Up on the roof: solar panels on industrial assets

Labour wants a solar energy “rooftop revolution” on UK homes, but what about the 18,500 acres of warehouse roof space? Julia Cahill talks to Prologis’s Simon Cox to find out what the barriers are to a faster roll out.

“Our objective is to fill the roof of every one of our buildings around the world with solar,” says Simon Cox, head of the UK development management team at industrial giant Prologis. “We are building an energy business globally because we want to use that to provide our customers with green energy.”

In fact, the world’s largest industrial property company is now the second largest solar power company in the US, with more than 500MW across its global portfolio. For context, that would be enough to power more than 85,000 typical US homes. And Prologis is in a rush to double that to 1 GW by 2025 as part of its drive to reach net zero by 2040. “All of our investors are very interested in solar. We are hiring energy experts to help us get there,” he says.

In the UK, Prologis is at 10.53MW across 43 buildings. It has identified a further 10.68 MW of “live opportunities” which would take the business to in excess of 20 MW. That would cover around half its buildings, so it can realistically see a future pipeline of up to 40 MW.

All of its speculative buildings are now delivered with solar in place, after it implemented the decision 18 months ago that all of its spec buildings would be EPC A+. In other words, they generate enough power to take care of themselves.

It is also working with customers across its existing portfolio to help them put solar in place – regardless of lease length – and would even consider using its expertise to deliver solar outside of its own portfolio. “But the roofs of our buildings can deliver much more. I would describe it as an exponential situation,” Cox says.

To some extent, the speed of that growth is limited by demand. The industry knows its customers are going to need more and more clean energy as they fully electrify their operations and implement innovations in areas such as AI and automation. Cox knows, for example, that some Prologis customers have ordered electric trucks and are working out how to integrate them into their supply chains.

But more fundamentally, the industry needs the electricity grid to be able to manage the to-and-fro of energy at that level. The National Grid was never designed as a two-way street and, as Keir Starmer has outlined, grid capacity is a huge issue. New renewables can only become more helpful if there is enough capacity to carry all this new power to where it’s needed. For the industry to serve its own customers over the coming decades and potentially transform into a net producer of renewable electricity, this has to be addressed.

Grid overhaul

At present, for large solar rooftop installations, electricity grid connections can limit the maximum system size, incur costly upgrades, and sometimes prevent installation altogether.

“The view of our energy expert in the UK is that something like 30% of the grid needs to be replaced to get us to where we need to be,” says Cox.

Even with the new Labour government hitting the ground running with its green energy mission, this is going to take a concerted effort over many years.

“At the end of the day, it’s a lot of people replacing cables and rewiring primary substations and power systems,” Cox says. “It’s going to need government to push that grid transformation.”

Pricing disparity

Another obstacle is the huge disparity between the price of buying electricity and the price of selling it – whether that is for households or for businesses.

“That’s a barrier to being able to put really big PV systems in place. And it is a barrier that is almost entirely artificial,” says Cox. “One thing that regulators could do almost overnight is to bring the value of export back up, so it is much closer to the true value of electricity when we buy it.

“I think the impact that would have would be transformational because people like us and our customers will be far less worried about the energy that escapes to the grid.”

Capturing that energy in batteries offers some help – but only up to a point. And as Cox points out, those batteries have an environmental footprint themselves.

“Should those batteries be in a box in a big distribution centre or will they do more if they are in electric trucks powering something which is much harder to replace?” he says. “Everything is a finite resource – including the materials used to make batteries. There’s also a speed limit in the manufacturing capability of them.”

Planning push

Cox agrees that planning could play a major role in driving the solar agenda. “My recommendation would be that local planning authorities should insist that every new building is EPC A+,” he says. “It’s simple. It matches the building regulations. It is consistent and it is a way of making sure that every building takes care of its own issues and strategic demand.”

It is a starting point that should, in most cases, be achievable within the confines of the grid.

“That’s important because what will happen otherwise is that if the planning authorities go too far, then they will find people won’t comply because they will bring in viability tests and they will argue that they can’t do this because the grid isn’t ready. But if we go for EPC A+ everywhere, that, again, could be transformative.”

In the meantime, Prologis will keep sharing its renewable energy expertise.

Warehouse sector and countryside charity align

UKWA – the representative body for the UK logistics industry – is campaigning to promote more sustainable and secure energy sources for warehousing and logistics, to the benefit of both the sector and the UK.

It estimates that the UK’s warehousing has 18,500 acres of rooftop space. Yet its research shows that only 5% of this has solar PV. It believes that enabling and accelerating the growth of rooftop solar would support government strategies for decarbonisation, level up the logistics industry by reducing energy costs and exposure to price volatility and reduce the use of valuable land.

With the largest footprint of any commercial sector, UKWA argues UK warehousing could become a net producer of renewable energy. Its priority areas to make this happen include grid connection reform and more coordinated local area energy planning, which recognises the importance of rooftop commercial solar. Leases can prove another barrier.

UKWA has an ally in the countryside charity CPRE, which has been calling on government to make rooftop solar panels a condition of planning approval for new homes, commercial buildings and large car parks.

It is opposed to the kinds of giant solar farms Labour moved quickly to endorse following the election and is campaigning for a “roof-first” solar policy that also prioritises brownfield sites for solar farms and protects greenfield land. It wants to see a target of 60% of new solar panel installations to be on roofs.

The next decade

Power, both access to it and achieving increasing levels of it, looks likely to be one of the biggest factors impacting developers, investors and occupiers over the next decade, according to a recent report from Savills and developer Tritax Symmetry.

As industrial and logistics buildings modernise, much of the new technology involved in automation, robotics and electric vehicles will require more power and meeting this increase is proving difficult. It is the primary concern for developers with 60% sayings it’s a critical issue and the second biggest concern for investors (ranking joint with the health of the economy, after ESG).

The report says: “The UK’s constrained grid network, particularly in areas where logistics developments are planned, significantly affects the delivery of new schemes. That this is now high on investors’ list of concerns should demonstrate that this is a significant bottle neck for the industry.”