Energy is a business opportunity
With rising energy prices, the real estate industry has a strong focus on reducing energy costs. Part of this involves making their properties more energy-efficient and measuring in higher resolution to understand how energy is used and report the right key performance indicators in their follow-up. This also applies to tenants. Despite energy efficiency efforts, energy will continue to be needed, especially for electrification and the transition of the energy landscape. So why not see energy as a business opportunity?
23. OKTOBER 2023
▪ 4 Min læsetid
Managing Director Digital Accelerator
Property owners have the opportunity to both work on reducing their energy costs and become an energy supplier to their tenants, creating incentives to collectively use energy more intelligently. Fundamentally, it's about realizing incentives for smart investments that enable technology for measurement and reporting, billing, as well as energy-saving measures that reduce unnecessary energy consumption. If we view energy as the raw material, property owners have the opportunity to find new revenue streams by becoming an energy supplier or "service provider" where, together with their tenants, they create the right incentives to help them in their energy usage.
Property owners today have several business opportunities related to energy procurement:
- "Hot Water Business," a mix of water and heat energy procurement.
- "Climate Business," which involves purchasing heat and electricity for heating and ventilation. This service includes real estate climate shells and installations.
- "Laundry/Laundry Room Business," a business where water and electricity create the opportunity, along with real capital in the form of washing machines and dryers. From a perspective, you can sell "wash cycles" or "energy usage per wash" depending on the model preferred by the property owner.
- "Mobility Business" (parking, rental cars, and charging infrastructure) is a business where property owners purchase electric energy, operational services (security, etc.), and acquire real capital in the form of chargers, land, and cars.
Why not take the next step, the business opportunity of energy resale? As property owners have more tools to both produce and store energy, they should take control of the entire energy business and resell it to users, whether it's electricity, heat, or cooling.
Whether you are active in the energy business or not, as a property owner, you will need to invest in infrastructure to measure more frequently and automate analysis and reporting to both tenants and additional users within the organization due to new sustainability reporting requirements.
Measuring allows you to know your costs in the business today and, in addition, add the investment in measurement technology and operating costs for it, is a prerequisite for assessing whether the entire energy business is economically viable. For example, you need to know the cost of a laundry room and more precisely, what does a wash cost on average today? If I sell hot water per liter, I want to have as few losses as possible. If I sell energy as a raw material for heating and do not see it as a climate business where you sell climate, there is no incentive to reduce energy.
The risk is that as a property owner, you cannot distribute all your costs if you do not take control of the various businesses. For example, when energy tariffs change and the parking operator is responsible for electric vehicle charging with a significant impact on power profiles and, therefore, costs.
The advantages property owners gain is that costs are shifted to the user, which strengthens incentives for energy savings. Property owners become both network owners and energy suppliers in their properties, which can lead to better electricity trading agreements. It also becomes easier to prioritize measures and investments.
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