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How can we meet the growing energy needs of warehouses?

By Tim O'Reilly – 08 Jun 2023

Energy is rapidly moving up the agenda for occupiers and owners of industrial and logistics buildings. Sustainable, resilient energy supply will become increasingly critical, but it’s essential that action is taken now to create energy infrastructure that is fit for the future.

Energy is a topic that comes up more and more in the discussions that our asset management team has with occupiers. In Tritax Symmetry’s recent survey of occupiers, almost half cited rising energy costs as a key concern, while about a third cited fuel price hikes.

Last year the price of gas hit record highs and electricity prices peaked at more than £6,000/MWh. While prices have softened since, the energy crisis persists and the risk of energy rationing can be expected to return in winter when demand is highest.

At the same time as supply is under pressure, demand from logistics buildings is increasing. Supply chains are being electrified: warehouses are using more automation and logistics are shifting towards electric transportation.

Sustainability also is an important factor for future-fit energy supply. Renewable energy sources can help drive decarbonisation and overcome supply constraints. To achieve the UK’s net zero goal, our country will need to shift almost entirely to renewable energy sources by 2050.  

However, the transition will take time and require the development of new technologies. Renewable energy sources are often intermittent, and the storage technology to overcome intermittence is expensive. So, what steps should owners and occupiers be taking now?

“Access to data is often the main barrier that prevents owners and occupiers collaborating effectively”

Importantly, we should recognise there is no “one-size-fits-all” solution. Each business is unique and has bespoke energy needs. It’s important that both owners and occupiers understand those needs – not just what those needs are today, but also how they will evolve in the future.

For the owner to understand the energy performance of a standing building, it needs to know the energy consumption in its totality, including the occupier consumption data. Access to data is often the main barrier that prevents owners and occupiers collaborating effectively to deliver the right energy solution.

For most, the first line of action should be reducing energy consumption. This can be achieved through the introduction of energy-efficient technologies at the development stage or through retrofitting. We are already seeing more widespread use of LED lighting and sensors that ensure lights are only on when needed. With higher-quality insulation, some sites do not require any additional heating or cooling beyond cold storage requirements.

Demand management can also be effective. While tenants often pay a flat rate for electricity, surging demand at peak times can still impact the price they pay. Controlling the timing of demand is therefore an important element of energy costs.

Peaks in demand

As we near the government’s deadline for cars and vans to be zero emissions, EV charging is a growing focus. There will be significant peaks in demand when warehouse employees arrive at work and charge their vehicles. However, software can be used to manage demand and flatten energy usage over the course of the day.

Steps can also be taken to enhance supply. As we become more dependent on electricity, we will need more sources to ensure resilience. This includes sufficient connections to the national grid, as well as opportunities to reduce costs through self-generated energy, such as roof-mounted solar panels.

The Co-op’s distribution facility in Biggleswade, Bedfordshire

In future, we will see more onsite energy generation assets like the one at the Co-op’s flagship distribution facility in Biggleswade, developed by Tritax Symmetry. The facility is located on a greenfield site where the 2 MW onsite energy generation asset is designed to provide uninterrupted greener, cheaper energy solutions through rooftop solar PV, batteries and a Combined Heat and Power (CHP) plant, supplementing the grid connection.

The economic case for onsite generation is clear: it is estimated it provides occupiers with savings on grid energy bills of between 5% and 10%. Onsite generation also creates a pathway to fully net zero carbon in operation and improves resilience with solar energy, the batteries to store energy and back-up generators.

Specialist capabilities

These projects are complex to develop, but complexity can be overcome through partnerships that bring together specialist capabilities in CHP (combined heat and power), battery units, electrical infrastructure and energy system design.  More and more, we can expect development teams to encompass partnerships with experts in these areas and occupiers will increasingly demand it.

We also need to ensure that onsite generation assets can be maintained during occupation too. Partnering with a separate entity for maintenance and repairs can ensure no risk to the occupier. And integrating occupier needs into the design process can ensure that onsite generation has the right level of flexibility to support changing energy requirements.

Beyond the overall decarbonisation of the energy grid, our sector has a clear role to play in investing into low-carbon infrastructure to build resilience and efficiency into our buildings. The market and technological conditions have evolved to make this both financially and technologically feasible. Now we need more collaboration between occupiers, owners and new partners specialised in energy to develop the resilient, sustainable energy supply that occupiers need.

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Tritax Big Box results for the six months ended 30 June 2023

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