Understanding the Cost of Installing Solar Panels on a Warehouse

In many ways, a typical warehouse roof offers the ideal landscape for hosting a solar power system. Not only does it have plenty of square footage to support a lot of solar panels, but it’s also high enough off the ground that shade usually isn’t a problem. Further, most warehouse roofs are pitched perfectly for catching the sun’s rays at various points throughout the day.

But the actual use of solar power in the logistics real estate industry is highly diverse, with its potential dependent on regional factors including regulatory regimes, energy economics and climate. Therefore we can only provide some general guidelines for you to keep in mind when thinking about implementing solar in your own unique environment.

The Upfront Costs of Solar Installation

Having solar installed on your warehouse roof may reduce your monthly energy bills. And solar can provide a great benefit in taking a warehouse into a more sustainable future if planned properly. But what makes people think twice about solar is the upfront cost that’s involved.  

Solar projects are multifaceted and require coordination between initial cost, investment resources, the power user and local policy. As such, upfront planning and cost analysis that considers the amount of time the solar installation will deliver energy is critical to ensuring a viable solar project that delivers economic benefits. 

The Declining Cost of Industrial Solar Panels

An industrial solar power system can be up to several megawatts (MW) in size, depending on the amount of electricity the facility needs and the size of the roof. Solar module costs are reflective of the global market and have been declining over time. Further, new technology is being developed daily and the price of modules is expected to decrease further.

Costs of Industrial Solar Panels

Costs of solar panels have been declining over time.

What Is the Return on Investment for Solar Power Panels?

The declining cost of solar modules is one of the reasons that renewable energy is no longer something we have to look forward to in the future. It’s here today.

The average “break-even” point for a solar installation in the U.S. is eight years. And with most solar systems backed by strong warranties—up to 25 years in some cases—this means that once you hit the break-even point, all the energy that’s saved beyond that number is money in the bank.

Therefore once the initial capital investment is paid for, the solar system may be able to deliver a good return on the investment and for a long time.

Consider Other Cost Factors

At the end of the day, solar implementation comes down to costs, offset by incentives where applicable. The end cost is critical because it tells you how much the cost of solar compares to the cost of purchasing kilowatt hours (kWh) from your local utility. Once the total project cost is understood and the corresponding kWh rate is established, the solar power cost can be compared to the utility power cost to determine if a solar warehouse is viable.

This article has only discussed the costs of solar modules. That’s an important factor but be sure to consider the total costs of a solar installation. They generally fall into one of four buckets:

  1.     Design, permitting and approval
  2.     Solar modules, racking and inverters
  3.     Site improvements, including roof replacement, reinforcement and on-the-ground utility connections
  4.     Labor: mechanical, electrical, inspectors and general labor

These costs can sometimes be offset in the United States by Federal, state, and local incentives as well as rebates offered by utility companies. There are a number of financial options available, including those that focus on clean energy development.

Prologis is a Leader in Solar Implementation

Prologis was recently recognized as among the top three corporations in the U.S. for installed onsite solar capacity by the Solar Energy Industries Association (SEIA). As of June 2019, we have more than 201 MW of global rooftop solar in our logistics real estate portfolio and we are working to expand our solar business in strategic locations.

Prologis’ global energy team is dedicated to developing solar, lighting, energy storage and other emerging technologies for our customers.  

Read more about Prologis’ leadership in solar.