‘We need a sustainable energy framework’

Portfolio energy strategy is the key to future-proofing business and real estate, says Peter Rolton.

In order to have the energy we need to grow our economies we must focus on our energy infrastructure as a country, but also as businesses and property portfolios. The UK, where we are based, has relied on cheap gas for a long time with no incentive to change, but this is true of other countries too. Now geopolitical, energy security and pricing issues mean we need to change, and clean energy is becoming key to the solution.

I was involved as an advisor to the UK government when the EU Renewable Energy Directive came into force in 2009 with the target of 20% of renewable energy by 2020 which applied as law to all EU countries. It was always my view that rather than off-set, we needed to engineer the problem with better technologies, a viable business case and reducing costs with scale. So what do we need to do as a real estate sector?

For too long the world of energy and infrastructure has had conversations in one corner with real estate in the other taking the consequences of energy strategy. We now need to see these worlds come together to create an environment where we can have the conversation and where business can flourish.

To support businesses and growth there is a need for a sustainable energy strategy at the government level which will mean more top down strategy from the governments across Europe.

What do businesses need to think about in terms of energy? Fundamentally companies need to think about their portfolio-wide energy strategy. Most companies think they have this under control at a property management level and ultimately it means changing light bulbs and tuning the thermostat down!

Big sea changes

What companies need to understand is the direction of travel around energy and infrastructure and what you should be doing in your business to make those big sea changes.

You might need to make a big change, such as replacing gas. This may require a major strategic shift and disruption to your business case. Our advice to companies is to look at the portfolio, what you own, the location and the input of energy. What major interventions can you have?

For example, if your asset has adjacent land, can you incorporate a solar farm, is there a wind farm nearby that you can get a private wire from? Are there other forms of accessible clean energy that you can access or could you develop yourself?

Or get another company to develop with you. As a company with a sound covenant strength, you could work with a solar developer and rent a field to develop a solar farm. Then sign a 25-year PPA with the developer to enable the project. Or cover your roofs in solar panels and use the power yourself rather than supplying it to the grid.

Offsetting fossil fuel gas

If you have a process or location which needs gas, you could link up with a partner and offset your fossil fuel gas by injecting the equivalent biofuel gas into the grid and therefore helping to fund the biogas project. It’s a win-win.

New technologies also provide opportunities. Renewable energy is currently providing a big opportunity for clean energy. But storage is an issue. New technologies such as Titanvolt are providing opportunities to store cheap, clean energy onsite and use it during peak times. This is a game changer when it comes to reducing energy prices.  

Rather than talk about sustainability, I prefer to talk about future-proofing your business, and energy is the key to that. Fundamentally, the important thing is to lift the conversation to a board level, to engage decision makers and to have an energy strategy that works for your portfolio. We must keep our eyes on the end goal and be bold.

Peter Rolton is chairman of Rolton