Miles Thomas, Chief Commercial Officer at AMPYR Distributed Energy (ADE), discusses the logistics sector’s drive to decarbonisation and explains why onsite renewable energy generation can offer warehouses a simple solution to cut carbon emissions and lower energy bills.

According to insight from the UK Warehousing Association (UKWA), sustainability is fast becoming a key focus for businesses across the sector. From the adoption of smart technologies and the switch to recycled packaging materials, to water conservation, waste reduction programmes and the use of green building materials, companies are working hard to accelerate their progress towards net zero.

However, while the trade association is right to celebrate notable progress, recent data suggests that the industry’s adoption of renewable energy generation remains limited. Indeed, as little as 5% of Britain’s warehouses currently feature solar panels on their roofs, despite collectively offering the capacity for more than 15GW of distributed generation.

This dichotomy seems curious considering the technology’s proven ability to reduce carbon emissions and lower operational utility costs – a boost for the environment, and for the bottom line too. While projections vary, the average warehouse can expect to save more than 50% on its energy bills by switching from mains supply to onsite solar.

So, if the financial and environmental arguments stack up, why are warehouses treading gingerly around the decision to invest in renewables? Well, analysis suggests that the high perceived cost of onsite renewables remains a major barrier to many – especially given the countless financial pressures experienced over the past few years. Volatile energy prices, commercial rent hikes, soaring interest rates, uncontrollable insurance premiums, a widening skills gap, wage inflation and the impact of COVID-19 and Brexit, to name but a few.

For some, keeping the lights on is pressure enough, with investment in decarbonisation having to take a temporary backseat. Solar panels have been pushed down the priority list, with the idea of onsite renewable energy generation dismissed as an expensive capital cost.

It’s also important to consider the complex ownership model of most UK warehouses. With most sites either fully leased or leasehold, investing already limited flexible capital in fixed assets is arguably a difficult sell.

But does onsite renewable generation really have to cost the earth? Can warehouses have the best of both worlds with direct access to greener, cleaner, low carbon renewable energy in the long-term without the expensive initial outlay? What’s more, is it only suitable for freehold sites, or can suppliers work around the complexities of the sector? Answering these questions will prove pivotal to driving momentum and accelerating adoption.

At ADE, we work with a wide range of customers from across the warehousing and logistics sector, all of whom are keen to harness the benefits of onsite generation. We’ve recently completed a project for Parfetts Cash & Carry in Birmingham, for example, which has allowed the business to switch some of its reliance on mains supply for onsite renewable energy generation.

The primary concerns for most businesses – of course – surround initial investment costs, site suitability and potential risks, but we have a robust solution.

Thanks to our innovative Power Purchase Agreements (PPAs), a model that sees the provider take on the initial investment cost, with resulting energy generated by the asset sold to the customer at a cost-effective fixed price, there are no upfront costs or ongoing maintenance charges to pay, making the adoption of renewable energy technologies both affordable and accessible.

Our PPAs even cover the installation of battery storage solutions, enabling warehouses to over-specify the size of their solar array against typical energy demand, with the surplus power stored for use overnight. By doing so, it’s possible to tackle inconsistent generation and minimise energy costs, while further reducing carbon emissions.

This approach leaves businesses free to deploy their available capital on commercial growth strategies, rather than funding non-core efficiency activities. They can save money, cut carbon and align with legislation – all with zero upfront expenditure.

While PPAs may seem the perfect solution to investing in onsite renewables with no upfront cost, this still doesn’t answer the question around site ownership. With warehouses rarely owned outright by their occupants, we’re regularly asked whether tenants can install solar panels on leasehold facilities.

While requiring explicit permission from the building owner, the simple answer is yes. What’s more, landlords are usually open to the idea as solar enhances the value of a property and boosts its environmental credentials. There are even solutions for shorter leases.

Even so, consent must be sought with two documents essential to progress a successful installation – Licence to Alter (granting permission to make modifications to the property) and Licence to Underlet (enabling access to the solar installation for maintenance purposes). From ownership and insurance, to liability, removal, ownership and maintenance, the licences will clearly define the responsibilities of the tenant and the landlord.

A lease agreement will need to be structured to address long-term property-specific factors including lease renewals, sales and occupational pressures. While this may seem complicated, it’s a common route for experienced developers, but may not suit all scenarios.

While many businesses may think that exploring the advantages of onsite generation is too daunting, especially with challenges and barriers surrounding grid connections, capacity, returns, pricing and liabilities, misconceptions are seemingly holding back industry progress.

When it comes to distributed energy, the models for deployment have been tried and tested worldwide. At ADE, we plan to deploy more than £300m capital (including debt) on projects across the UK and Europe. Central to our ethos is to make it simple for organisations to realise the full potential of onsite renewables.

Businesses can access both the expertise, and the funding required to secure a system that is right for them, with no upfront costs. We understand that businesses don’t want renewable energy installations to be a liability, so we take the pressure completely off – an attractive proposition for the warehousing and logistics sector.

To discuss how we can help with your onsite energy needs for your business premise, please contact us.