Introduction
Due to their vast roof space, Real Estate Investment Trusts (REITs) have incredible untapped potential for solar development. According to a recent report by Morgan Stanley, REITs encompass 38.5 billion square feet of solar-ready rooftops capable of generating about 320 GWdc of clean power—enough to cover 25% of commercial buildings’ electricity needs in the United States.
Industrial REITs have the greatest potential for solar capacity, followed by self-storage and retail REITs, and finally by sectors like retail, single-family rental, healthcare, and multi-family properties. Warehouse, storage, and distribution centers are well-suited for solar energy investment. These properties typically have large rooftops and lower energy consumption per square foot compared to other real estate segments. Industrial REITs can capitalize on solar by selling surplus energy through net metering, community solar programs, EV chargers, or renewable energy certificates (RECs).
Learn more about the benefits of installing solar and battery storage for REITs and how to maximize risk-free returns with an innovative energy-as-a-service (EaaS) model.
Achieve your sustainability goals
REITs are integrating sustainability into their core business and have publicly announced prioritizing environmental sustainability goals like installing renewable energy. Currently, of the 100 largest REITs by market cap, 94% report on portfolio GHG emissions and 78% report on onsite clean energy generation. By utilizing existing infrastructure, such as rooftops, parking lots, and garages, REITs can achieve their environmental, social, and governance (ESG) goals while also saving on utility bills.
REITs are integrating sustainability into their core business and have publicly announced prioritizing environmental sustainability goals like installing renewable energy. Currently, of the 100 largest REITs by market cap, 94% report on portfolio GHG emissions and 78% report on onsite clean energy generation. By utilizing existing infrastructure, such as rooftops, parking lots, and garages, REITs can achieve their environmental, social, and governance (ESG) goals while also saving on utility bills.
Most commercial buildings already have ideal conditions for solar power: large, flat roofs typically free from shade and other obstructions. As many states are starting to phase out natural gas and oil and introducing performance standards for buildings, solar energy presents an excellent solution to electrify buildings, reduce operating expenses, and meet sustainability goals.
Additionally, as the 450,000 warehouses and distribution centers across the U.S. are increasingly relying on automation, robotics, and electric fleets, solar energy can efficiently power these operations. For instance, Amazon’s rooftop panels supply 80% of its energy needs for facilities in the U.S., India, and Europe.
Improve the Net Operating Income (NOI):
Onsite-generated solar energy lowers energy bills, directly reducing operating expenses. These savings boost NOI, as the income generated after expenses is higher. It also helps generate additional revenue streams, as owners can sell the excess solar energy back to the grid through net metering or lease rooftop space for solar panels. In addition, solar with storage installations offers tax credits or depreciation benefits, further improving profitability. Solar installations positively affect NOI, improving the property's financial performance and overall proterty value. This offers a strategic advantage in the competitive real estate market.
Attract tenants and investors with ESG commitments
Decarbonizing and sustainably operating their buildings establishes REITs as responsible and action-oriented environmental leaders. Doing so strengthens their brand reputation and attracts socially conscious investors and tenants, thus increasing asset returns and investor interest. Tenants are often willing to pay higher rents for green, efficient buildings and receive the benefit from lower utility bills, ultimately enhancing tenant retention rates.
Enhance resilience against power outages
REITs can strengthen resilience to have 24x7 power moving to onsite solar and storage. It protects againsts power outages and climate-related events ensuring operational continuity while preserving asset value. This emergency backup generation and storage keeps critical operations running smoothly during a service interruption. It requires less maintenance than traditional diesel generators, leading to minimum revenue loss.
Support EV charging infrastructure
With the rise of electric vehicles, REITs face growing pressure to provide EV charging infrastructure for tenants and fleets. This capability attracts and retains tenants and can be crucial in securing or renewing leases. Solar with battery storage can efficiently power EV charging stations for tenants, customers, employees, fleet-owned company vehicles, and the public. For example, most distribution centers only utilize 10-20% of their roof’s solar potential. This additional revenue stream can help enhance overall financial stability.
Energy as a Service (EaaS): The go-to solar and storage solution for REITs
Clean energy solutions provide Industrial REITs with numerous financial, environmental, operational, and social benefits, paving the way for sustainable growth and long-lasting success. However, despite having billions of square feet of ideal roof space, many REITs and warehouses are hesitant to invest in clean energy due to risk aversion, looking for competitive returns or lack of upfront capital for energy projects.
GreenStruxure®’s groundbreaking Energy-as-a-Service (EaaS) model offers a risk-free way for REITs to transition to clean energy without any upfront costs and have complete visibility on the energy performance and operations with the AI platform BeyondtheGrid®.
Contact us today to explore solar and storage EaaS solutions for your property or portfolio and start enjoying the benefits clean energy offers.