Control and ownership are key to resilience

Installing photovoltaic panels on rooftops can ensure energy security, says VerusSol’s Joost Leendertse.

What are the benefits of investing in your own energy production? Real Asset Impact recently interviewed Joost Leendertse, founding partner and chief executive of VerusSol, to find out.

What are you seeing in the market now?

What we see is that everyone is trying to have an ESG strategy, realising at last that it is time to act. They see that complying with all these regulations will result in higher valuations – or at least they see that if you don’t act then your valuations will be lower. It is the same in the financial world: financial reporting regulations dictate what can and cannot be consolidated in financial statements.

We will see the same for ESG regulations and the associated reporting. Financial institutions only include decarbonisation efforts if they have ownership and full control, which is not the case when you lease out your roof, because the green power produced does not belong to you.

What is the best strategy for firms that want to minimise risk?

If you want to be resilient and don’t want a brown discount then two words are crucial: control and ownership. You need to invest yourself to achieve that, and people are beginning to realise that. Without control and ownership, you lose accountability and you are in risk territory. Investing in your own energy production gives you that control, and it means your buildings will have a higher value.

The best solution is taking out the third party and investing in a high-quality energy system yourself. Hire specialists as advisers and go for it.

What about tenant involvement?

You need commitment from tenants and the way to get that is to give them a discount on their energy costs, which you can recoup by charging a higher rent, so you get your investment back. It is much more beneficial over the long term, for tenants and for owners, so it is a win-win.

I hope people see that you can make ESG very complex, but if you simplify and flatten it down, it can be extremely easy.

Which countries are most advanced?

Definitely the UK, the Netherlands, France, Belgium and the Nordics – the others have to catch up. I compare the shift to fire regulations which came into force 20 years ago, requiring an extra staircase in buildings, sprinklers and so on. It was a big deal at the time, but now it’s totally normal that you take those extra costs into account when you build an asset.

In a few years, energy production will be factored into the costs as a matter of course. We used to have internet cables, now it’s wifi everywhere. It is an evolving situation and you need to keep up.

How is innovation changing the sector?

Innovation is ramping up very quickly, improving things all the time. At the moment there are still a lot of technical issues. The suitability of available space is a problem now, but that will be solved by lighter weight, higher-efficiency PVs, plus production prices will be lower. Battery storage will also improve.

Production of renewable energy on site will be easier and more profitable. The major problem is that the hardware comes out of China and India, as the EU doesn’t have its own production capability. The US was very smart with its Inflation Reduction Act, which increased local production. It’s not happening in Europe, so geopolitical factors are an issue we have to deal with.

What is next for VerusSol?

We are finalising two major contracts with an asset and investment manager and a property adviser, which will involve millions of square metres of roof space. We cannot disclose the details, but we are very glad that two big firms are choosing our model. They have done a lot of research and have opted for our type of solution because it is the best.