Solar Panels on Buildings Need a Shift in Valuations

If solar power wasn’t on the agenda for more CRE owners, operators, and developers before the pandemic, it should be now. The Inflation Reduction Act, passed in 2022 as an attempt to slow the growth of inflation, has provided many billions in potential tax credits for smarter energy use and generation, with solar a big part.

And there are many ways to using solar, including having panels installed directly for the owner, renting space out to third parties, providing power to tenants, using it only for internal purposes and cutting utility bills, or selling power back to the grid. Installation costs of PV dropped by 90% between 2010 and 2020, as JLL notes. Life expectations of the systems have also grown to a range of 25 to 40 years. Then there are the ESG benefits at a time when the chances of having to report on greenhouse gas emissions either directly or through tenants is a distinct probability for CRE firms.