Pan-Europe

CBRE Global Investors is one of the world’s leading real asset investment managers with $114.5 billion in AUM.

PROJECT GOAL

CBRE GI wanted to understand how onsite renewable energy generation could help them to achieve their ambitious net-zero carbon commitment. They commissioned Longevity Power to perform a desk-based analysis of the capital costs, financial returns, and CO2 savings associated with a rooftop solar PV rollout across a Pan European portfolio of 83 assets, with a view to developing a strategic roadmap for on-site renewable energy generation.

CHALLENGE

Lack of detailed understanding of country-level solar PV incentives and regulations: The assets were located across Spain, Germany, France, Italy, Belgium and the Netherlands, covering logistics, retail, and office buildings. The large number of assets made it difficult to fairly evaluate the PV opportunities across the entire portfolio and prioritise assets for improvement. This required a deep understanding of the financial incentives, legislative framework, planning and grid requirements, as well as the market factors across each of these jurisdictions. For instance, some locations may be suitable larger PV systems due to high export prices for surplus generation, while other countries may have low export prices or restrictive legislation and complex grid application process that make exports unattractive. These considerations have a direct impact on the size of the optimal PV system, and the revenue model that should be pursued.

Inconsistent and missing asset level consumption data: Furthermore, as many of the assets were not directly managed by the landlord, the analysis of the PV potential was reliant upon tenant-supplied data which is typically of variable quality. The data was often only available on an annual or a monthly basis, while a half-hourly profile is needed for a feasibility analysis.

SOLUTION

Longevity Power leveraged its pan-European network to develop a comprehensive picture of the regulatory situation across each of the six countries: In doing so, we determined both the optimal and the maximum PV system across each of the assets. The optimal scenario looked very different across each country, depending on the incentive structure in place, the degree of landlord control, the current tenant tariff price, as well as the billing and service charge arrangement. In determining the PV system that would yield the optimal financial return, we also determined the potential rent that the landlord would be able to yield from the asset should they wish to pursue an onsite roof rental business model via a third-party power purchase agreement (PPA). This allowed the landlord to quickly compare the potential costs and benefits associated with a landlord-owned and a third-party owned ownership model, and alerted them to the assets that were unlikely to attract third party investment.

Longevity scheduled meetings with local lawyers to determine the business implications of selling electricity to tenants within each country: This was particularly relevant, given the large number of indirectly managed assets within the portfolio. The team had to establish the nature of the fund structure across each of the funds to determine the potential tax implications up the chain.

Longevity Power utilised its comprehensive catalogue of consumption data to establish bespoke load profiles for assets with missing data: The consumption profiles were built based on asset type, size, location, climate, opening hours and type of tenant operation. Establishing an accurate load profile is critical to sizing the PV system correctly, which in turn ensures that the IRR associated with the optimal PV system recommended is as credible as possible.

BENEFITS

Following our analysis, CBRE GI were able to:

• Implement a portfolio-level roadmap for the roll-out of solar PV across the portfolio, prioritising assets with the highest environmental and financial impact;

• Understand the maximum hypothetical onsite generation and associated CO2 abatement across their entire portfolio, feeding this analysis into their broader net-zero carbon forecasting analysis;

• Develop a view on the preferred business model for the implementation of solar PV systems across the portfolio; namely in what instances they should seek to own the PV system themselves, and in what instances a third-party owner-operator should be sought out.

• Establish buy-in throughout the business to prepare for the coordinated roll-out of rooftop solar PV across the entire European portfolio.