On a hot tin roof

Investment in renewable energy sources for logistics facilities in the region has so far been somewhat limited. but there are signs that maybe its time has finally come

Mladen Petrov

Designers and retailers both know it. Italian high-end retailer Ermenegildo Zegna has installed small solar panels on one of its sports jackets that convert  sunlight into electrical energy, which is then transmitted to a battery in an inside pocket. This battery can be used to charge a mobile phone or an iPod.  Such an ecotech solar jacket would surely work in the Czech Republic too. Yes, the country does not receive the same amount of sunlight as Spain and Greece, but its solar electricity potential still offers attractive returns. Warehouse developers and Italian designers have already realized that and are now conquering new territories.

Profit from on high

At the end of February, warehouse developer PointPark Properties (P3) announced that it is to install solar panels on its facilities in the Czech Republic. According to the deal, which has been agreed with solar park operator SolOps, around 335,000 sqm of roof space in PointPark Prague D1 and PointPark Prague D8 has been rented out. The total capacity of the photovoltaic energy generated will exceed 7 MWh. One of the biggest advantages of this approach is to provide the tenants with cheaper energy. Thanks to this deal, P3’s warehouse parks will become energy self-sufficient. SolOps is to invest EUR 24 mln, with the system expected to become operational in Q2 2010. “Also, the renting of the roofs is a revenue line that shouldn’t be ignored,” Ian Worboys, P3’s CEO points out.

Also in the Czech Republic, CTP Invest has been working on a similar project. All solar project locations are in the southern part of the country, where comparatively high levels of sunlight (generating up to 1,250 KWh per sqm) are measured.

“The solar project raises the value of these buildings significantly and increases their sustainability for the long term,” believes Tomáš Budař, project manager at CTP Invest. “The solar programme is designed to take advantage of the existing CTPark infrastructure – the electricity network system and free rooftop space – to collect and deliver solar energy in an efficient and cost-effective manner through lower initial investment costs.” According to company estimates, the technology needed for the production of 1 MWh of energy costs around EUR 2.4 mln. CTP expects to see a return on this investment within six years.

Flying start

In 2008 the company started a pilot project in 
CTPark Humpolec. Based on the success of the tests, a year later CTP began installing 
10 MWh of solar capacity on 18 buildings. This plan has been extended to a total of 21 buildings across the country this year, inceasing capacity to around 14,000 MWh. How much is that? An average household of two adults and two children uses 2.2 MWh a year. Therefore, this year CTP properties covered by the solar programme will be able to produce the power needed for 6,363 households – or 25,450 people. In addition, this will contribute to a reduction of 9.6 mln kg of CO2 emissions every year. With a total of 1.65 mln sqm of rooftop space eligible for the scheme, the numbers look even better: the project’s overall energy output is expected to reach 50 MWh – enough to power one-third of the total energy consumption across the company’s network of warehouse parks.

Even though CTP Invest is the owner of the solar panels it is not eligible to sell the energy produced directly. This is why a licensed energy distribution company will be in charge of selling the energy to both end-users and energy companies such as ČEZ and E.ON. The tenants of the parks are given priority when it comes to buying solar energy, but outside companies are to be offered the surplus energy. “The distribution company is the one setting the final price. We are not making a significant profit which would allow us to lower the rent, but one should think outside the box when it comes to solar energy and focus on the long-term benefits,” points out Mr. Budař. According to Ian Worboys, tenants could have access to energy cheaper by as much as 15 pct.

Helping hand

None of these schemes, however, would be possible without the support of the government. But how exactly does this work? Every CEE country has been trying to determine its green energy potential and some governments are now taking the next step, increasingly trying to encourage more companies to start using that potential. The European Bank for Reconstruction and Development, one of the major institutions committed to introducing a new approach to green energy across the region and a donor for such projects, has identified the green energy strengths for each CEE country. According to the bank’s research, the Czech Republic’s energy strengths are solar, biomass and wind. Bulgaria could take advantage of hydro and geothermal energy, while Poland should explore the opportunities for wind and biomass energy. In the case of Hungary, the country’s main green energy potential lies in biomass, while Slovakia could also exploit its geothermal and hydro resources. According to the study, Ukraine is the only CEE country which can benefit from all five alternative sources of energy. Also, as the experts agree, Ukraine now has the most attractive green tariff in Europe, as the country is currently putting an emphasis on energy diversification as a response to energy security issues.

Companies such as CTP Invest are benefiting from there being a clear government policy on alternative energy. To start with, the state is subsidizing several alternative energy technologies, including solar. The government offers ‘purchase guarantees’, obliging grid operators to buy all the renewable energy produced by domestic firms such as SolOps, P3’s partner. “The government provides us with green bonuses, cash subsidies or fixed minimum prices for renewable energy. It also subsidizes the domestic development of renewable energy equipment,” explains CTP\'s Tomáš Budař.

In Hungary, Zsombor Török, country manager for Hungary, Slovakia and the Czech Republic for warehouse developer Goodman, is calling for a bigger involvement from the government on this issue. “Goodman is already investing in green technology in certain areas. Roof, insulation and lighting are just some of the examples. However, tenants at the moment are not willing to pay extra for this because of the economic situation, and as a consequence CEE governments are lagging behind Western Europe on this issue. In Germany, Goodman has developed a project with solar roof panels and the government has guaranteed 20 years of buyback on the energy produced. Our strategy for the whole region includes developing projects eligible for participation in every green energy project without any additional adjustment. In the case of warehouses, rooftop construction is crucial: older facilities are not able to cope with the heavy equipment – around 50 kg per sqm – and adapting the roof doesn’t make a great deal of economic sense. However, it is certainly the next big thing in our industry.”

Going in the right direction

Poland is also moving forward in terms of incentives for renewable energy projects, but the country is lacking a key ingredient when it comes to solar energy: sunshine. “Subsidies and incentives could make solar installations viable in Poland. For example, Germany is not considered to be a sunny country, but it has become one of the largest solar markets through its feed-in tariff scheme over the last ten years,” comments Matt Singleton, ProLogis’ VP of renewable energy.

P3’s Ian Worboys believes solar energy is an option for the warehouse buildings in Poland too. “The new technology also allows for the realization of such schemes in Poland,” he says. “This is a major issue for us and we are willing to explore all the options everywhere we are present, and not only in sunnier countries such as the Czech Republic, Romania and Bulgaria. It makes less sense to do this in Poland, profit-wise, but it is clearly the way things are going to be done.”

Currently Segro is also exploring such opportunities for its warehouse parks in Poland. In the Czech Republic and France the company’s warehousing facilities already have solar panels installed. Rafał Mirowski, technical manager of Segro Polska, reveals that the company is now cooperating with Juwi, the global renewable energy company, on exploring opportunities for producing wind energy. “If the wind turns out to be strong enough in the area where our parks are located we will decide whether to build an entire wind farm or just put up a single windmill. We are also now talking to one of the government agencies committed to renewable energy regarding the search for a partner willing to install solar panels on the rooftops of our warehouses.”

Panattoni Europe has teamed up with H&M for this purpose. In Gądki near Poznań the developer is to deliver a 30,000 sqm warehouse for the Swedish retailer, the first facility in its portfolio featuring a number of ecological solutions, including, among others, solar panels on roofs, more daylight inside the facility and a rainwater recovery system.

Segro and ProLogis, after securing partners for their green initiatives, are planning to follow a similar strategy. “Our programme is set up so that we do not own the projects. ProLogis provides a host site and development services for the owner of the system, who rents the roof space and pays a development fee,” Mr Singleton adds. It is still too early to set timeframes for either scheme. “As soon as we find a partner for these initiatives we will be ready to start working,” Rafał Mirowski concludes. ν