In practice: UK's largest landlord-funded distribution warehouse rooftop solar installation
The landlord/tenant relationship can be a barrier when it comes to sustainability and onsite generation, but both Dixons Carphone and LondonMetric will benefit from the new solar installation at a distribution warehouse in Newark.
Dixons Carphone has goals in place to reduce its UK energy consumption by 30% by 2020, and corresponding CO2 emissions by 35%. While investments have been made into technologies such as LED lighting at its retail stores, the distribution facilities it uses are leased and efforts to reduce emissions required a holistic partnership with the building’s landlord LondonMetric.
As part of its sustainability strategy, LondonMetric has targets in place to reduce retail warehouse portfolio energy consumption and emissions. Goals to investigate implementation of a tenant fit-out guide, including a green lease clause into new leases, created the opportunity for the landlord and tenant to create a singular solution that would contribute to both their targets.
The property firm realised that occupiers are unlikely to make large renewable investments on buildings that they lease, as they may not remain their long enough to secure the benefits. LondonMetric works with all its occupiers across a 12 million square foot estate portfolio to reduce emissions and occupational costs.
LondonMetric’s leased facility on the Newlink Business Park in Newark was fitted with the largest landlord-funded rooftop solar installation on a distribution warehouse in the UK in September 2017.
The 726,000 square foot facility is covered by a 66,000 square foot solar photovoltaic installation, which is approximately the same size as the White House. Solar Advanced Systems Limited was the appointed contractor on the installation, Smeaton Wood Energy helped to develop the opportunity for both Dixons Carphone and LondonMetric and Syzygy Renewables acted as project manager for the installation.
More than 3,600 solar panels were installed as part of the project, and will generate approximately 940,000kWh of electricity annually. It is believed that the onsite generation of renewable electricity will reduce the site’s carbon emissions by more than 500 tonnes annually.
The Newark installation is expected to reduce Dixons Carphone’s annual grid energy consumption at the warehouse by around 15%. Dixons Carphone will also purchase energy generated at the site through a discounted procurement scheme that will generate long-term cost savings and protect the company from volatile energy prices.
From April 2018, new legislation under the Minimum Energy Efficiency Standards (MEES) will mean that tenancy cannot be granted on a property with an Energy Performance Certificate (EPC) of less than E.
Because LondonMetric is investing in renewables projects across its portfolio, it is actively future proofing itself by improving EPC ratings. Subsequently, if Dixons Carphone leaves once its lease expires, LondonMetric has an attractive offer for new occupiers.
These types of projects also help to strenghten the relationship between tenant and occupier, which will assist any further project developments in the future.
LondonMetric spent approximately £800,000 on the solar array at the Newark site. It is believed that payback for the project will be close to the nine-year mark.
As mentioned, Dixons Carphone will benefit from a reduced procurement tariff for the renewable energy sourced onsite, but how much this will save them during the length of the tenancy has not been disclosed.
The project was designed to be upscaled and fitted with battery storage technology if necessary, although no discussions regarding battery deployment are yet to take place.
LondonMetric is also investigating the cost of switching to a 100% low-carbon energy tariff for landlord procured energy. The property firm also has a target in place to reduce investment portfolio energy intensity and emissions, against a 2016 baseline, by 20% by March 2022.