New Regulations on Solar Panel Installations on Commercial Buildings

Current Legal Framework and Challenges

Under the current legal framework, solar panels installed on buildings are considered part of the real estate and are subject to the property's mortgage under Section 38 of the Danish Land Registration Act. This has posed significant challenges for financing solar panel installations, as lenders and leasing companies have been unable to secure separate rights over the solar panels, limiting their ability to offer financing solutions and reducing investment incentives.

Adopted Changes: The Renewable Energy Act Section 15

The amendment to the Renewable Energy Act introduces a new Section 15, which provides an exception to the existing rules under the Danish Land Registration Act. The new Section 15 allows lenders and leasing companies to retain separate rights over solar panels installed on commercial buildings, provided the following conditions are met:

1. the solar panels must be installed on commercial buildings and connected to the collective electricity grid,
2. the panels must be removable without causing significant damage to the building, and;
3. no later than upon commencement of the installation of the solar panels, a declaration of the separate right must be registered with consent from existing secured creditors, who can withhold consent if the installation poses credit risks or violates financial regulations.

Implications and Limitations

The adopted rules are expected to open new avenues for financing solar panel installations, making it easier for commercial property owners to invest in renewable energy solutions. The ability to secure separate rights over solar panels will enable more flexible financing arrangements, such as leasing, which were previously hindered by the legal classification of solar panels as part of the real estate. The rules apply only to commercial buildings and do not extend to residential properties in the form of single-family houses, row houses, apartment buildings, nor summer houses etc., and the rules do not apply to solar panels installed on land. Additionally, the regulations do not apply if the building owner purchases the solar panels outright, as separate rights cannot be retained in such cases.

How We Can Assist

At Moalem Weitemeyer, we are closely monitoring the development of these regulations and are prepared to offer expert advice to clients in the real estate sector.