PV electricity could largely replace Germany’s fossil energy sources in future
Roof-mounted PV systems on top of logistics and industrial properties could act as milestone for the general energy transition. The total roof surfaces in Germany that are potentially eligible for the production of solar power would easily suffice to replace the output of 36 hypothetical nuclear plants (1 GW each) or 121 gas- or coal-fired power stations (300 MW each), for example. It is an enormous opportunity that has been grossly neglected so far. For the time being, less than ten percent of the roofs of commercial buildings in Germany are equipped with such systems. This is odd insofar as PV systems are also lucrative in a financial sense: For professional operators of large arrays, roof surfaces become cost effective as of 5,000 square metres and more. The fact that the idea has barely resonated yet with property developers, financiers and owners should be blamed not on any lack of interest but on a large number of obstacles, which need to be addressed as quickly as possible. These are the findings of an online panel headlined “PV potential of roof surfaces: will the logistics industry make a substantial contribution to the energy transition?” The panel was attended by Tobias Kassner, Head of Research at GARBE Industrial Real Estate, Dr. Manuel Schrapers, Managing Director of Metroplan; Moritz Wickert, Managing Director of GARBE Renewable Energy, and by Inka Klinger, Head of Project Finance at Hamburg Commercial Bank.
Solar energy counts among the most important regenerative energy sources, and is thus a highly relevant component in the bid to accomplish the energy transition. The photovoltaics strategy adopted by the Federal Government aims for a generating capacity of 215 Gigawatts (GW) by 2030 from solar energy alone. At present, roughly another seven Gigawatts from new PV systems are annually added to the 60 GW that were on-stream in 2022 – not nearly enough to achieve the goal of fully converting the German power supply to renewables. Indeed, the rate of increase would need to triple to around 22 GW per year. This would equal the theoretical output of around 22 nuclear power plants (1 GW each).
While ambitious, it is an undertaking that could by all means be accomplished. According to a recent analysis conducted by GARBE Industrial Real Estate, Germany has a commercially usable potential of 362.8 million square metres of roof surfaces on top of industrial and commercial properties measuring 5,000 square metres or more, which could be used to generate over 36 Gigawatts of electricity by installing solar arrays. Tobias Kassner, Head of Research at GARBE Industrial Real Estate GmbH, is convinced: “Our calculations show that PV systems on top of logistics and industrial properties could largely replace fossil energy sources. To use a concrete example, this would equal the output of 36 assumed nuclear plants (1 GW each) or 121 gas- or coal-fired power stations (300 MW each).” Accordingly, photovoltaic systems contribute significantly to the phaseout of fossil-fuel electricity generation.
The sprawling roof surfaces of logistics and industrial buildings provide Germany with a commercially usable rooftop potential of 362.8 million square metres that could be employed to generate several gigawatts of electricity via PV systems. At present, less than 10 percent of such roof tops are equipped with PV modules. Installing such modules on new-build warehouses has not become the standard yet, although 5 to 6 million square metres of new roof surfaces are added each year.
GARBE identified around 32,500 potentially eligible logistics and industrial properties within the scope of a survey. However, not all of these properties are suitable for solar power generation. The most common reason for ineligibility is a poor state of repair. That is why the GARBE experts deem the ideal scenario of an additional 36.6 Gigawatts rather unrealistic. “But putting 80 percent of the rooftops to good use would already be a worthwhile target,” said Kassner. “It would imply a capacity of 29 Gigawatts and require 24.6 billion euros in capital expenditures.”
About 40 to 50 percent of the roof surfaces of standing properties are currently not used for photovoltaics because outdated power distribution grids result in feed-in uncertainty and poor planning predictability. The overriding goal for the near future: Increasing the share of usable roof surfaces to somewhere between 65 and 80 percent. “An important step is to secure the minimum remuneration for the investor,” said Kassner.
Dr. Manuel Schrapers, the Managing Director of Metroplan, believes that developing existing building surfaces for this type of use poses an enormous challenge. Being an expert for industrial and logistics facilities, he argues that “the key question with existing properties, aside from age and state of repair, is often whether their structures are actually strong enough to bear the weight of PV systems.” In the case of manufacturing properties, superstructures such as ventilation systems could, on the one hand, hamper the installation and, on the other hand, reduce the sun exposure later on. He added that the principal contractors of future property developments, by contrast, will include load reserves in their structural planning which will make installations at a later date much easier.
New GARBE developments include PV systems as a standard feature now, explained Moritz Wickert, the Managing Director of GARBE Renewable Energy. This contrasts with existing properties, where a roof refurbishment is sometimes the first thing to do. “Being the one setting up the systems, you should not only have the state of the roof inspected but you should also verify whether the structural strength of the roof will permit the installation of a system that may have a service life of well over 20 years,” said Wickert.
He added that certain aspects need to be sorted out together with the tenants. “In the case of new-build construction, the property lease includes the PV system; in the case of existing buildings, you need to discuss with the tenant that you intend to use the roof surface and that you are permitted to sell the electricity to the tenant, where applicable,” Wickert explained.
In many cases, the generated electricity is not used on the premises but exported – at least hypothetically speaking. After all, much depends on the question as to where the power is to be fed into the grid. For banks, existing access to the utility grid is decisive for project financing approvals. “The effort to expand the roughly 9,000 Megawatt peak completed in 2023 to the planned annual completion rate of 22,000 Megawatt peak urgently necessitates an accelerated grid expansion,” said Inka Klinger, Head of Project Finance at Hamburg Commercial Bank. “Once the grids hit their capacity limits, electricity prices will come under pressure and we could be seeing an increase in negative market prices.”
“Banks tend to rely on collateral securities for their financing arrangements, and these will vary depending on ownership structure. They can take any of various formats, such as land charges, easements or usufruct, but may also include assignments of claims from any and all relevant project contracts,” said Inka Klinger. She added that another aspect of fundamental significance for lenders is the need to ensure that the rights to set up, operate and maintain the facilities as well as access to them have been secured. In regard to the current market situation, Klinger said: “The significant rise in lending rates are putting pressure on returns. This has lately made alternative investments that meet the return expectations but come with lower project risks an increasingly interesting proposition for investors.”