The Business Case for Renewable Energy in Real Estate

Investments in renewable energy could unlock billions in real estate value, help building owners reduce long-term energy costs and generate supplemental income, said the Urban Land Institute, Washington, D.C.

“Renewable energy is the fastest-growing power source for buildings globally, but still accounts for less than 15 percent of the total energy used by buildings,” said Billy Grayson, Executive Vice President of Centers and Initiatives with ULI. “Between rising prices for fossil fuels, the declining cost of renewables and more government incentives for emissions reduction, the business case for pursuing renewable energy in real estate has never been stronger.”

In a report, Renewable Energy Strategies for Real Estate, ULI said real estate organizations can reduce their carbon footprint and add value for buildings, tenants, investors and communities with renewable energy.

The report includes four recommendations for real estate practitioners interested in renewable energy:

–Create tailored approaches. The best strategy for implementing renewables varies by organization, building and situation and is informed by an entity’s goals, financials and priorities, the report said.

–Plan ahead. “As demand for renewable energy increases, real estate organizations can begin exploring renewable energy opportunities now in order to gain experience and build relationships with service providers who can help them succeed,” ULI said.

–Involve experts. On- and off-site renewable energy deal structures are numerous and complicated, so they are best supported by expert external stakeholders, the report said.

–Maximize energy efficiency first. There are several steps on the path toward net-zero emissions, including renewable energy, but energy efficiency is often the highest impact investment, ULI said.

“Renewable energy is not new to real estate,” Grayson said. “These strategies can help developers and stakeholders lower energy costs, earn additional income and access financial incentives. Not to mention they can help meet tenant and investor expectations and create community benefits.”