A study by Sunday Power has identified the most attractive commercial and governmental buildings for solar energy production in Norway.
Building solar installations on large commercial and industrial buildings is a powerful and relatively simple way of producing green energy and reducing CO2 emissions. In launching the United Nations IPCC Climate Change 2023 report written by some of the world's leading scientists the UN Secretary General, Antonio Guterras said in a speech to the IPCC that in order to avoid a climate catastrophe, carbon emissions must be halved by 2030 because “the climate bomb is ticking.”
This is not only a global imperative for sustainability but also an economic opportunity. The cost of solar power has fallen dramatically in the past 10 years from being the most expensive to being the most cost effective way to produce electricity. In relative importance solar energy is expected by the International Energy Agency (“IEA”) to be the largest source of energy production by 2040 and the EU wants solar to be the largest source of energy ten years earlier by 2030 requiring a Herculean task of 300 percent growth from current installed capacity.
This will require huge investments and opportunities for related technologies including power storage and flexibility solutions. To realise this green shift we need supportive governments and for real estate and land owners to take action now to build solar and build solar fast as the time is running out for any hopes of us reaching net zero CO2 emissions by 2050 as stipulated by the IEA and other intergovernmental organisations.
The Sunday Power Study
A detailed study led by Eskil Gjerde, a Data Scientist at Sunday Power has identified the most attractive commercial and governmental buildings for solar energy production in Norway. These 13 637 buildings have a total roof mass of over 38 million m2 and can produce over 3.3 TWh of electricity annually and save over 1.5 billion Kg CO2 / per annum or over 35 billion Kg CO2 reductions over the lifetime of these potential installations.
Method: Using data analysis to narrow down to the most attractive buildings for roof top solar
These are very meaningful reductions to help us reach net zero targets. For example, an adult tree can absorb roughly 22.5 kg of CO2 each year and this identified Norwegian real estate portfolio if installed with solar plants is equivalent to roughly 205 000 football pitches of Norwegian forest. Monetarily, based on the average energy price of 235.3 øre per kWh in 2022 this represents NOK 8 billion in annual potential value creation, not including savings in grid fees and taxes in behind the meter consumption.
Norway is behind all its Nordic and its European peers with the least developed building mass of Commercial and Industrial buildings (“C&I”) in terms of solar installations. Sunday Power will use this study to help advise public and private real estate owners to select the best properties and estimate the economic and green impact of installing solar plants on their real estate portfolios.
Installed solar PV capacity (GW) in 2022 by country
In 2022 Norway installed circa 150MW of solar installations on C&I roofs whereas Sweden installed over 700MW. Importantly, southern Norway has similar solar conditions to its Nordic peers and has the regulatory frameworks in place to change this relatively low level of adoption of solar power production.
Norway is today connected to continental Europe via inter-connectors such as Skagerrak 1 to Denmark and NordLink to Germany so any sustainable energy produced on roofs in Norway will reduce fossil fuel based energy sources (largely coal and gas) production on the continent.
Both Public and Private sectors need to participate in the Solar Revolution
The Sunday Power study is based on the public registry of all buildings in Norway and graphical satellite analysis of these roofs has identified the most economically attractive buildings for PV solar installations based on their location, price zones, size, age, height and the individual roof's angles.
When breaking down this “perfect solar” building portfolio based on ownership by the public and private sectors the private sector represents approximately 75% in terms of both building numbers and the combined roof mass.
Norwegian Perfect Solar Buildings by ownership (# of buildings in %)
The public sector represents eight of the ten largest single owners of the identified buildings highly attractive for solar installations.
Top 10 Owners of Perfect Solar Buildings (# of buildings).
The largest single Norwegian owner of “perfect” solar roofs is Oslo Kommune with 367 buildings in NO1, NO2 and NO5 where Norway has the highest electricity costs. This means that a small number of large public institutions such as Oslo Kommune could greatly benefit from solar installations on its buildings and have a substantial positive impact on CO2 emissions and reducing electricity costs for the benefit of Norwegian taxpayers.
While the Norwegian public sector has started pilot solar installations the majority of public buildings are not being actively pursued for solar installations. This is a shame and a loss for society at large.
A deeper dive into the private Norwegian real estate sector shows that out of the 4608 owners of these “perfect solar buildings” 71.4% of entities own two or more of these buildings. The diagram below shows how the total roof mass is distributed after grouping by the number of buildings owned.
Distribution of Roof Mass by # of Buildings Owned
Owners with 15+ buildings (three last groups in above graph) have a little over 20% of all roof mass but are only accounting for roughly 1% of all owners.
When we break down the concentration of ownership of private buildings in Norway 15% of the total building mass is owned by the 25 largest private owners and 30% of the building mass is owned by the 100 largest owners.
We can also look at the different industry categories of buildings. The largest group of buildings is categorised by industry followed by commerce and logistics.
Buildings by industry classification (# of buildings)
From an attractiveness perspective buildings with high internal energy consumption are more attractive relative to buildings with low energy consumption. This is as using the solar electricity in the building will reduce the network fees from buying electricity from the grid.
The study also looks at the building year and shows that 56.6 % of these buildings have been built in 2003 and after which means they fall under building regulations that stipulates increased roof weight tolerances which is positive for solar installations as the likelihood of needing to clear these from snow is reduced which is both costly and increases the risk of damaging the solar installations.
Call to Action
The untapped green and economic potential of these buildings is astounding, says Rikard af Ekenstam, Chief Commercial Officer at Sunday Power.
When we look at the average roof size of this building portfolio it is 2826 m2 (a little short of half a soccer field) and such a “normal” building with a 60% use for solar panels would produce approximately 240 000 kWh per annum and 106 929 kg CO2 annual reduction in CO2 emissions. This is equivalent to NOK564 000 in electricity production (based on 2022 average spot price).
This economic potential is from largely empty roofs and a solar installation would represent a win-win for all stakeholders and maybe more importantly a win for our environment and for future generations.
Using Sunday Powers Solar as a Service offering a building owner with a 2826 sqm roof could get a solar installation without any costs gaining all the green values, a more attractive and valuable building as well as generating an estimated NOK100,000 in annual income as “rent” from Sunday Power (based on 2022 average spot price).
While the total economic return for the world is attractive given that the technology is proven and the execution risk is limited, the actual financial realized returns will be driven by future electricity prices which are uncertain. However, we think the green values are likely more important for humanity and we need to act now. The value creation from installing solar installation for real estate owners is greater then the actual cash flows partly from attracting tenants who prefer to rent greener buildings and banks who are increasingly willing to provide better terms to sustainable clients. There is also increasing evidence that greener buildings are more valuable, making the decision to install solar plants on commercial roofs very attractive.
As the world is getting more electrified we need to urgently increase sustainable energy production and the use of these empty roofs using proven solar technology while requiring no additional use of land or water resources and generating income is simply a fantastic opportunity that needs to be developed immediately.
The UN Secretary General Guterres also launched “a survival guide for mankind” in March 2023 urging developed countries to commit to achieving zero net emissions by 2040. “In short, our world needs climate action on all fronts: everything, everywhere, all at once,” he said.
Please connect to Sunday Power (via link below) if you would like to learn more about this study and explore the potential solar can generate on your Norwegian real estate portfolio.
About Sunday Power
Sunday Power is a solar infrastructure and technology company focusing on solar installations and related battery solutions for commercial and industrial buildings. We offer advisory and project management and the software for efficient operation of solar and battery installations. We also offer Solar as a service where Sunday Power invests in the solar installation allowing building owners and tenants to benefit from the improved building classification, the sustainable electricity as well as share part of the income generated from the solar plant without any financial or operational investments.
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