10 / 10 / 23 - 6 minute read
“Here comes the sun” sang George Harrison on The Beatles’s 1969 hit track of the same name. Written by George as spring ushered in warmer, sunnier weather after a typically chilly British winter, the song conveyed his joy at this simple changing of the seasons.
In the post-chorus refrain of “it’s alright”, there’s a sense of reassurance in the song – apt as George wrote the song at a time of personal turmoil, which he’d managed to escape from, both mentally and physically, having transported himself to the country house of his friend, Eric Clapton, to avoid a meeting with The Beatles’s Apple Corps organisation. Here, in the garden, the sight of the sun took his mind off his troubles and inspired a track which would be hailed his best whilst a part of the ‘Fab Four’.
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This mixture of joy and reassurance (not to mention the focal point of the sun) could easily be the response to the news, reported by the Financial Times in May, that solar power investment is to exceed oil for the first time. This was the forecast of International Energy Agency (IEA) Executive Director, Fatih Birol, who was quoted as saying: “If these clean energy investments continue to grow in line with what we have seen in the past few years… we will soon start to see a very different energy system emerging and we can keep the 1.5°C goal alive.”
Of course, the 1.5°C goal he referred to was set as part of the Paris Agreement – a legally binding international treaty on climate change designed to limit the rise in global temperature to this metric. Anything above this temperature rise would lead to even more severe, and potentially catastrophic, climate change impacts than experienced today. Most references to the Paris Agreement suggest the goal is unattainable, so Fatih’s words provide a much needed sense of hope and reassurance that renewable energies can help reverse the world’s climate change fortunes. And solar is leading the charge.
Total spending on solar power in 2023 is forecast to reach $382 billion, exceeding the $371 billion spent on oil production, Fatih says. Ten years ago, $636 billion was spent on oil production and $127 billion on solar power. This current spending on solar is a large part of why $1.7 trillion is forecast to be spent on clean technologies this year compared to the $1 trillion on fossil fuels – a shift from five years ago when the $2 trillion spent on annual energy investment was split evenly between fossil fuels and clean technologies, which include renewable energies, electric cars and low-emission fuels.
Further good news followed in June 2023, with energy think tank, Ember, sharing data that showed that wind and solar produced more electricity for the EU than fossil fuels in May – the first full month this has happened and been recorded. The data showed that solar generated a record 14% of EU electricity in May, hitting an all-time high of 27 terawatt-hours (TWh) and, for the first time, EU solar generation overtook coal generation, with coal generating just 10% of EU electricity in May.
Fatih Birol, International Energy Agency (IEA) Executive Director
Mathieu Elshout, PATRIZIA Head of Sustainability and Impact Investing
As a key driver of the energy transition and pivotal to the world’s challenge to decarbonise, solar offers attractive investment opportunities – something PATRIZIA has identified and acted upon over recent years as part of the second action point of its decarbonisation strategy. “Making buildings more efficient is the first step,” says Mathieu Elshout – PATRIZIA Head of Sustainability and Impact Investing. “Introducing renewables is the second step. Renewable energies are a huge part of the solution.”
Being a real assets player, PATRIZIA’s approach to solar power is two-pronged as Mathieu highlights: “In real estate, it’s solar panels on roofs. The infrastructure angle is different. Renewable energy is a business opportunity in itself in infrastructure.”
The roofs Mathieu refers to are those on logistics assets – a workstream which PATRIZIA Associate Director – Asset Management, Tim Schotte, leads on. “In PATRIZIA’s portfolio alone, we have six million square metres of available logistics roof space,” Tim states. “If fully covered in solar panels, this could power up to 200,000 homes.
“Bringing together our expertise in real assets, we have identified this opportunity and fitted almost 600,000 square metres of solar panels across our logistics portfolio in the Netherlands, the UK, Belgium, Germany and Spain.”
This ‘solarfication’ programme is already generating enough clean energy to power almost 20,000 households, with projects in the Netherlands accounting for the vast majority of roof-mounted solar panels in PATRIZIA’s portfolio.
And it is in the Netherlands that PATRIZIA’s largest example of solarfication can be found at the 210,000 square-metre Maasvlakte logistics development in Rotterdam’s harbour area, where solar developer, Sunrock, has installed a 120,000 square-metre photovoltaic (PV) system on its roof.
One of the largest rooftop solar installations in Europe, Maasvlakte alone has the capacity to meet the annual energy needs of 8,000 homes.
Tim Schotte, PATRIZIA Associate Director - Asset Management
Sunny investments: ‘Solarfication’ boosts the value and benefit of otherwise unused rooftops, as shown here at Maasvlakte.
Partnerships with solar developers have become an innovative way to add value to PATRIZIA’s logistics assets.
“The attraction of our relationship with solar specialists like Sunrock is that they provide the financing and operational expertise to deliver clean energy to local and national grids, as well as the ability to create net-zero carbon operational buildings for both our tenants and investors, which perfectly aligns with the sustainability ambitions of all our stakeholders,” Tim comments.
Luke Le Brun, PATRIZIA Director - Asset Management
Other PATRIZIA examples demonstrate the investment potential of solar energy, such as at Westcott Venture Park – a 650-acre business park in Buckinghamshire, England, owned by PATRIZIA. “At Westcott Venture Park, we are expanding the solar farm to be three or four times larger which will mean it will be powered by renewables, with excess energy available to sell to the grid,” says Luke Le Brun – PATRIZIA Director – Asset Management.
“There’s Venlo too – a logistics asset in the Netherlands,” Tim shares. “We collaborated to install solar panels on its roofs, sharing the cost with the tenant 50/50. They have now committed to a new long-term lease on the property due to this. This demonstrates the benefits of engaging with tenants and embarking on such a project.”
The attraction of solar panels is clear to Hans Insing – PATRIZIA Associate Director – Asset Management and a colleague of Tim’s in the company’s Amsterdam office. “They are relatively cheap and easy to implement,” he explains. “I have solar panels and they pay for themselves over time, particularly with the high energy prices at the moment. They still work 30 years after installing them.”
Overall, PATRIZIA has 500,000 square metres of solar panels on its logistics buildings in the Netherlands - 86% of which in partnership with Sunrock. Plans are well underway with the developer to deliver a further 595,000 square metres of solar panels across PATRIZIA’s logistics roofs in the Netherlands, France and Belgium.
Once complete, PATRIZIA’s logistics portfolio will generate enough clean energy to power up to 37,000 households across Europe, playing a major role in the energy transition.
Hans Insing, PATRIZIA Associate Director - Asset Management
Shawn Lal, PATRIZIA Infrastructure Investment Director
In October 2021, PATRIZIA Infrastructure opened the 25-megawatt (MW) Vopak Solar Park at Eemshaven in the Netherlands – a joint venture with Groningen Seaports - which will deliver enough electricity to power the equivalent of around 8,000 households in the country. Solar is a sector which the infrastructure business will continue to keep an eye on as PATRIZIA Infrastructure Investment Director, Shawn Lal, shares: “We’ve gone from small solar projects to utility-scale projects. Projects have to get bigger and bigger to get to the scale required and the electrification pathway requires significant investment.
“We are observing really interesting innovation in solar panels as they are becoming more efficient. There is constant innovation; for example, reusing waste heat from solar panels. The solar sector is a deep established market which will continue to innovate over time and will incrementally get better over time so we’ll have improved yield and lower electricity loss.”
The trend to solar unsurprisingly hasn’t escaped the attention of investors. Of the 120 investors surveyed in the PATRIZIA Client Survey 2023, released in July, more than 50% said they plan to increase their allocation to renewables and more than 45% plan to increase their allocation towards the energy transformation. When it comes to traditional energy, almost 40% expect to decrease their allocation to this bucket.
The forecast for the planet may be gloomy but, in renewable energy – and solar as the greatest harbinger of change - there may be the wherewithal to ensure the sunny days are here to stay.