As published in Property Week 06 October 2023

Despite the UK’s patchy record on sunshine, solar panels have become an increasingly common feature on industrial and logistics units. Stuart Patience, director of energy solutions at consultancy Hollis – a lead partner in our Get Set for Net Zero campaign – discusses the pros and cons of photovoltaic (PV) power.

What is the role of a consultancy in the PV sector?

Our energy solutions department covers PV, charging for electric vehicles (EVs), battery storage and related technologies. It’s a rapidly developing area. We work with clients on proposals and feasibility reports, as well as live projects. Prior to joining Hollis, I worked for a PV contractor rolling out solar across commercial, industrial and local authority units. You could see there was a gap in the market between installers and end users, to help businesses avoid pitfalls and reach their business goals.

What is the biggest pitfall?

The state of the roof. As a building services consultancy, we can use a drone to inspect it, or bring in surveyors to make sure the roof will see out the 25-year life expectancy of PV. PV installers often overlook this need.

We are picking up the pieces of a project – not one of ours – where the roof wasn’t checked before the PV went down. The roof is starting to break down and needs recoating, so unfortunately the PV panels need to come off temporarily. That will add substantially to the overall cost of recoating. PV is a long-term investment and needs to be viewed holistically. It can be a very hard topic. If you’ve got a full repairing and insuring lease, who takes ownership if the landlord puts PV on the roof?

How do these kinds of questions get resolved?

We have a case where the landlord asked us for help. The tenant wants to put PV up to cut its energy costs, the PV contractor is prepared to go ahead, but the roof won’t see out five years. The tenant probably knew about the roof’s condition but was just trying to keep the lights on – fixing the roof as well is beyond what it can afford. We advised on potential ways ahead. The landlord can invest in that building, put up the PV and sell the power to the tenant under a power purchase agreement (PPA), at a discount on market rate.

What other challenges come up?

We often find that older buildings are better able to support the weight of PV than newer ones, because modern buildings are engineered down to a cost. Obviously, we’d love to get solar on from day one with a new build, but that doesn’t always happen. My advice is: don’t save a few pounds by sizing the purlins down – make sure you futureproof for solar. Other roadblocks include availability of materials and labour. Most of the PV contractors are super busy.

Is grid capacity a limiting factor?

There’s a lot of capacity-grabbing going on. In certain areas, we can’t put as much PV down as we want or there are export restrictions. For example, we might put 500 kilowatts of PV on to a shed, but are only allowed to flow 300 kilowatts back to the grid. We have to fit an export limiter, which potentially means losing valuable clean energy. We can reduce that problem with battery storage, but that can be hard to stack up economically.

In the winter months, PV produces about a fifth of the summer level, so it’s unlikely you will put much into the batteries. And in the summer, you’ll quickly fill up the batteries and go back to exporting. Where it can work is if you can charge batteries overnight on a low-rate tariff. Battery costs are falling quickly and we expect over the next two years to see them become commonplace.

What about planning?

Most commercial systems are less than one megawatt so fall under permitted development. We’re working on some five-megawatt projects that need a full planning application, but we find local authorities don’t tend to block roof mounted energy efficiency projects.

How long do large installations take?

A typical project might be 35 weeks to get on site and then eight weeks on site. Most of the time is in the planning, the approvals, ordering materials and design reviews. We try to understand early on what the client’s goals are. Is it purely a return on investment? In that case, it’s really, really important to get good data to model the tenant’s energy use over the past 12 months. We can then design a system where the majority of the energy is consumed on site, reducing energy exports, to give the biggest yield.

If the grid rate is 20p per kilowatt hour, the landlord might agree a PPA to sell to the tenant at 14p, whereas energy sent back to the grid earns only around 5p. So, demand data is critical to
sizing the system correctly. However, clients may be motivated by factors beyond financial returns, including compliance with Minimum Energy Efficiency Standards (MEES), tenant energy costs and retention and corporate net zero strategies.

What about speculative developments, where there is no data?

Sizing is more difficult. The size of the building doesn’t dictate energy usage because one occupier might be a metal fabricator using welders and lathes, and another might just move boxes. We draw on our experience and the building’s location. This is where cheaper batteries will be a game-changer. Another issue is, we don’t know what will happen with export rates.
Rates are likely to go up in the short to medium term, but longer term, as more renewables are installed, will we see the grid turning energy away on a sunny day in June? We are likely to see export rates vary based on demand – with higher payments per kilowatt-hour if you can export when the grid really needs it.

What other trends are at work?

The transition towards EVs for small deliveries, and in the future for bigger trucks. Volvo, Scania and Tesla are trialling battery HGVs, so we can expect to see logistics trucks that want to charge while unloading. We’re also moving towards a market for energy ‘sleeving’ over the grid. You will be able to take PV energy from your warehouse in Birmingham and, via a PPA, sell it to your office block in London, effectively becoming your own energy supplier. The government is also working on nodal pricing. At the moment, if you sell energy, you pay the same transmission costs regardless of distance.