ESG in Real Estate - Green Leases expert guide in Germany

same as Norway, but in the case of buildings used by public bodies with an area of more than 250 sqm only if they are heavily frequented by the public and also in the case of buildings with more than 500 sqm that are heavily frequented by the public, even if they are not used by public bodies. 

same as Austria, whereby the implementation of specific modernisation measures (e.g. modernisation of heating, installation of smart meters) is increasingly being imposed by law as well for existing properties, irrespective of any renovations planned by the owner of the building; in addition, the following laws must essentially be observed in Germany:

• Act on energy conservation and the utilisation of renewable energies for heating and cooling in buildings (Gebäudeenergiegesetz (GEG))
• Act on the development of a building-integrated charging and cable infrastructure for electromobility (Gebäude-Elektromobilitätsinfrastruktur-Gesetz (GEIG))
• Act on the sharing of carbon dioxide costs (Kohlendioxidkostenaufteilungsgesetz (CO2KostAufG))
• Law for the expansion of renewable energies (Erneuerbare-Energien-Gesetz (EEG))
• Act on metering point operation and data communication in smart energy networks (Messstellenbetriebsgesetz (MsbG))
• Act to increase energy efficiency in Germany (Energieeffizienzgesetz (EnEfG))
• Law on corporate due diligence to prevent human rights violations in supply chains (Lieferkettensorgfaltspflichtengesetz (LkSG)) 

same as Austria, but for the time being, green leases are predominantly implemented by means of commercial lease agreements due to the mandatory provisions in the German Civil Code in favour of residential tenants, which severely restrict applicability in residential leases. Similarly, the applicability in the scope of application of general terms and conditions is influenced in both residential and commercial leases and is also more restricted here in the B2C area and thus primarily in residential leases, which also promotes cautious use in residential leases. 

same as Austria, although instead of ÖGNI, ÖGNB and klimaaktiv, the German certification system DGNB is still a widely used certification system on the German market. 

same as Austria 

same as Austria, although instead of ÖGNI, ÖGNB and klimaaktiv, the German certification system DGNB is still a widely used certification system on the German market; tenants and investors are also generally more likely to ask for certification of the building when it is a new building.

This is contingent on the specific setup, such as e.g. the generation capacity and potential local requirements. 

1. Regulatory provisions

The expansion of rooftop PV is being significantly pushed by the Federal Government and therefore building and regulatory law is constantly being reshaped in this regard. A building permit is generally not required for rooftop PV installations. However, for new commercial properties, it is mandatory in most federal states to install PV systems. The specific details of this obligation are governed by state law. 

Subject to certain exceptions, the requirements for financial support scheme can be summarized as follows: 

1. PV plants with an output of less than 100 kW (and, under certain circumstances, 200 kW) are eligible for a feed-in remuneration.
2. PV plants with a capacity of up to 1 MW are eligible for financial support in the form a market premium (i.e. a type of one-sided contract-for-difference).
3. PV plants with a capacity of more than 1 MW are eligible to participate in tender auctions, the award resulting of which will determine the amount of financial support. 

If the PV plant is located directly on, or adjacent to the building where the produced electricity is consumed, a tenancy electricity surcharge scheme may apply to the benefit of the PV plant operator. The amount of financial support is determined by statutory law.

Further regulatory requirements apply.

2. Contractual provisions

The electricity generated by the rooftop PV plant can be marketed outside any financial support scheme described above, i.e. by way of a direct marketing agreement or a merchant PPA. Finally, the generated electricity can be consumed on site in order to meet the electricity demand of the building on which the PV plant is installed. 

If the rooftop PV plant is not operated by the building owner, a lease agreement as well as a respective in rem right (i.e. easement) are typically required. Key aspects to be regulated beyond the right to use usually include aspects such as the risk and cost allocation regarding roof renovation, installation and dismantling of the PV plant, and structural integrity checks. The contract duration is typically set at twenty years, with an option for extension. 

Given the multitude of involved stakeholders – building owner, plant operator and/or owner, grid operator, electricity off-taker or consumers, EPC contractor, and O&M provider – PV projects require a complex grid of contractual relationships. This intricate contractual framework may establish significant interface risks, which need to be mitigated through careful contract design.