Solar powers industrial growth

Western Australia’s expanding industrial property base is providing a boon for growth in the volume of renewable energy sources across the state.

Industrial developers are prioritising green power sources when undergoing new builds to reduce their environmental impact and tenants’ energy costs.

Solar panels supply a large portion of the energy requirements of the state’s industrial developments, with expansive roof spaces making these buildings ideal to harness the sun.

Currently, developers are focused on using the energy to power the assets themselves, with little power being fed back into the grid from industrial estates.

This is due to a number of factors, including the high cost of battery storage systems and the lack of incentives for industrial owners to divert electricity into mains power.

A recent study by Cygnet West found that, in theory, industrial buildings in Perth’s metropolitan area could supply Perth’s energy requirements, satisfying demand of at least 775,000 homes.

The real estate group identified 100 million square metres of industrial properties around Perth, which could support 40 million square metres of solar farms if 40 per cent of the roofs were covered in solar panels.

“While building solar farms on urban fringes or rural land can encroach on prime agricultural land or environmentally sensitive areas, utilising existing industrial rooftops would avoid further harm to the natural or urban landscape,” Cygnet West head of commercial management services Ian Burrows said.

“And industrial buildings with large roofs can house more solar panels than individual homes, making them more economically viable as solar generators.”

However, harnessing solar energy generated on industrial buildings for Perth’s grid would require upgrades to the load and storage capacity of the electricity network.

The state government is going some way to address this, late last year announcing a $700 million upgrade to the power grid to allow for the integration of more renewable energy.

A large chunk of this will be spent increasing the capacity of the northern section of the electricity network, from Malaga to Pinjar.

The economic viability of battery storage is also a barrier for industrial property owners, industry sources say.

The government is investing in large-scale battery storage systems in Kwinana and Collie, with the projects to provide 1,000 megawatt hours and 2,000MWh, respectively.

French renewable energy company Neoen is also building a 219MW battery in Collie.

Mr Burrows said incorporating vertical battery farms into industrial areas could enable the storage and redistribution of renewable energy.

While industrial owners are intent on cutting their carbon emissions, the current focus is on providing the energy needs of the individual buildings, rather than supplying power to the grid.

Dexus, which became the state’s largest owner of industrial property when it purchased Jandakot Airport and the surrounding industrial land for $1.3 billion in 2021, is part way through developing the estate.

As the institutional giant’s head of industrial development Chris Mackenzie explained, the company is focused on energy efficiency.

Dexus has just completed a 26,000sqm warehouse at its Jandakot estate, which was built to high sustainability standards.

“If you build in the direction we have, which is adopting Green Star principles and carbon neutral principles, you’re really trying to focus on those water and power initiatives,” Mr Mackenzie told Business News.

“That’s a priority for us, that the tenant gets the benefit so when their power and water bills come in, we’ve put in as many of the smarts as we can to keep them as low as possible, [which] links to [their] carbon footprint.”

When compared with an industrial property built to minimum Australian standards, Dexus’ buildings are between $2 to $3 per square metre cheaper to operate.

This is due to embedded energy networks, via solar panels, energy efficient lighting and passive design principles, including north-oriented offices.

Dexus delivered a $70 million, 20,000sqm warehouse in Jandakot for Amazon late last year, along with facilities for HelloFresh and Marley Spoon.

Each of the buildings contains solar panels within the base builds and allows for additional panels to be added to the structures.

Mr Mackenzie said feeding energy into the grid from solar generated on industrial buildings would be challenging, due to the nature of existing infrastructure.

“The power authorities have got the systems built to deliver power but [are] still catching up with having higher power returning into the grid,” he said.

“It puts a lot of pressure on the existing infrastructure … the feedback has limitations, so that’s something we as developers and owners need to work with the power authorities [on].

“Ultimately, it’s no good having extra capacity if the system can’t carry it ... that’s why batteries will become really important.”

Elders' logo on its warehouse in Victoria. Photo: Dexus

Industry sources say there is little financial incentive for industrial owners to feed energy back into the grid.

Under the state government’s Distributed Energy Buyback Scheme (DEBS), Synergy and Western Power are required to offer to buy electricity exported from households with rooftop solar or batteries.

A state government spokesman said this scheme was largely available to households.

“DEBS is limited to systems of up to five kilowatts in capacity, which is enough for most household needs,” the spokesman said.

“Non-residential customers – particularly larger industrial customers – are able to negotiate buyback products with their electricity retailer.”

Mr Mackenzie said while some electricity trickled into mains power from Dexus’ industrial developments, most of it was used on site.

“If they’re not using it during the daytime it can feed back into the system … but it will be primarily absorbed in these assets themselves,” he said.

“It’s a bit like water, really, it just runs and goes to where the demand is and where the tap’s turned on the most.”

Ideally, Mr Mackenzie said, the solar panels on an industrial building would supply the energy requirements of the tenant as this was considered a more efficient business model.

“You want the optimum amount of solar [on a site], because at the end of the day if it feeds back in,” he said.

“You don’t get a lot of payback on that. In fact, sometimes nothing, it just overflows into the system for free [and] just gets taken up elsewhere.

“That’ll be the best system ultimately when you’re creating more power [than you use]. You can get … a couple of cents or whatever back on the trickle that you feed back into the system.”

Dexus’ customers in the eastern states, including Elders, are installing their company logos in solar panels on the roofs of their industrial buildings.

Business News understands global fitness retailers Nike and Lululemon have done the same.

Centuria Capital Group, also one of WA’s major industrial property owners, has set a target for the assets within its industrial real estate investment trust (REIT) to be powered by the equivalent of 100 per cent renewable energy by 2028.

The listed property fund is aiming to achieve this via onsite solar and the purchase of government-issued large-scale generation certificates.

Centuria plans to deploy 293KW of solar energy across its industrial REIT, which includes eight WA assets valued at $259.1 million, by 2028.

Notably, in its Broome Boulevard Shopping Centre retail asset, solar panels are installed across 8,000sqm of the property and supply 44 per cent of the centre’s electricity needs.

International property group LOGOS has recently installed 150KW of solar on the roofs of its newly constructed 18,000sqm and 12,000sqm industrial facilities in Hazelmere.