Real asset investors were already placing their bets on renewable energy before recent global energy price hikes, with wind farms and solar energy among chief strategies. But experts say the war in Ukraine has placed an extra incentive to speed up investing.
Carsten Bartholl, a Hamburg-based lawyer at Taylor Wessing, says his clients have been active in renewable energy production, mostly wind and solar PV systems, and are ‘already convinced of the necessity of renewable energy production’ in the future.
And while he has not seen any direct effect yet from the Ukraine war upon real estate or asset strategies, Bartholl believes demand for renewables will accelerate. Indeed, he has already seen increasing interest to invest in this already competitive market. ‘This will further accelerate as a result of the current crisis,’ he says.
Once the current crisis is over, he also believes legislative changes will help push more modern renewable energy solutions onto the typical real estate developer.
‘I believe we will see more legislative initiatives like we have already seen in Germany where we have obligatory solar PVs on rooftops of new buildings. I expect to see everything that helps to become more independent – and once the crisis is over – carbon-neutral to become more important for real estate developers.’
The agent view
Two years ago, JLL produced a paper entitled: ‘Why renewable energy is fuelling investor interest’. It said at the time that for investors more used to city centre office blocks, offshore wind farms may be unfamiliar territory, but the world of sustainable infrastructure had big potential.
Responding to recent events, JLL told PropertyEU that the expectation of further sanctions on Russia had already pushed up energy prices, and that the Ukraine war had both indirect and direct impacts upon real estate and real assets investors.
Said JLL: ‘Higher input costs are affecting production viability in some industries, and shortages of primary and secondary goods are likely to emerge or worsen. Market hesitancy will also undoubtedly lengthen decision-making but this will vary by region and proximity to the conflict.’
It added: ‘There is live debate about what impact the current energy price crisis will have on renewable energy strategies.’
‘Several factors point favourably toward a faster move to renewables: the EU, US and UK have announced plans to cut dependency on Russian oil and gas over the next year. Also, high petro-energy prices reduce or eliminate the cost premium renewables normally have over conventional energy sources. Meanwhile, energy security concerns will accelerate the push to greater self-sufficiency.’
‘On the other hand, change will take time, the funds for the required investment may not be available due to higher operating costs and lower profits, and company focus may be on survival first.’
