum take-or-pay |
| On-site PPA | Pay per kWh generated/consumed | Solar investor (seller) | 15–25 years | Pay only for energy; performance risk sits with seller | Metering & performance measurement disputes |
| Capex Purchase (EPC) | Upfront capex; O&M fee annually | Factory/landlord | Asset life 20–30 years | Full control; highest savings after payback | Upfront cost; warranty & O&M discipline needed |
2) Core Documents (Typical Set)
- Rooftop Solar Lease / On-site PPA (between factory host and solar investor)
- Roof Space Licence/Access Agreement (detailed rights to occupy roof, cable routes, switch room)
- EPC Contract (design, supply, install, test & commission)
- O&M Agreement (operations, preventive maintenance, response times)
- Interconnection & Metering Approvals (utility application, meter CT/PT, protection settings)
- Consent Deeds:
- Landlord’s consent (if tenant is the host)
- Chargee/Bank consent or non-disturbance agreement
- For strata/industrial parks: MC/JMB consent
3) Roof Rights & Technical Due Diligence
- Structural capacity: PE certification for dead loads, wind uplift, seismic allowances; check purlin spacing and corrosion condition.
- Waterproofing & penetrations: Prefer clamp/rail systems on standing-seam; if penetrations are required, state responsibility for leaks and re-warranty of roof.
- Layout constraints: Skylights, smoke vents, fire lanes, fall-arrest systems, lightning protection, rooftop equipment clearances.
- Fire & safety: DC isolators, fireman’s switch, shutdown labeling, emergency walkway access, Bomba coordination.
- Electrical integration: AC/DC design, protection relay settings, export limiters (if any), earthing, harmonics.
4) Risk Allocation — Clauses That Matter
- Performance & degradation: PR/availability guarantees, liquidated damages or tariff rebates if underperforming.
- Insurance: Construction All Risks, Public Liability, and Operational All Risks naming landlord/tenant as additional insured; subrogation waiver.
- Ownership & fixtures: System remains investor’s chattel; clear removal/restoration obligations at expiry/termination.
- Access & shutdown: Reasonable notice for planned outages; emergency access rights.
- Change in law/tariff: Pass-through or sharing mechanisms if grid tariffs/program rules change.
- Revenue metering: Dedicated revenue-grade meters, calibration, data sharing and audit rights.
- Default & step-in: Investor step-in to cure roof leaks/electrical faults caused by host and vice versa; cure periods; termination fees.
- Buy-out options: Fair market value schedule or pre-agreed buy-out price at year X.
5) Approvals & Compliance (High-Level)
Expect utility interconnection review and local authority submissions. Many industrial users adopt self-consumption and/or netting/export mechanisms where available. Program names, quotas and rules are updated periodically—confirm latest requirements with the utility and energy authorities at the time of contract.
6) If the Property Is Tenanted
- Tripartite alignment: Landlord–Tenant–Solar Investor deed to align access, ownership and removal obligations.
- Rent & service charge: Clarify whether roof rental applies and who benefits from energy savings (tenant, landlord, or a split).
- Lease term vs solar term: If tenant’s lease is shorter than the solar term, include assignment of benefits to incoming tenant or buy-out/relocation mechanics.
7) Bank & Title Considerations
- Chargee consent: Most mortgaged properties require lender consent to grant roof rights and to register any caveat or notice of the solar agreement.
- Title conditions: Ensure use remains consistent with industrial building use; no contravention of express/implied conditions or height/setback rules.
8) Quick Checklist Before Signing
- Latest title search, land use & restrictions-in-interest.
- Structural due diligence & roof warranty status; corrosion inspection.
- Preliminary energy profile: load curve, roof yield estimate, offset potential.
- Draft Lease/PPA with clear metering, performance and insurance clauses.
- Landlord/chargee/MC consents pathway agreed in writing.
- Interconnection timeline and responsibilities (fees, studies, upgrades).
FAQs
1) Which model saves more—Lease or PPA?
Depends on tariff, roof yield, indexation and performance guarantees. PPAs tie payment to kWh; leases fix monthly cost. Run both through a 20-year cashflow before deciding.
2) Who pays if the roof leaks?
State it clearly. Often: investor covers leaks attributable to mounting works; landlord covers latent roof defects. Re-warranty terms should be written into the contract.
3) Can I move the system if I relocate?
Yes—if the contract provides. Include relocation/buy-out schedules and who bears removal, transport and re-install costs.
Start Your Search for Agricultural, Industrial, or Land Investment
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Disclaimer: General guidance only. Program quotas, interconnection rules and tariffs change. Obtain legal and technical advice for your specific site and state.
