A decade or so ago, it appeared that the nascent trend of powering distribution centers from solar panels installed on the roofs of the warehouses, leveraging the hundreds of thousands if not a million or more square feet of roof surface for larger facilities, would take off.
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Though interest remains high, it hasn’t really worked out that way.
A recent article in the Wall Street Journal (Liz Young) put it this way: “The highly-touted benefits of solar power run up against serious costs as the panels are brought in: The installations are expensive, and there’s a risk that the heavy panels could damage the building.”
The Journal says commercial buildings in the US, of which warehouses are probably the largest source, installed 1,913 megawatts of solar power in 2023, up from 1,034 megawatts installed in 2014, for an average growth over the past decade of 6.3%. That according to trade group Solar Energy Industries Association and research firm Wood Mackenzie.
There here are real cost obstacles for warehouses owners or operators to going solar. A combination of low prices for electricity in many states and high costs for the green technology frequently make it a real challenge for warehouse owners to see the necessary ROI.
The Journal says that structuring the deals can also be complicated, with landlords reluctant accept the cost of a solar installation when the payback may come years after the average five-year tenant distribution center lease.
That means deals often need to get creative to get over the finish line. For example, deals with solar companies to set up and manage the panels and transit the energy generated to local utility companies and customers.
Warehouse developer Prologis says it has installed more than 500 megawatts of solar power on its properties, pursuing a goal of generating a gigawatt of solar power worldwide by 2025.
However, Vibhu Kaushik, global head of utilities and energy storage at Prologis, the solar installations represent just 5% of the company’s buildings worldwide.
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 Kaushik told the Journal the ROI math for solar is often tough.
“States where energy is expensive, solar will pencil out easier. Where energy prices are still cheap, it may not,” he said, adding that “You can come up with a handful of states across the US - you can count them on your fingers - that it actually pencils out.”
The weather naturally plays a key factor in the ROI, with a huge advantage to very sunny locales.
Potential tenants are usually more interested in the condition of the distribution center floor than they are at solar on the roof, one real estate executive told the Journal.
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