In logistics, most carbon emissions are caused by freight transport, moving goods by sea, rail, chiefly road or occasionally air. Until now, most government policy, academic research and industry discussion about sustainability in logistics has therefore focused on decarbonizing transport. Warehousing has been largely overlooked. But it would be wrong to assume all the opportunities to go green can be found in transport alone.
At the UK Warehousing Association – a trade body which represents the warehousing sector – we are not interested in 'bashing' the logistics industry for not putting solar panels onto its rooftops; after all, until recently, barely anyone was talking about it and in any case, there are some good reasons why people haven't been doing it. But we wanted to understand more about the perceived barriers, such as high costs, lack of information, grid constraints and stakeholder conflicts.
Globally, we are facing a climate crisis; and nationally, the UK Government has a legally binding target to achieve net zero carbon by 2050. Accordingly, last summer, UKWA commissioned a substantial research project to find out what is going on. This also aimed at using our platform to affect change within the industry while highlighting to government the opportunities for policy reform that would help unlock the potential of warehouse rooftops across the country.
We found some particularly successful examples of warehouses with solar panels. Sometimes they had been installed by the landlord, other times it was a collaborative project including both landlord and tenant. And of course, some warehouses are owner-occupied, which was generally seen to be even more straightforward. The benefits for the owner of the building can include meeting their ESG targets, future-proofing the building against future regulatory requirements (such as MEES, the Minimum Energy Efficiency Standard Regulations, which are gradually becoming more stringent) and of course, making the building attractive enough to persuade the current tenant to renew their lease, or to appeal to a new one. For occupiers, the main benefit was the safe and secure supply of low-cost electricity, which can offer excellent savings. In fact, the current exorbitant cost of electricity has made the business case for solar even more compelling; and it is also worth noting that the cost of solar panels has come down by about 80 percent over the past decade.
Our report found that a typical ambient warehouse would only need to cover up to 25% of its roof space with solar panels to self-consume all the electricity generated. But we also acknowledged that electricity demand is increasing in our sector, so the electrification of mechanical handling equipment (such as forklift trucks or even robots) might prompt companies to install extra solar panels; and the prospect of recharging an EV fleet would make an even bigger difference.
Of course, it is also possible to sell excess energy back to the grid. Avoiding the cost of purchasing electricity is worth about three times as much as the potential earnings from exporting it, although these factors may be subject to change in the future, if the buying or selling prices fluctuate. Another consideration is the option to install batteries, to store electricity for future use. This is not currently favorable for most projects because battery costs are so high but may become more viable in future.
There are several different funding options. Most straightforward is a simple capex expenditure, which may be paid for by either landlord or tenant. Asset finance is also available, for either lease or hire-purchase. Alternatively, a Power Purchase Agreement (PPA) sees a financial partner cover all the costs of installation and then sell the power that is generated to the occupier. ESCOs and Community Energy schemes are less prevalent but may also be worth considering.
One of the reasons we felt businesses might not be taking the plunge was due to the range of options outlined above, which companies might find too complex to weigh up. UKWA has therefore developed a ‘toolkit’, exclusively for our members, to outline the choices and provide estimates and guidance, equipping everyone with the information they need to develop a solar project, optimized for their own circumstances.
Another challenge we discovered, which neither UKWA nor our member companies can tackle alone, was the powerful role of the Distribution Network Operators (DNOs). The National Grid operates the high-voltage transmission network. However, a dozen or so DNOs own and operate the infrastructure that delivers power to each property. Unfortunately, however, their monopoly status means DNOs are barely incentivized to invest in futureproofing their networks. The current system for access to the grid is inconsistent. One company may be allowed to connect at no direct cost, on a first come first served basis. If subsequent applicants exceed the remaining network capacity, they are required to pay the DNO for grid reinforcement works. Solar project costs are already 80 percent ‘upfront’, so these additional advance costs are a burden; and connection costs cannot be amortized, so they must be borne in one year. In some cases, the DNO’s costly demands can kill the business case for a solar project or introduce untenable delays.
UKWA’s policy paper was launched in October with a roundtable debate amongst industry leaders followed by a sumptuous lunch at the House of Lords, hosted by our honorary President, Baroness McIntosh of Pickering. We followed that up by posting 853 hard copies of the paper to all the MPs, Members of the Scottish Parliament, Members of the Welsh Senedd and Metro Mayors. Meanwhile, we spent three weeks trying to persuade a national newspaper to cover this topic, and failed, although the trade press reported it extensively. But little by little, the message about warehousing’s potential for renewable energy has started to take root…
At the solar industry’s annual exhibition, Solar & Storage Live at the NEC, Bim Afolami MP was the keynote speaker. We were delighted when he specifically mentioned warehouse rooftop deployment in his speech. This was especially important because Mr Afolami is Chair of the largest and longest standing energy and climate change group in Westminster. Known as PRASEG, the Parliamentary Renewable and Sustainable Energy Group is an all-party group for MPs and Peers committed to enhancing the scale and quality of debate around the energy transition. Caroline Lucas MP, of the Green Party, is a Vice-Chair.
The very next day, there was a pertinent exchange in the House of Lords. In a debate about the Energy Prices Bill, the Conservative Peer, Lord Framlingham, observed that “there are thousands and thousands of acres of factory roofs in this country. Would it not be a very good idea for them all to be encouraged to have solar panels?”, to which Lord Foster of Bath responded: “Indeed. The noble Lord is absolutely right. I was going to come on to that point. The UK Warehousing Association says that if we could get solar panels on all its warehouses, we would get 15 gigawatts of energy. The difficulty—perhaps the Minister can comment on this—is that there is difficulty in many cases with connecting to the grid”.
As far as we know, this was the first time the UKWA had ever been mentioned by name in parliament! In fact, only a fraction of the UK’s warehouses would be required to achieve the 15GW cited. And that would double the UK’s solar capacity.
So, if the political, economic and society news all seem as depressing as the weather, why not turn your attention to something positive which businesses can do right now? Solar panels can generate green electricity even when it’s raining. Putting them on your warehouse roof is almost always a good idea. And UKWA is here to help you do it now.
