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Upstream and Beacon Lighting inspire bulky goods retailers to cut costs with clean energy

Upstream

By Nick Lenaghan

With a business based on illumination, Beacon Lighting's Ian Robinson has more insight than most into the surging cost of power.

And that's why Beacon has spent considerable effort to defray that expense with a series of solar arrays above its 108 outlets.

So far Beacon has identified as many as 90 potential sites across its store network, with solar arrays installed at 36 outlets so far in the past 18 months.

"If we didn't do something about it, our power costs could blow out by $1 million," Beacon's executive chairman told The Australian Financial Review.

"That's a fairly big number. We do have responsibility to mitigate some of these expenses."

Solar may be common sense, but it's also unusual for a retail tenant to take matters into their own hands when it's the landlords who own the roofs.

The opportunity for Beacon to claim its place in the sun arises from the typical layout of large format retail centres.

Unlike many shopping centres, homemaker centres are often single storey, giving tenants a notional share of the rooftop.

And while major shopping centre owners are adapting to solar, they are setting up so-called embedded networks and then selling down the power to the tenants.

Big players such as Vicinity Centres, SCA Property Group, Stockland and even Brisbane Airport are installing solar.

Meanwhile Beacon and other homemaker centre tenants are forging a different kind of deal with their landlords.

In Beacon's case, it has struck a power purchase agreement with provider Upstream Energy.

Under that deal, the retailer effectively leases the solar array from the provider, which delivers power at a rate discounted on Beacon's current cost from the grid and fixed for 10 to 12 years.

"They own it until we pay it off," Mr Robinson said. "Then you decide what the ownership will be. In a lot of locations we don't want to own it so we pass the asset onto the landlord."

While Beacon's landlords take over an asset worth anywhere between $100,000 and $300,000, the retailer also reserves the right to the power that the array generates for another decade.

So far Beacon has won approval from its landlords at 60 properties.

While Beacon's solar rollout has been slowed by the approval process, the installations – typically about 40 kilowatts – can account for as much as 40 per cent of the energy the retailer needs to display its wares.

A increasing number of such deals are being struck in the "big box" retail sector, according to Philippa Kelly, who heads the Large Format Retail Association.

"It's so important that you have your expenses in check and this is one way of looking at it," she said.





Posted on 12th December 2017 / More news