Community solar needs space to grow. Warehouse rooftops have lots of it.

Natasha Keefer is not a fan of heights. But on June 5, Keefer, who heads the Energy Solutions team for the Americas for Prologis, one of the world’s largest logistics companies, braved the ladder up to the roof of a 147,500-square-foot warehouse in Oakland, California, to take a look at the latest solar project her team had built.

The 720-kilowatt array will generate far more power than the company’s warehouse can use. In fact, the building in East Oakland is vacant right now. But that’s OK, because as a community solar project, it’s feeding electricity directly into the grid, Keefer explained to a group of state and local officials who had gathered to ​“flip the switch” on the array.

Ava Community Energy, a public energy provider serving Oakland and other East Bay and Northern California communities, will buy that power and make it available to low-income households, with a guarantee for subscribers of at least 20% savings on monthly utility bills.

Half of U.S. states and Washington, D.C., have adopted policies enabling some kind of community solar program. Many such projects are built on open fields. But as one of the country’s largest owners of logistics real estate, Prologis is ​“looking to deploy solar on as many rooftops as we can,” Keefer said.

In a sense, warehouse rooftops are like open fields in dense urban landscapes, with acres of flat space available for solar panels.

Ava has awarded Prologis a contract to build nearly 7.3 megawatts of solar on sprawling roofs across five sites, enabling about 3,000 residents to see lower bills. Keefer previously worked for Clean Power Alliance, another California community energy provider, which is building 9 megawatts of warehouse-rooftop community solar with Prologis.

“California has a huge need for power. I’m not claiming distributed generation is the answer for all our needs,” she said. ​“But you need all the tools in your toolbox.”

How community solar can unlock solar capacity on empty roofs

Similar logic is driving U.S. states from the mid-Atlantic to the Midwest to expand opportunities for community solar on warehouses and other commercial and industrial buildings. There’s certainly a lot of roof space to go around, said Peter Light, CEO of Lumen Energy, which brokers deals between real estate owners and solar developers.

His company’s analysis of federal data indicates U.S. commercial, industrial, and institutional rooftops could host 581 gigawatts of solar, enough to provide the lower bounds of the country’s overall electricity demand. Similar data from a 2023 study by the Environment America Research and Policy Center found that warehouses across the U.S. have nearly 16.4 billion square feet of rooftop space, capable of hosting enough solar to power more than 19 million homes.

Of course, not all of that space can be used to generate solar power. But Light thinks that rooftops should be considered as valuable as open land for utilities and policymakers desperate to meet booming demand for electricity.

“With surging power prices from data centers and AI, and general electrification, utilities and states are asking, ​‘Where can we get capacity now?’” he said. In many cases, rooftop solar systems can come online more quickly than utility-scale solar, which frequently faces yearslong interconnection studies and hefty grid upgrade costs, he said.

But only a fraction of available roof space is being used for solar today. Community solar can be a ​“revolutionary” tool to unlock that rooftop potential, Light said. ​“What community solar does is turn energy complexity into rental income — and new rental income is what real estate people understand,” he said. 

Susan Uthayakumar, Prologis’ chief energy and sustainability officer, agrees that community solar is a valuable option for real estate owners.

Prologis has deployed more than a gigawatt of solar and batteries across its global real estate footprint, largely to pursue its sustainability goals, she said. That includes more than 300 megawatts of solar at its U.S. properties, more than any other U.S. real estate owner.

Some of that power is being used on-site, where the demand exists. But when it comes to warehouses, most have relatively low power needs. ​“We usually need only 30 to 40% of the roof space for on-building demand,” Uthayakumar said. ​“We like to contribute the rest of the space for community solar.”

Black Bear Energy, a subsidiary of real estate efficiency and sustainability contractor Legence, has more than a gigawatt of on-site solar projects in its development pipeline, with customers ranging from apartment buildings to office parks. But relatively few building owners have the capital and long-term ownership commitment to invest in and own solar projects, said Victoria Stulgis, Black Bear’s president.

What’s more, buildings that are rented or leased face the split-incentive problem: The owner is less likely to pay for the solar installation when tenants will be the ones reaping the benefits with lower electricity bills.

That’s why Black Bear Energy and customer LBA Logistics pursued tens of megawatts of community solar projects on warehouse rooftops in Maryland and in Illinois. ​“Community solar structures are much more attractive to us because we’re basically monetizing our rooftops,” said Michelle German, a vice president at LBA.

What’s holding back shared solar on warehouse rooftops 

So what’s preventing more warehouse rooftops from being harnessed for community solar? First of all, it’s possible only in states with programs that allow shared solar.

Right now, that’s limited to Colorado, Illinois, Maryland, Massachusetts, New Jersey, New York, and a few other states, according to the Coalition for Community Solar Access, a trade group. Prologis is planning to build about 116 megawatts of rooftop solar in New Jersey with developer Solar Landscape, and another 82 megawatts across 45 rooftop projects in Illinois.

Second, states that do offer these programs restrict how much can be built, forcing developers and site hosts to scramble to design and bid projects into a limited pool of opportunities. But those pools are getting bigger. Earlier this year, New Jersey expanded its community solar program to 3 gigawatts, and Maryland is set to establish a 2-gigawatt target for distributed solar, including community solar, later this year.

But in California, community solar policy is moving in the opposite direction, its advocates say. State utility regulators have rebuffed a multiyear effort to expand community solar, leaving tight restrictions on how much can be built. Ava Community Energy’s 7.3-megawatt project portfolio with Prologis maxed out how much solar it could build under an existing program based on the number of customers it served in Alameda County — although its recent expansion into other parts of California have opened the opportunity to increase its portfolio by another 11 megawatts.

California regulators and utilities have argued that community solar projects are more expensive than utility-scale solar, making them a bad bet for keeping the state’s rising electricity costs in check. That’s because of both the economies of scale that giant solar farms offer and the extra costs of installing arrays on rooftops rather than on open land.

But that simple cost comparison doesn’t capture other benefits, Prologis’ Keefer said. ​“This is local to the community it serves,” she said. ​“It’s utilizing the existing built environment.” And because the power flows directly to existing urban power grids, ​“you don’t have to build a transmission line from the desert” to get the power where it’s needed.

In some states, community solar programs prioritize rooftops over empty fields. New Jersey limits projects almost exclusively to commercial and industrial rooftops, said Charlie Coggeshall, mid-Atlantic regional director for the Coalition for Community Solar Access. Similar requirements and incentives meant to prioritize solar development on buildings or ​“brownfield” sites like landfills exist in Illinois, Massachusetts, Maryland, New York, and other states, according to CCSA data.

Adding batteries to community solar systems could help them further reduce peak power demands in urban centers, according to research from consultancy Brattle Group commissioned by solar developer Solar Landscape. The analysis found that community solar-battery systems at commercial and industrial buildings in California could lower energy and grid costs more than ​“remote, ground-mounted projects,” mainly because they are situated in more densely populated areas.

Warehouses also tend to be located in communities that suffer from higher than levels of poverty and air pollution. A 2024 report led by researchers at Stanford University found that widespread deployment of commercial solar could provide disadvantaged communities significant relief from rising utility bills.

These are the kind of impacts that make urban community solar worth doing, said Rowena Brown, an Oakland City Council member and Ava board member. Residents of the East Oakland neighborhood that surrounds the Prologis warehouse ​“are unsure whether they can really benefit from lower energy costs — and they face real barriers to the clean energy transition,” she said. ​“I think of this project as a clear opportunity to show we care about the families here.”