Solar power fuels real estate’s green transformation.

By Oliver Townsend Jul 9, 2024
solar power is at the heart of real estate’s decarbonisation agenda.jpegOrginal image from: https://www.netzeroinvestor.net/news-and-views/shout-it-from-the-rooftop-solar-power-is-at-the-heart-of-real-estates-decarbonisation-agenda

Solar power is becoming increasingly important in the real estate sector as the push for decarbonisation gains momentum. The UK’s listed real estate companies are embracing solar energy, with many properties now equipped with solar panels. However, the transition to solar power is not without its challenges, as highlighted by reports from various real estate funds and companies.

The Design Challenge

One of the primary challenges developers face when incorporating solar panels into real estate assets is the design aspect. Retrofitting older buildings to accommodate solar panels can be structurally challenging, especially in markets with a significant amount of pre-1946 housing stock. Innovative design solutions are necessary to overcome this hurdle, as seen in the case of Abrdn Property Income Trust’s strategic approach to solar power.

Financial Considerations

While the cost of solar energy has significantly decreased over the past decade, installing solar panels across a property portfolio remains a capital-intensive endeavor. Companies are exploring various financing mechanisms, such as internal carbon taxes and net metering, to fund their solar retrofitting projects. British Land and Big Yellow are among the companies implementing innovative financial strategies to support their solar initiatives.

Energy Supply and Control

Another critical aspect of the solar power transition in real estate is determining who controls the energy supply – the property owners or the customers. Companies like SEGRO have adopted different approaches, with some customers procuring energy independently and others relying on property owners for energy procurement. Ensuring visibility over energy demand and source of supply is essential for effective energy management.

Conclusion

The integration of solar power into real estate portfolios is a vital step towards decarbonisation and sustainability. As listed real estate companies in the UK continue to invest in solar energy, overcoming design challenges, managing financial considerations, and defining energy supply control are key focus areas. By addressing these challenges effectively, the real estate sector can play a significant role in advancing the transition to renewable energy sources.

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