Solar Warehouses

One of the biggest installers of solar power capacity in the U.S. last year wasn't a power company. It was Prologis, the world's largest owner and operator of warehouses:

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.” . . .

To date, Prologis has put solar panels on more than 100 buildings around the world, with a combined capacity of 140 megawatts. About 70 percent of its installations are in the U.S. Prologis has planted solar on only about 10 percent of its global footprint, in part because the economics don’t yet make sense everywhere it operates, and in part because it is proceeding methodically. The company plans to add about 15 megawatts of solar capacity per year through 2020—a growth rate of about 10 percent annually. As it expands its solar footprint, Prologis will likely add energy storage to the mix, which will allow it to make greater use of the electricity it generates. As Singleton puts it: “We will see a convergence of real estate and energy.”

The logic is inescapable. As I have said here repeatedly, the cost of solar generated power is now comparable to natural gas and continuing to fall. And that's for a power company that has to buy the land for the solar plant; if you already own the land, solar power is significantly cheaper. That's why, incidentally, the U.S. military is investing heavily in solar generation right now; they have plenty of land and rooftops they would love to put to better use, and they can afford to think on a time scale of decades.