Understanding Future Uses of Roofspace and Defining An Early Path to Profitable Roof Estate Investing
August 17th, 2016
Courtesy of GreenBiz, a report on Prologis, a $65 billion real estate investment trust that controls 149 megawatts of solar generating capacity atop its global portfolio of warehouses and industrial facilities:
If we asked you to name the three U.S. companies with the largest corporate solar footprints, there’s a pretty strong chance that you would get at least one of those names wrong.
Meet Prologis, a $65 billion real estate investment trust that controls 149 megawatts of solar generating capacity atop its global portfolio of warehouses and industrial facilities. That’s the double the amount that it had at the end of 2011.
A ranking tallied earlier this year by the Solar Energy Industries Association places Prologis second only to retailer Walmart in terms of capacity. It should be noted, however, that the number used by SEIA for that list is actually far lower than what Prologis claims in its latest sustainability report, out in early July.
For Prologis, the decision to invest in solar (something it has been doing for close to a decade) was financially motivated. It actually doesn’t use all that much power in its buildings, compared with commercial offices or retail space. The company views this as one way to generate more revenue from underutilized rooftops, said Jeannie Renné-Malone, vice president of global sustainability for Prologis. “We own the installations, once we design and build them,” she said.
In the scheme of things, the amount of power that Prologis isn’t huge – it’s still less than the capacity of a small, natural gas power plant. But the company figures it adds enough power to the North American grid each year to power 11,218 homes.
The projects are managed by Prologis Energy, which partners with utilities, developers and financing organizations such as Bank of America, which was involved in one of the company’s biggest initiatives launched back in 2011. Its studying the feasibility of leveraging funding mechanisms such as community solar, according to Renné-Malone.
Locations are picked depending on a variety of factors including the quality of the solar resources at the site, the state or municipal incentives offered in a given geography, and the age and condition of the roof involved. That latter consideration is a huge one: solar panels are weighty. Prologis replaces the roofs on its facilities roughly every 20 years, so it’s a long cycle of renewal.
“New construction is designed to be able to handle panels, should they decide to go that route,” Renné-Malone said.
Most of Prologis’ solar sites (71 percent of its total portfolio) can be found in the United States, with the rest split between locations in Europe and Asia. The company doesn’t disclose what percentage of its buildings are solar hosts because the size of its portfolio grows and shrinks regularly with acquisition activity, Renné-Malone said.
However, a Slate report in January 2016 estimated the number at 10 percent. As of June 30, Prologis owned or management approximately 666 million square feet of space (including sites under development). The plan calls for it to reach a cumulative total of 200 MW by 2020.
Decade-long dedication
Prologis’s solar investment plan is just one facet of the REIT’s expansive sustainability program, which is now aligned explicitly with several United Nations Sustainable Development Goals:
- Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all
- Goal 9: Building resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
- Goal 13: Take urgent action to combat climate change and its impacts
As you might imagine, given that lens, operating its facilities sustainably is a huge priority. Last year, Prologis earned green building certifications (under programs including both LEED andBREEAM) for another 45 projects – bringing the total so far to 68 million square feet across 173 projects.
Close to three-quarters of the company’s entire portfolio uses energy-efficient lighting; as of 2016, all future construction and retrofits are directed to use LED technologies, Renné-Malone said.
Two other notable metrics from the company’s latest sustainability report:
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Approximately one-third of Prologis’ buildings use “cool roof” materials, which can reduce surface temperatures and (in turn) reduce a building’s temperature. This approach can be used in tandem with solar investments. However, don’t expect Prologis to emphasizegreen roofs, as the weight of the vegetation and the water needed to keep it alive is difficult to manage on facilities of this size.
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Prologis is stepping up its evaluation of brownfield development sites, such as mew park near Paris that was previously owned by automaker Peuogeot. The biggest challenge at the site: designing a sustainable system for storm water management, which the company addressed by redirecting runoff to green hollows and ditches.
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Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has held a lifelong interest in environmental and conservation issues, primarily as they relate to freshwater scarcity, renewable energy, and national park policy. Working from a water-scarce base in Las Vegas with his wife and son, he is the founder of Water Politics, an organization dedicated to the identification and analysis of geopolitical water issues arising from the world’s growing and vast water deficits, and is also a co-founder of SmartMarkets, an eco-preneurial venture that applies web 2.0 technology and online social networking innovations to motivate energy & water conservation. He previously worked for an independent power producer in Central Asia; co-authored an article appearing in the Summer 2010 issue of the Tulane Environmental Law Journal, titled: “The Water Ethic: The Inexorable Birth Of A Certain Alienable Right”; and authored an article appearing in the inaugural issue of Johns Hopkins University's Global Water Magazine in July 2010 titled: “H2Own: The Water Ethic and an Equitable Market for the Exchange of Individual Water Efficiency Credits.”