Solar Due Diligence

20% of commercial real estate today is equipped with solar panels (also called photo voltaic panels or PV). This makes it increasingly likely that you will have to deal with PV during a transaction. But how do you quickly know whether these solar panels are going to be a premium or a liability?

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In what situations is a technical and financial risk analysis desirable?

Sale of a building with solar panels

When selling a property, you would like to maximise your indirect yield. It then helps to have your file in good order. You want to prevent the buying party from negotiating over ambiguities. Proving that the solar panels (PV) present are sound can remove concerns and therefore be of value. Consider: is all documentation complete? Has the system been inspected recently? Are the commercial agreements with tenant(s) and energy company clear? Zoncoalitie can help you well with this, ensuring that you highlight the PV system as a premium. This will have a positive impact on pricing in the transaction.

A quick scan can be made within 5 working days, but if you want us to really showcase the system as a premium, more time is needed. Think of 1 to 3 months, depending on the nature of any problems and completeness of the file.

Case study from practice: client A had a PV system under management with us. Party B wanted to buy the property on which this system was located from A. Since B did not want to make a return on the sale of energy for tax reasons, the existing system was immediately the subject of discussion. The first question our client asked was: 'What will it cost to remove the entire system from the roof?' After giving our answer, we asked the reason for this question. After explaining this to our client, we managed to change the wind by clarifying how the cash flows could also be incorporated into the rent. Because we had clear insight into the performance and clear guarantees from the installers, the only risk left was the number of sunshine hours. Fortunately, that too can be estimated quite well.

By giving comfort to the buyer and clearly underpinning the case with a well-organised file, A and B still quickly reached a transaction in which B even ended up paying a premium for the building as a result of the solar panels. A premium that was a lot higher than the original purchase value of the PV system.

Purchase of a building with solar panels

As an investment manager, you would like to know quickly whether a PV system present on a property implies a premium or a liability. That way, you can stipulate at the time of negotiation that any defects or risks are factored into the price. Should more time be needed to estimate the exact defects or risks, we can at least help you make an educated guess. This way, you can weigh up the materiality yourself and address it in the transaction documentation if necessary. This way, you avoid surprises after the investment has been made.

Our inspection, callable at short notice, provides substantiated clarity on expected cash flows and risks. We can then support in fixing defects, complementing files or changing legal structures.

Leasing a building with solar panels to a new tenant

When leasing a property with solar panels to a new tenant who has self-determination over the connection, you can agree on an operating lease or include the installation in the leased property. In that case, make sure that all details about the system are clear so that clear agreements can be made with the tenant. Think of proof of the past years' production, but also a log of the audits performed from which comfort can be traced.

How do we carry out the inspection

File audit

Via our standardised working method, we know exactly what documentation should be present. With a quick check, we establish what is and is not there and what it costs to complete the file.

Visual inspection

We understand that time is of the essence in real estate transactions. That is why we carry out our inspection within 5 working days, so that you get a quick picture of the state of the system.

Risk analysis

Our inspection gives you a clear impression of possible maximum repair costs or, for example, cash flows expected in the future. This allows you to use substantiated amounts in a negotiation and avoid surprises afterwards.

Next steps

We offer concrete follow-up steps to:

- Complete the file

- Possibly carry out a Scope 12 audit as a baseline measurement

- Set up agreements/documentation with tenants, grid operators, energy suppliers, metering companies

- Get the best agreements from the market with aggregators (energy companies) in case of substantial grid supply

- Add energy management systems to apply curtailment (prevent feed-in at negative energy prices)

- Create links with any EV chargers, batteries (storage).

Insurance check

Get a clear picture of how many panels would fit on the roof. We know exactly how to deal with fall protection or obstacles on the roof.

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Technisch rapport Financial risk assessment

Zoncoalition's experts are ready to help you

More than 100 MW under management
All experts are certified
Independent and transparent

2,3 MW

of capacity

"With Zoncoalitie's transparent approach, we know exactly where we stand in terms of efficiency, technology and sustainability."

Technical due diligence for solar systems

Within 48 hours, an expert on site

This due diligence is specifically designed for properties with existing solar panels undergoing ownership or lease changes. Zoncoalitie provides a rapid risk analysis and financial justification that can serve as input for negotiations.

Alex Muhring

CEO