Is energy the new gold in real estate?

Is energy the new gold for real estate companies? In conversations about city logistics real estate development, developers often see charging demand for electric vehicles as a chore. It’s inconvenient, takes a long time, and you don’t have a clue. But the charging infrastructure has to get there. And fortunately, many market players are willing to solve that for you quickly, charging as a service. Sounds easy, but it could end up being very expensive.

The first experiences with zero-emission urban logistics hubs show charging is indeed complicated. One of the first examples was UPS in London, but AholdDelhaize, TSN Groen, Ikea, Deudekom, and others are happy to share their experiences. However, especially if the solar panels on the roof also have to share their energy with (refrigerated) logistics operations and many zero-emission trucks and vans are driving to and from the distribution center, you quickly get stuck. Corvee so? Not at all, I think.

The first experiences also show that electricity can be a solid revenue model in real estate. You can buy energy cheaply with a wholesale tariff, arrange your own energy generation, temporarily store it, and sell it again at a high price; charge what the market can bear. Balancing energy supply locally, storing energy, and delivering energy is a good moneymaker for smart real estate entrepreneurs; smart charging. But, unfortunately, it was a bit like the telecom market 20 years ago; anything but transparent….

Developing a charging infrastructure is not a piece-of-cake. My personal experience in my HOA shows that. What a hassle. With which partners do you do it, who owns the infrastructure, how do you grow along with the power demand, how do you divide the investments, costs, and benefits of the power infrastructure (local generation, storage, and distribution), and how do you set up the smart charging control tower? This requires expertise, entrepreneurship, and no guts, no glory.

An urban logistics hub of any size will soon have 4,000 to 6,000 charging sessions per day for delivery vehicles and passenger cars; that’s a value of 40,000 to 100,000 euros per day. That’s 10 to 25 mln euros per year. So naturally, real estate developers feast on that; what does that do to the value of your business park? No wonder providers are ‘eager’ to jump on the bandwagon; winner takes all.

Power is the new gold with decarbonizing supply chains. If you think of it as a chore, you can paint yourself in a corner. There is a level playing field with a fixed price at the pump with diesel. With electric driving, the kWh price at the charging station is an entirely different playing field. The first step is to do the math yourself. What will soon be the charging profile of your tenants?

Walther Ploos van Amstel.

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