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FONTANA, CA-As GlobeSt.com reported recently, the Southern California Edison initiative is expected to generate 250 megawatts of electricity from solar panels on 65 million sf of commercial building roofs in California within five years. The project, though, is groundbreaking in more than one way. As the country’s largest solar panel installation, it becomes a potential major revenue generator for owners of warehouse distribution facilities.

Denver-based ProLogis, the world’s largest owner of industrial properties, is the first participant in the SCE initiative. But this is not ProLogis’ first foray into utilizing rooftop real estate for solar panel installation, and it certainly is not its last. Roof-mounted solar panels are in place at ProLogis Park Chanteloup in France and at ProLogis Park Penedes in Spain. The European agreements are different from the one in California. Drew Torbin, manager of sustainability for ProLogis, tells GlobeSt.com, “we own the solar array at the European locations under a feed-in-tariff agreement.”

Under the agreement, ProLogis sells the electricity to customers in Europe. Thus, the firm profits from the sales in the same way a utility company would.

In the SCE agreement, the utility company owns the solar array on space it leases from ProLogis. The initial installation is for the 607,000-sf roof at 13230 San Bernadino Ave. here. Neither Torbin nor Gil Alexander, spokesman for SCE, would disclose the lease rate.

Among the factors in evaluating a rent rate, Torbin says, is the value of the space to the utility company, and “the risk we run by putting panels on the roof. We have important customers under that roof.” Another factor is comparable rates to rent that space to other potential users. “We’ve never leased roof space for anything before,” Torbin says, “but we have had offers.” Cell phone companies, for example, have sought to build towers on industrial rooftops, and companies have looked to place billboards there.

ProLogis will also generate fees as the installation and construction manager of the project. That “aligns risk,” Torbin says. “It’s our asset and our tenants. Racking up solar panels is fairly basic.”

Prior to clinching the deal, ProLogis discussed the project with building tenants. “They were thrilled,” Torbin says, even though the electricity generated by the panels does not supply the building. It goes to surrounding residential areas. The panels shade the building, which does provide some small benefit, Torbin says, but the real reason for tenants’ enthusiasm is, “they wanted to be a part of this.” For the same reason, ProLogis landed a tenant at its solar-panel-topped facility in France.

The SCE initiative has a projected investment of $875 million. ProLogis owns 180 distribution facilities aggregating more than 41 million sf in SCE’s territory alone. While negotiating for additional SCE installations on those properties, the company is also in negotiations with other utility companies elsewhere in the US and abroad.

In all, ProLogis owns more than 510 million sf of industrial rooftop real estate worldwide. The benefit of using rooftop space, SCE’s Alexander points out, is that the electricity “goes right where the customers are. In dessert locations, there’s sun, but no customers.”

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