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Untapped solar potential awaits atop warehouse roofs

Acres and acres of flat, sunny warehouse rooftops could be an untapped resource in Illinois’ transition to 100% clean energy, a recent study highlights.

Illinois has the potential to generate nearly 10,000 gigawatt-hours of solar power annually on warehouse rooftops — enough to power more than 1.1 million homes.

Those numbers come from a recent Environment America Research and Policy Center report, which used federal data to estimate warehouse rooftop space suitable for solar in each state.

Illinois is among the top five states for potential warehouse solar capacity; however, even with the state’s robust solar incentives, barriers remain and few projects have been attempted so far. 

The report also comes amid growing tension nationally over land use for renewables, with concerns about wind and solar projects cutting into agricultural land and natural spaces. 

Widespread opportunity

Environment America’s report drew from data the National Renewable Energy Laboratory modeled in its 2019 City and County Commercial Building Inventories. It concluded that, nationally, warehouses built before 2019 have the potential to generate 185.6 terawatt-hours of solar electricity each year, enough to power almost 19.4 million average homes.

Meanwhile, “the number of warehouses in the U.S. has been growing fast, especially during the first few years of the COVID-19 pandemic, with more than 626 million square feet of warehouse space under construction in the first half of 2022,” the report notes.

Some warehousing companies are adopting solar. For example, the logistics giant Prologis currently ranks second in the U.S. for corporate on-site solar capacity, with more than 200 megawatts, and more than 400 MW worldwide. 

In Illinois, solar developers, industry leaders, and state officials said they were not aware of any data on solar on warehouses, and they don’t believe it is widespread. 

CenterPoint Properties, a major developer of logistics complexes in Illinois and nationwide, declined to comment on whether they have solar on warehouses or any plans to do so. Hilco, the logistics company that owns the former sites of Chicago’s two coal plants and other complexes nationwide, did not respond to requests for comment. Hilco’s project website says the Little Village warehouse has “a roof that accommodates solar panels.”

“Owners of large rooftops should be examining the opportunity,” said Kevin Borgia, vice president of external affairs for SunVest and board president of the Illinois Solar Energy Association. “They’re not getting any money for their rooftop right now. Generating their own power or leasing to a community solar developer is definitely a great opportunity for them, but it’s not without its challenges.”

Adding solar could help warehouses make a dent in the significant environmental and climate impact they have, as their operation depends on a constant stream of trucks and trains largely powered by diesel and emitting massive amounts of particulate matter and carbon dioxide. Many residents of the Little Village neighborhood in Chicago, for example, were furious that the local coal plant was replaced by a warehouse, substituting coal-fired pollution with diesel emissions from truck traffic.

Pros and cons

Medium to large distributed solar arrays are typically most efficient when mounted on the ground, since then solar panels can rotate to track the sun. But when ground space is not available, or when solar would displace farming or other productive uses, rooftops can be ideal.

Warehouse complexes in the Joliet, Illinois, area as well as locales like the Inland Empire in California are close to populated areas and transmission infrastructure, making it a more efficient place to generate and distribute energy than a rural farmland or brownfields far away from concentrated energy demand.

Illinois’ solar incentive program, which gives projects the right to sell valuable renewable energy credits, applies to community solar placed on warehouse or other business rooftops. In the competitive process to reap incentives in the “traditional community solar” category, extra points are awarded for “using the built environment,” noted Brian Granahan, acting director of the Illinois Power Agency.

“It’s better, all things equal, to site on a warehouse rather than take agricultural land out of commission,” Granahan said. “Ideally, we’ve created an incentive structure where if you want to do that on a warehouse, you get extra points. I don’t know how much success we’ve had with this.”

Structural and logistical concerns can make it hard to develop solar on warehouse roofs. There may be a lot of HVAC equipment or other installations on such roofs.

“In many cases, these buildings were not built to host solar on the roof,” Borgia said. “You might have a building that’s 20 years old or more; maybe it can’t structurally support solar because it wasn’t engineered and designed with that in mind.”

“Not all roofs are created equal,” added StraightUp Solar vice president of development Shannon Fulton. “Where those roofs are free of or have limited HVAC units or other types of obstructions like skylights, warehouse roofs are a wonderful opportunity for more solar.” 

The ownership structure can also be confounding. Often a development company or logistics company owns the warehouses themselves and leases space to one large tenant or multiple tenants.

“Today the tenant isn’t using the roof, but in five years that tenant might move out and a data center might move in. Data centers require a ton of cooling, then you end up with chillers or equipment on the roof,” Borgia said. “Some building owners understand solar is a benefit, but may not be able to make the commitment of 25 years.”

Different arrangements

If the warehouse or industrial operations require a lot of energy, like for refrigeration or powering automated machinery, the energy from solar can be used on-site. Otherwise, it can be sent back to the grid in a net metering situation, in states with net metering policies, and ideally benefit from selling renewable energy credits.

Prologis plans “to own the panels themselves and then sell the power to their tenants,” said Johanna Neumann, lead author of the Environment America report and the organization’s senior director for the Campaign for 100% Renewable Energy. “It’s just going to be part of the rental agreement.”

In other cases, Borgia noted, “the warehouse owners aren’t usually in the energy business, but there are developers who will rent the rooftop from them.”

Indeed, increasing numbers of big box stores, and possibly also their warehouses, are putting solar on their roofs and purchasing the power from a solar developer through a power purchase agreement.

StraightUp Solar developed a 500-kilowatt solar array on the roof of the warehouse for Automann, an aftermarket truck parts supplier, in New Lenox, Illinois, noted Fulton. The array tapped renewable energy credits created by Illinois state law. 

Borgia pointed to SunVest’s multi-megawatt solar installations on large factory roofs, including factories for Harley-Davidson in Wisconsin and Radio Flyer on Chicago’s West Side. While the Environment America report looked specifically at warehouses, large industrial buildings raise the same opportunities and challenges for solar, Borgia said.

Community solar and C-PACE 

Community solar can be placed on a warehouse roof and reap the right to sell renewable energy credits under Illinois’ Climate and Equitable Jobs Act, which created robust incentives for community and distributed solar. That law built on a previous law, and increased the size of eligible community solar arrays from 2 MW to 5 MW. Warehouse roofs could offer a particular opportunity for community solar in the Chicago area, where there is less land available for large arrays.

Warehouse roofs could present a similar opportunity in other states with community solar programs, such as Minnesota.

But, “the thing probably preventing some wider-scale use of warehouse rooftops for community solar arrays is just the interconnection queue,” Fulton said. “And not every state has community solar. If you have just a big massive warehouse with very little energy usage, you have a mismatch of opportunity to demand” using the energy behind the meter. “In community solar-friendly states it would have a better success rate.”

Commercial property assessed clean energy, or C-PACE, financing can also be a way to cost-effectively add solar to warehouses, Neumann noted. States need enabling legislation to allow C-PACE financing, wherein owners essentially receive loans to install solar and the principal and interest is rolled into property tax payments. 

“There are a number of policies that are going to help realize the rooftop solar potential of warehouses, net metering and feed-in tariffs are among those,” Neumann said. “But C-PACE is another critical one, because it essentially allows the property owner to make the investment in going solar. And if they sell the property, that investment stays with the property.”

New warehouses are still being built as online commerce continues to expand, so solar advocates note the structures could be made solar-friendly or outfitted with solar from day one.

“When they build it, it’s probably not that difficult to prepare for solar down the road,” Borgia said. “You already have construction crews [and] cranes. As you build, that’s the best time to put solar on.”

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