Warehouse Design – Solar Panels
Posted on 25th November 2022
You might be interested in some of my findings following an investigation on behalf of a client into the feasibility of fitting a solar photovoltaic (PV) system at their new premises.
I intend to be thought provoking in this blog so hopefully this overview will lead to some further discussion. I would appreciate your feedback and comments.
PV systems are complex and their use can sometimes be confusing. I will try to keep my description as straightforward as possible so you can draw your own conclusions. My aim is to provide enough information to help you decide whether a PV system could be beneficial for your business.
I will provide a summary of my conclusions drawn from the recent report relating to PV systems for warehouse rooftops which was commissioned by the UK Warehousing Association (UKWA). I will also share a real-life case study relating to a survey I conducted for a client.
I am planning a series of discussions relating to environmental issues in warehousing and you might also be interested in some previous ideas I shared about lithium ion powered fork lift trucks.
I will also share my personal experiences of running an electric vehicle powered by solar panels at my home.
2. Case Study
2.2 The roof
2.7 Charging of EVs
1. The investment case for rooftop solar power in warehousing
An independent research report concerning the investment case for rooftop solar power in warehousing was published in August 2022. It was commissioned by the UKWA and produced by specialist consultancy Delta Energy & Environment (Delta-EE).
The report identifies the potential benefits of installing solar PV systems on warehouse rooftops across the UK. Reading this report will add some context to the case study below.
I wanted to summarise some of my key takeaways from the report:
In the UK only 5% of warehouses currently have any solar panels on their roofs. Where panels have been installed they usually only cover 10% to 25% of the available space.
The government published the UK Energy Security Strategy in April 2022. It received very mixed responses, but one of the proposals was for a five-fold increase in solar generation by 2035.
TH comment: This, of course, leads us to ask where this additional solar capacity will be built.
Warehouse rooftops have capacity to double UK solar generation.
TH comment: This seems like a logical way to solve part of the problem.
The largest warehouses could provide 75million square feet of space, these warehouses alone could double current UK solar generation capacity. However, there are some significant issues to consider.
Grid connections – there is every likelihood that the UK’s electricity network will need to be upgraded to ‘smart grids’ comprising controls, computers, automation, and new technologies. This would allow the grid to respond quickly to changing demand. Grid connections may require upgrading to accept additional surplus power generated from solar and wind turbines from customers who are both producers and consumers or ‘prosumers’.
TH Comment: This could represent a major obstacle if the connections are not upgraded, however, this could increase the return on investment (ROI) case for battery storage at specific locations.
Tenancy agreements – the agreements between tenants and landlords would become more complex since the duration of a lease is likely to be short compared to the life cycle of the panels. While landlords might now be more motivated to reduce their own carbon footprint, tenants who are already part way through their lease agreements might be less enthusiastic to embrace new PV technology and the costs associated with it.
TH comment: Options for landlords and tenants to work together to develop a solution to this obstacle will be needed.
Warehousing leases – third-party logistics providers operate in a volatile environment based on short term contracts and subject to changes which are unlikely to fit well with a new renewable energy model.
Electricity costs – the purchase price of excess electricity will need to be at a rate that encourages larger installations. Many installations are currently designed to maximise consumption of energy generated and there is little incentive to generate excess power.
TH comment: Feed in tariffs will need to be improved to encourage larger installations
Financing – renewable energy will need to become cash neutral for investors, compared to standard invoicing and payment methods associated with energy costs.
TH comment: Incentives to support financing for larger installations would be needed since, at the time of writing, interest rates are increasing which would have a negative impact on ROI calculations which would deter investment.
There are many potential obstacles that could prevent wide-scale adoption of PV installation on warehouses in the UK even though they represent an opportunity to help meet the government’s renewable energy targets for 2035.
Rooftops or fields are currently the only realistic options.
TH Comment: It is to be hoped that fitting rooftop PV panels will be a prerequisite requirement for planning approval to large developments in future.
We should also consider that Savills review of the sector predicts that new warehouses will be considerably larger and that ideally these will be fitted with PV panels during development.
The challenge – land use and renewable energy
A recent new initiative will see fields being covered in PV panels at a 100-acre site at Sedgeford, near Heacham, where 31,800 solar panels are to be sited on three fields. Developments such as this will no doubt lead to many conversations in pubs across the country about why warehouses in the UK aren’t covered in solar panels.
2. Case Study
For reasons of confidentiality, I can’t mention my client’s name but they have agreed I can share some information about our recent work which is not sensitive.
They are currently subletting space within a facility and the agreement is due to expire in 2023 so they are planning to relocate to a new facility. They have enjoyed a period of continued growth and the timing of the relocation will also provide additional space to meet future growth forecasts.
The company manufactures and distributes products that are environmentally friendly, so the adoption of renewable energy is a key statement for the company about their desire to achieve their Net Zero Strategy. I have been working with them developing their new layout, working on the fit out of the facility, and the project management of the transfer.
In their current facility, they pay a mutually agreed proportion of the site’s energy costs. When they relocate they will need to enter a new contract with a new energy provider. As we are all aware energy costs have increased significantly over the last year.
A potential new site has been identified with a property developer which will be part of a larger development in which many of the tenants have already installed PV systems.
My investigation is intended to help identify the potential benefits of installing a PV system at their new site, obtaining suitable quotes, providing installation management, and evaluating the potential financial implications of fitting a PV system. Here are some of the key findings:
2.1 Sunrise and sunset
PV panels will only generate power in the hours of daylight and with the sun rising in the east and setting in the west positioning is important. In the northern hemisphere the general rule for solar panel placement is that they should face true south, while in the southern hemisphere they should face true north.
The amount of electricity generated can vary considerably during the year with increased generation during the summer time. When the sun is shining we will probably need less electric for lighting and heating which means there is an issue around peak generation and demand.
2.2 The roof
Below we can see the client’s potential site oriented with due north facing upwards. The panels shown in the image cover the whole of the client’s unit. The image shows panels fitted to both the west and east elevations of the roof.
Using modelling tools PV suppliers estimated expected outputs from varying numbers of panels in east and west configurations to decide the optimum design. The space available on the roof, and any obstructions such as ventilation or sky lights also effect the final design.
Representation of the solar roof panels west and east
There is an option with this project to have slightly more panels on the east of the facility than the west, as the power generated would best support expected demand, especially considering the client’s operation is based on a 06.00 to 14.30 shift system, Monday to Friday.
The pitch of the roof is also a factor: the best roof pitch for solar panels is between 30° and 40°. However, the angle of the roof can be outside of this range and generate electricity effectively as solar panels can still absorb sunlight even when horizontal.
PV suppliers will quote in their calculations ‘zone irradiance’ which is based on the postcode of the location linked to a climatic database to determine the average irradiation/m2 over the past 10 years.
As an example, the south coast sees zone radiance at around 1000 and central/southern Scotland at the 840 range.
The following map shows the zone irradiance over Europe.
Prior to any installation there should be a site survey by a qualified structural surveyor and the wind and weight loadings should be checked in line with the structural integrity of the building. Should the structural integrity of the roof be an issue then there are lightweight PV options such as the ones installed at Northampton Saints rugby ground.
Northampton Saints Rugby Ground
2.3 Cost of electricity
Historic Commercial Electricity Prices
My client will need to enter into an agreement with a new utility provider when they relocate to their new facility. They use a relatively large amount of electricity, so their overall costs will increase proportionately when they relocate. For the purposes of evaluation, we have considered a price of electric set at 34p (the government's Energy Price Guarantee). The price per unit has been frozen at 34.0p/kWh for electricity and 10.3p/kWh for gas.
Based on current use annual electricity costs are calculated to rise from £8,600 to £33,700 for their new contract (assuming the same consumption in kWh at a new rate of 34p per unit).
TH comment: Electricity providers charge electric by the kilowatt hour (kWh), one kilowatt equals 1,000 watts. My client had previously benefitted from a contracted rate of less than 9p per unit which is significantly lower than would be typical for users on long standing contracts. The increase will be significant when they relocate.
Current Costs vs Costs in new facility
2.4 Smart Export Guarantee
The Smart Export Guarantee (SEG) is a government-backed scheme which was launched in 2020 to provide payment for surplus electricity for homeowners and businesses who are small-scale generators using renewable sources. The utility companies set the rate paid although it must always be above zero. In the last 12 months SEG rates for larger solar PV systems have been between 15p and 32p per kWh while homeowners receive a much lower price, typically between 3p and 6p. For my analysis, the pessimistic rate of 15p per unit has been used.
2.5 Solar generation and consumption
For the project PV suppliers estimated how much electricity their systems will generate, ranging from 86,700 units vs 88,700 units. Of course, actual generation will vary from year to year depending on the weather.
Performance will be affected by the panels chosen and the number of panels on each orientation. PV panels are also subject to a maximum performance degradation of approximately 0.57% each year. The panels have a 10-year guarantee and an expected life span of 25 years. In the worst case this could result in a reduction in performance of 12.7% over 25 years.
My client’s roof space couldn’t accommodate a larger installation which raises the same issue as the UKWA report. To realise financial benefits with a larger installation a longer period for ROI will be needed for the project to be viable.
During the investigation the local distribution network operator (DNO) indicated it would accept feed in of up to 80kW per hour as a general rule. However, this would have to be confirmed at the time of application. While most PV installations are approved, the export of spare solar capacity generated might be limited or stopped in some instances.
As an alternative, battery storage is explored below.
Case Study : Projected Energy Generation and Consumption
The above shows PV production through the year in blue. As would be expected, PV production in winter months is very low compared to the summer. In contrast, during the summer excess power is generated which could be sold under the SEG.
Consumption, shown in red, is based on my client’s historic usage and is more consistent throughout the year.
Finally, the estimated power used which is generated by the PV system is shown in green.
Most of my client’s consumption is between their standard operating hours (excluding peaks and overtime) of 06.00 and 14.30 from Monday to Friday. The calculation of how much PV energy will be consumed or exported is open to some interpretation. For the purpose of analysis, we projected 56% would be used and 44% exported This considers energy generated outside of the standard working hours during the afternoons and weekends when the facility isn’t operating.
The custom profile times for energy used are:
2.6 System design and specification
The specification of the PV system is based on the number of panels installed and the capacity of the inverter fitted to create an 87kW system. This means that, at full capacity, the system can generate a theoretical maximum of 87kW per hour. For comparison purposes domestic systems range between 3kW and 12kW.
An application for a G99 connection to the national electricity grid will go directly to the DNO who will assess whether the installation is suitable. Typically, the PV suppliers manage this process which will currently take approximately three months.
The suppliers who supported the specification process said their experience with the local DNO suggested the capacity of this system would probably be suitable for feeding into the grid without additional investment from my client.
2.7 Charging of EVs
Although my client’s company cars are not currently electric vehicles (EVs) like most companies they will move to EVs and electric delivery vehicles moving forward. There is an option to use the PV panels to power company cars which would be more beneficial than exporting electricity to the grid at a reduced rate.
Smart EV charging systems allow for any excess solar power to be directed to car chargers instead of diverting it to the grid. The car chargers can be either 7.1kW or 22kW chargers and these can be programmed to use only excess power to reduce the need to buy additional electricity from the grid.
Although not included within this analysis heating could also be powered by excess solar electricity generation.
TH comment: In practical terms, this would mean excess energy would be used to power cars instead of selling it to the grid at an assumed rate of 15p. This energy would otherwise have been charged at a rate of 34p or more (domestic car charging at night rates can be less than 34p, however, ultra-rapid charging points are in excess of 69p per unit).
It might be tempting for installers to add additional PV capacity for EV charging, however, the ability to charge vehicles when there is sufficient surplus should be considered in more detail.
2.8 Summary of savings/return on investment
Note: projected costs with new supplier are £33,647 per year.
The following items are the variables:
Annual consumption – 98,962 units is based on my client’s historic 12-month use
Generation – 71,640 units is the estimated power generated from a PV system
Generated electricity – used by the client ‘free of charge’ is 46,280 units
Surplus electricity – electricity ‘sold to the grid’ is 25,360 units
Deficit – electricity required in addition to the PV generated 35,641 plus 17,041 units = 52,682 units. This will be supplied by the new energy provider.
Day time use – extracted from client’s data
Night time use – extracted from client’s data
Current day rate – extracted from client’s data is currently 9p per unit
Current night rate – extracted from client’s data is currently 8p per unit
New rate – new supplier rate is assumed as 34p per unit
New supplier SEG tariff – assumed as 15p per unit
Balance – consumption % vs export % is estimated at 56% and 44%
Potential savings could be £19,000 per year based on the assumptions summarised above. Assuming system costs of £70,000 the payback is approximately four years.
TH comment: This does not include allowances for interest on any loans or any costs for servicing, or for additional insurance costs. Corporation Tax deductions might be applicable. The client’s operating volumes are forecast to increase over the next four years and they will, no doubt, take on additional electric company vehicles. Savings could therefore be greater, so payback in four years is realistic.
A battery storage system for excess electricity wasn’t included in the analysis. The UKWA has reported that batteries are currently very expensive so it is unlikely to be financially viable.
Batteries will also require dedicated space, possibly with some fire protection. They are still considered with some scepticism by insurance companies so insurance costs might also increase.
Should the client decide to investigate PV panels further the cost of batteries will be considered with the option to future proof the system with later fitting considered within the design process.
Many installers are recommending that users install the PV panels in the first instance, and then reconsider if batteries are viable options in 12 months’ time. During this time, they can review their actual generation and consumption and then consider if there is a benefit to installing batteries.
This review could take place in a few years’ time when more second life batteries are available and the cost of batteries comes down.
TH comment: Second life batteries are ones that have reached the end of their ‘automotive’ life but still have a residual capacity of about 70% to 80%. These batteries are starting to be used for storage with PV systems.
I have concluded that there is a strong business case for companies to consider installing PV panels. PV panel cost reduction combined with energy price increases will influence the financial business case for investment.
In this case study, the payback period would be approximately four years but this could be reduced if they add more electric vehicles to their fleet. The payback period appears to be typical and is likely to be less for larger systems. The project could even be financed so that it is cash neutral in the early years until any loans are paid off.
The systems are particularly suitable for occupiers that are tied into a long lease, or owner-occupiers. Landlords also have the option to invest in solar on a building to sell the power to the tenant and sell excess power back to the grid.
We should of course not neglect the environmental benefits of installing PV panels and ROI calculations can be considered in the context of a requirement to reduce CO2 emissions. PV installations will contribute to a company’s Net Zero targets.
Where we can use available roof space to install PV panels the need to convert fields to solar farms could be reduced or eliminated.
There seems to be a long way to go to ensure that the grid has the ability to accept additional capacity, and incentives need to be greater to encourage larger scale installations instead of ones designed to meet only the consumption requirements of the user.
I would like to thank the following providers in no particular order who have contributed to this blog.
Tony Gresty, ASG Energy Services Ltd
Ian Marr, Perfect Sense Energy (and ASG Energy Services) Ltd
Leigh Meek, Forest Eco Systems
Both suppliers have been an invaluable source of information and support and I appreciate their input. Please visit their websites and let them know I sent you.
As an independent consultant specialising in warehouse design, I must stay at the forefront of modern technology and equipment. I have no allegiance to these companies although I would be happy to recommend them for inclusion in your shortlist of potential suppliers.
My work for my clients is always impartial and the best interest of my clients is my top priority.
Please do not hesitate to ask for any advice. I would be very happy to have an initial no obligation chat or, if required, provide a quotation for any assistance.
Tagged as: renewable energy, solar panels, Warehouse design
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