Roof top solar is the answer so what's the hold up?

ON HIS very first day in office after an historic General Election landslide victory for Labour the new Secretary of State for Energy Security and Net Zero Ed Miliband told his department that the timeline to decarbonise the nation’s electricity grid was moving in by five years to 2030 so that the UK can get to net zero by 2050 to fulfil its legal obligations to the 2015 Paris Accord on Climate Change.

Among a whole host of reforms and planned legislation, not least the launch a new publicly owned energy company - Great British Energy - designed to drive clean energy deployment, Miliband has firmly set his sights on the nation’s rooftops to meet this ambitious deadline.

“I want to unleash a UK solar rooftop revolution. We will encourage builders and homeowners in whatever way we can to deliver this win-win technology,” he says.

Music to the UK Warehousing Association’s ears. The UKWA has been promoting roof top solar following the launch of its ground breaking research in 2022 which noted that using only the largest 20% of warehouses there is enough roof space to double the UK’s solar generation capacity from 14 to 28GW.

With 15GW of solar fitted, the warehouse sector could generate ~13.8TWh of renewable electricity per year (more than 4.5 times the planned output of the Hinkley Point C nuclear plant) – transforming the logistics warehouse sector from net consumers to net producers. 

Avison Young head of sustainability and decarbonisation Chris Wright says: “Big sheds will be incredibly important in years to come with a huge capacity to put power back in the gird.”

With the sector keen to reduce operational costs and a growing onus on decarbonisation both regulatory and commercial, industrial and logistics warehouse occupiers, developers, and landlords are keen to invest in the technology.

Just last month FTSE listed property company SEGRO, working with 3PL tenant GEODIS, announced it has installed a 1,750 panel solar PV array on the roof of the 3PL’s Heathrow facility. The PVs can provide a 700 kilowatt peak (kWp). Earlier in the year, Knowles Transport partnered with renewable energy company Shawton Energy to install a 500kWp roof top solar PV array at its Wisbech DC in East Anglia to fulfil its contract with Princes Food Group and supply chain firm The Woodland Group fitted a 526 panel solar PV array on its distribution facility at Verdion’s iPort scheme in Yorkshire in collaboration with its ‘eco-friendly’ toilet paper maker client ‘Who Gives A Crap’. The array is set to contribute 60% of its Doncaster site’s electricity demand.

Many industrial and logistics warehouse developers and investors mindful of occupational desires and keen to ensure the viability and ‘lettability’ of their assets have been at the forefront of this movement. Almost all the UK’s big national developers ensure that their buildings either already have a PV array, or else, in the case of speculative buildings, ensure that the roof is 100% PV ready.

Indeed, Savills director in Building and Project Consultancy Will Cooper notes: “I can’t think of a scheme that I have been involved in the last four to six years where we have not put a PV array on the roof.”

Many planning authorities now demand that industrial and logistics schemes have renewable energy provision on site in order to secure consent.

While there is the technology, the money and the desire for roof top solar from all parties – it is not working. Manufacturers, 3PLs, retailers, investors and developers all tell the same story – they can’t get a connection, or if they can it is smaller than what they want or else not happening when they want. This is not just an initial connection to secure electricity for a site from the grid; it is also about transferring green electricity back to the grid.

The grid lacks capacity.

SEGRO head of strategic growth Octavia Peters, says: “Access to power is a real issue for warehouse developers right now. Connection dates are increasingly being pushed out beyond the planning horizon for particular schemes and making them unviable.”

Anecdotally there are stories of sites where connection dates are set for 2035 and beyond and the same is the case for those wishing to export back to the grid. 

European car marker Stellantis, whose 690,000 ft2 build-to-suit NDC in Ellesmere Port will host an 4MW 5,400 ft2 rooftop solar PV array has been told it cannot export any surplus green energy until 2035 – losing a valuable additional revenue stream that would help make the investment more economic. A similar story is told by 3PL Rhenus Warehousing Solutions which had hoped to install a 2,600kWp array in its 1 million ft2 BREEAM Outstanding state-of-the-art logistics campus in Nuneaton – it did manage to secure a 949kWp array with assurances that the network would be able to accommodate more in 2028 – five years after going live.

Fisher German partner and head of industrial & logistics, Rob Champion, says: “Between April and September 2020, the average wait time for connection to the UK’s electricity network after application was 15 months. From October 2022 to March 2023, the average wait time had increased to 51 months. For connections in the North of England, it was 75 months [6.25 years].”

And the wait time has only got longer. The cause for this is the increased number of projects especially renewable energy schemes, that have applied for connection. According to the Guardian newspaper projects that would add 49GW alone were submitted in January 2024. Ten months later the queue currently stands at 722GW – more than four times as much as the country’s 150GW estimate by 2050 would ever need.

Champion says: “Each project in the queue is a potential investment and jobs that are not able to come online.

That being said a report by international energy and services company Centrica last year claimed that 20% of all the generation capacity waiting to be connected to the grid was accounted for by projects with no planning consent applications and unlikely to go ahead.

“These ‘phantom projects’,” says energy project developer Base Power director of business development Steven Jeffers: “are in effect blocking viable schemes from securing connections.” Under the current system it is ‘first come first served’ rather than ‘first ready, first connected’, while that was not an issue when demand for connection was lower pre 2012, now that decarbonisation has been put on the front foot more projects are coming forward.

Champion says: “The UK has more requests for electricity connection stuck in the queue than any country in Europe. We are falling behind our targets for industrial infrastructure and net zero – the root cause is that the UK’s electricity grid has been expanding too slowly.”

UKWA CEO Clare Bottle adds: “The Distribution Network Operators [DNO] and the National Grid are private companies that have made a lot of profit but have not invested. Ofgem has been focussed on keeping energy affordable for the domestic user when it should have been future proofing the network and that is why we are in this mess.”

DNOs are licensed companies that own and operate the network of towers, transformers, cables and meters that carry electricity from the national transmission system and distribute it throughout the UK.

Savills director of energy, renewables and infrastructure, Phil Pearson broadly agrees: “There is not enough infrastructure and there has not been enough investment is the short answer. The way the system works is reactive – you cannot make a forward investment in infrastructure, you have to ask at the point of need which is usually a long way down the project, so DNOs opt for a sticking plaster approach which is faster and easier until of course there is a real problem too big to repair that calls for grid supply points and big transmission lines which take some 10-15 years to implement from when someone asks.”

Experts agree the situation is a mess. Jeffers says: “As we transition away from a centralised power generation system to that of decentralised renewable energy the grid has to adapt but it has not done so enough, or quickly enough and we no longer have enough capacity to meet demand from consumers and business users.

“It is frustrating that we have known it was coming for a while and yet we are still having the same conversation that the grid is not ready. Under the last administration Prime Minister Rishi Sunak had to put back end of sale of diesel and petrol cars [to 2035] because the grid was not ready for EV charging.”

With such unreliability in the system, it is no wonder those requesting connections over specify their need – which only compounds the problem. Jeffers notes that a logistics building standard of anywhere between 30w-160w per m2 is over specified. “The projects we work on occupiers only use half of that in reality - there is a lot of capacity unused.”

“Unused capacity matters because you pay for that capacity - it is a fixed cost. An occupier agrees to take 8MvA, they pay for 8MvA even if they only use 2MvA. But no one wants to return the excess in case they cannot get it back again when they need it.”

In the meantime, that unused capacity is ringfenced and cannot be used by anyone else compounding capacity issues further.

A number of developers and occupiers are looking to invest in on-site renewable power options, and micro-hubs to create resilience and bridge the gap between grid electricity and solar PV generation to help their customers decarbonise.

However, says SEGRO’s Peters: “Renewable sources cannot fully substitute for a reliable grid connection – and even on-site renewables have to have a grid connection, even if they don’t plan to export power. There are also no small-scale technologies available that can provide non-grid de-carbonised reliable power, as hydrogen and small-scale nuclear are years away from commercialisation and the role that biofuels could play is not yet clear.”

Bottle is quick to say private micro grids and energy centres are ‘a cop out by Government because it has been asleep at the wheel’. She says: “Electricity should be a public good not a private business.” Especially if the regulatory body overseeing it has ‘no teeth’.

Right now, if you go to the grid and ask for power the answer is pretty much no but says Carter Jonas renewable energy consultancy and project management associate partner Jamie Baxter: “There are ways at looking at a building in the round to reduce your ask from the grid which may help with getting a more positive response.”

There is an art says Jeffers: “But you need to go back to first principles and understand what your demand is before you ask for supply.”

Baxter agrees: “Make sure you look at exactly what is being used, do not assume. Don’t over specify. Engage with the DNOs and show clearly what you need – it gets a better response.”

Testing your operating model is paramount says Wright: “You need a clear operating model and need to look at ways to adapt that model – are you really going to charge everything overnight? Is that cost effective? Can you do phased charging? If you are using EVs in the future, for example, how far do they need to travel? When are they going to be charged and how often, once you have done the modelling then talk to the DNO.”

Unfortunately, it is not just about securing connections and getting rid of phantom projects clogging up the system. Law firm Forsters joint head of the industrial and logistics practice and head of commercial real estate, Victoria Towers, explains: “Those of us negotiating these connections for industrial developments find obstacles not just in the grid infrastructure but – less forgivably – in the process of securing a connection. Projects are held to ransom by substation and wayleave arrangements. The attitude is ‘take it or leave it'.

“Why do providers make us renegotiate every time instead of using previously agreed terms? Basic matters like repair, alterations, use and works around cabling don’t need to be revisited every time and nor does the need to swathes of indemnities.

“We shouldn’t have to negotiate separately between independent distribution network operators and distribution network operators. There are even occasions where we are only permitted to liaise with the IDNO, which in turn has to pick up with the DNO. We need more co-operation, collaboration, and coordination between them and more of a sense of a collective benefit for all to be able connect to the grid.”

As this feature is being written there is a glimmer of hope. Ofgem has set out a series of proposals to overhaul the system for getting new projects connected, speeding up the process and preventing it from being clogged up with unviable projects by prioritising schemes that can be operational within five years and contribute to the right mix of renewable generation types in the right location and at the right voltage to hit the Government’s 2030 goal. It is also proposing DNOs and IDNOs could face stronger licences; financial penalties; and tougher enforcement if they don’t hit stricter milestones and deadlines – with the tougher regime in place within 12 months.

Ofgem director for energy system design and development Eleanor Warburton, added that the regulator was overhauling the application system as well.

“If we are to hit our 2030 target, it’s vital that we can get clean, secure and homegrown electricity flowing through the grid as quickly as possible.”

It is going to be a tough call.