Leasing or renting of photovoltaic systems on roofs

The Royal Decree-Law 244/2019 brought about a radical change in the regulation of domestic consumption of electronic energy in Spain. This regulation abolished the so-called "solar tax", introduced a simplified compensation system for surpluses, lifted the power limitation and made it easier to manage the own consumption. This leads to a promotion of the development of photovoltaic systems in many areas that were previously underused, especially on the roofs of residential houses, other buildings and industrial halls.

The possibilities available to the owners of these areas are very diverse. The same applies to the suppliers of photovoltaic systems. It is crucial who has to secure the financing for their construction and the purchase of the modules and who has to generate the income from the energy produced. The simplest systems are the following two: in the first case, the owner of the roof finances the entire construction, which is carried out by a supplier specialised in turnkey construction, and receives the income from the sale of the energy or, if necessary, compensates it with the energy consumed; in the second case, the owner leases the roof to a third party so that the latter can install the production system there and sell the energy generated on the market.

Based on these two models, forms of cooperation between the owners of the land and the providers of modules and other energy services are emerging. In this paper we would like to focus on the leasing or renting of photovoltaic systems on the roof.

This contract allows the owner of the residential house or hall (or any other building suitable for this purpose) to install photovoltaic systems on his roof for his own consumption of the energy generated and, if necessary, to sell and/or compensate for the surplus by feeding it into the electricity grid, which is the difference between this and simply leasing the roof area. Instead of financing the costs of purchasing the modules and installing them itself, a third party (usually a company specialising in renewable energy projects) purchases the modules and leases them to the owner of the roof. The photovoltaic system is thus owned by the latter company, which receives a rent from the roof owner that recoups its investment and which in practice is much lower than the profit the lessee makes in terms of energy cost savings. The contract usually provides for a purchase option at the end of its term, the exercise of which gives the roof owner ownership of the system that was previously owned by the lessor.

The renting of photovoltaic systems on roofs presents the lessor of the system with a whole range of legal and fiscal challenges. The first is obvious: his position as owner of the property must be secured until the purchase option is exercised. This is an important issue, since ultimately the system is on someone else's property, so that a bona fide third party could legitimately assume that it is part of the property and therefore belongs to its owner if the necessary measures are not taken. For this reason, it is highly advisable to have the lease agreement entered in the Register of Movable Assets, as it is assumed that the lessor holds the title to the property with the registered agreement. In this way, the lessor of the system can easily prove his position as the owner of the system in case of sale or insolvency of the land owner.

Furthermore, in the event of a breach of contract by the lessee and termination of the contract, the owner of the system can resort to a very rapid legal procedure to obtain the return of the system (or at least of the parts that could be useful to him, such as the photovoltaic modules).

In order to be entered in the Register of Movable Assets (Registro de Bienes Muebles), the lease must be drawn up on an official form approved by the General Directorate for Legal Security and Protection of Public Confidence (formerly the General Directorate for the Register and Notary's Office). The general model can be used, but this does not seem sufficient to deal with the complex issues that must be dealt with in this type of contract. It is also possible to apply for approval of an official model, a possibility that has so far only been used by financial institutions, but which is available to any company.

The renting of photovoltaic systems on a roof brings with it a fundamental difficulty: the identification of the rented property, which is essential for the registration of the contract in the Register of Movable Assets. In fact, the contract is concluded before the system exists (since the lessor has to manufacture it) and therefore before being entered in the relevant register (in this case, the register of installations for the production of electrical energy or, if applicable, the administrative register of own consumption of electrical energy).

In order for the contract to be entered in the Register of Movable Assets, the system must have the brand name, model, if any, and serial or manufacturing number indelibly printed on one or more of its essential parts, or it must have a distinctive feature that prevents it from being confused with others. In theory, it would be possible to identify a photovoltaic system by means of the make, model and serial number of each photovoltaic module of which it is composed, but this would require the contract to be amended each time, for example, a defective module had to be replaced.

In order to solve this problem, we have found a practical solution, which has been accepted by the Directorate-General in all previous cases. This consists in considering the photovoltaic system as a whole as an economic unit, made up of a series of modules of one or more makes and models, as well as a series of accessories (the transformer, for example). The system is identified by a brand and a global model (assigned by the lessor), by its location and by the registration number, which must be indicated on all modules and accessories by means of a weatherproof label. This means that it is not necessary to mention the serial numbers of the modules that make up the system in the contract.

As the registration number will not be known at the time of the conclusion of the contract, this information must be left blank. As soon as it is available, the parties will sign a supplementary declaration (which they committed to in the original contract) in which they will record the registration number and, if necessary, adjust the starting date of the lease. With both documents (contract and supplementary declaration) it will be possible to obtain registration in the Register of Movable Assets.

At Lozano Schindhelm, we have years of experience in assisting owners of photovoltaic systems and specialists in photovoltaic projects with the legal and fiscal structuring of their investments. If you have any questions, please do not hesitate to contact us.

Authors: Carlos Fernández, Fernando Lozano and Axel Roth