January 29, 2016

SIMPLE ECONOMICS:

Put a Solar Panel on It : How did a warehouse company become one of America's leaders in renewable energy?  (Daniel Gross, 1/29/16, Slate)

You may not know about Prologis, which at 97.54 megawatts trails only Walmart in the amount of installed rooftop solar capacity in the U.S. The company doesn't operate stores, doesn't fret much about what upscale American consumers think about its energy use, and doesn't even have much energy use to offset.

Despite the low profile of its buildings and its brand, Prologis is a big-time company. It's the world's largest owner and operator of warehouses, with a portfolio of thousands of nondescript one- and two-story buildings around the world. Boasting 700 million square feet of space (about 25 square miles) in 21 countries, it has a market capitalization of more than $20 billion. Thanks to emerging trends in the production and regulation of renewables, Prologis has figured out how to turn the ultimate waste of space--the flat roof of a warehouse--into an emissions-reducing, money-producing power plant.

Prologis has figured out how to turn the ultimate waste of space into a money-producing power plant.
Retailers like rooftop solar in part because the juice that the panels produce can offset the high electricity bills created by their lighting, refrigeration, heating, and computers. But warehouses have a different energy profile. Prologis' buildings just kind of sit there. "If you imagine what is inside the facility, it'll be a basic shell, concrete floor, rows of racking filled with pallets, then forklifts driving around the place," says Matt Singleton, vice president for global energy and development at Prologis. Very few people work inside the warehouses. Offices make up about 5 percent of the space.

So if solar doesn't cut the power bill much, why does Prologis like it? In a word, it's all about efficiency--of energy, yes, but also capital and space. "Traditionally the only purpose of the roof was to keep the building dry and secure," Singleton says. The company plans to own its buildings for decades. And when your capital is tied up in immobile assets for long periods of time, you want to make the best possible use of it. Most real estate owners can maximize revenues by renting out every inch of usable space at all times. But if you can find a way to produce an alternate revenue stream from the same building, it's gravy. "We were motivated to generate clean power, but also to leverage an underutilized asset," Singleton says. "This is a for-profit activity."

Posted by at January 29, 2016 5:29 PM

  

« PLAYTIME IS OVER: | Main | A CANDIDACY THAT CAN'T WITHSTAND PEOPLE GETTING TO KNOW THE CANDIDATE: »