There are thousands of hectares worth of hot steel roofs on warehouses and factories in our biggest cities, but few have solar panels on them that could act as virtual power plants for those factories and the homes, schools, hospitals, offices and shops that are often nearby. Anyone flying into Auckland and Christchurch airports can look down and see the biggest missed opportunity for renewable energy and resilience just sitting there, radiating heat back up at the plane on a sunny day.

It was particularly frustrating to think about during last winter’s energy crisis when many large industrial and manufacturing facilities had to suspend or close their operations permanently because the spot power price deals they were on made them uneconomic.

So why hasn’t it happened yet?

I spoke with FortHill Property Fund General Manager Nick Maier this morning about the fund’s latest $50 million capital raising exercise, which it plans to use to buy more new warehouses and factory buildings in Auckland and Christchurch.

The fund already has $432 million worth of these buildings, which are in hot demand, are 100% tenanted with an average lease length of 8.2 years. That’s not too unusual in the wake of the logistics boom of the last decade, driven partly by the switch towards online delivery. The unique and interesting thing is Forthill’s property builder, Calder Stewart, is building them so they are capable of hosting solar panels on their roofs from the start, which avoids the extra cost of retro-fitting in later years.

Forthill has already started putting solar panels on its new warehouses. It plans to put 8,000 panels on 20 such buildings, giving them a generating capacity of more than 4 million kilowatt hours.

The full conversation with Nick is in the video above. The key takeaways I took from the chat were:

* It’s still more expensive and difficult to ‘retrofit’ existing warehouses with solar panels, given some don’t have the structural strength in their roofs or the wiring systems to connect easily to;

* the cost of panels and the cost of spot electricity makes the economics of building new warehouses with stronger structures and panels installed from the start much more attractive;

* Foothill doesn’t own the panels, as it simply rents the space to Calder Stewart Energy, which installs and own the panels and offers long-term contracts to building tenants that match their lease terms;

* Calder Stewart is not installing panels across all of the available roof space because the market and regulatory arrangements are not there for the electricity to be sold back into the grid;

* Other countries such as France allow tenants to have multiple electricity retailers they can access through a single point, which makes the economics of virtual grids and solar power exporting and buy-backs more viable; and,

* Nick suggests regulatory reform is needed to make that more viable.

Calder Stewart built the warehouse below in Christchurch in 2022 for its initial tenant, Komatsu, with 133 solar panels to supply up to 50 kilowatt or 50% of Komatsu’s daily power needs.

Chapters:

00:00 Introduction to Renewable Energy in Industrial Properties

02:23 The Economics of Solar Panel Installation

05:25 Tenant Relationships and Power Management

07:59 Innovative Partnerships in Energy Solutions

10:30 Energy Monitoring and Sustainability Initiatives

15:47 Challenges and Future of Renewable Energy in New Zealand

Ka kite ano

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe