Energy transition in the office

As interest in alternative energy sources continues to ramp up, is the switch to renewables in the office market proving a success? This article looks at progress in the sector and the pitfalls of going clean and green. By Isobel Lee

When consulting, planning and management firm Drees & Sommer (D&S) decided to build its new headquarters in Stuttgart, it knew it needed to do something very different. “To build your own building is more difficult than somebody else’s,” notes Drees & Sommer’s CEO, Steffen Szeidl. “I have about four thousand colleagues here who have ideas for even better buildings.” However, one thing was clear. The office needed to be outstanding from a sustainability perspective, and to do that, it needed to generate its own energy and seek to be operationally carbon net zero. The firm created a digital twin through building information modelling (BIM) to trial the best route to achieve this, before opting for significant prefabrication in construction. 

The resulting building at Obere Waldplätze, dubbed OWP12, is powered by geothermal and solar energy, with photovoltaic panels on the roof and even in the glass of its façades. The roof generates 67 percent of total energy production, while the south and west façades contribute 24 percent. The total output of the photovoltaic system is 243 kWp and its expense should be paid off in a decade or so. The building has no C02 emissions when in operation, and its various parts have been designed according to a cradle-to-cradle principle, which scrutinises how they can be recycled at end of life. 

For consultant Drees, the building acts as a business card. The firm says that the innovations found within its head office have already translated into around 60 new projects for interested clients, and that the building itself has been designed to be “flexible and adjustable”, with a view to incorporating further technologies over time. 

Green and digital: Drees & Sommer built a flagship office for its own use. The new headquarters building in Stuttgart’s Vaihingen district meets the latest standards for environmental friendliness, sustainability and digitalisation. Deploying a variety of energy solutions allows the building to generate more energy overall than it consumes in normal operation.
Drees & Sommer/Jürgen Pollak

Prototypes make the challenges in the office sector visible

Yet despite the increased pressures on the real estate industry to improve the operational profile of buildings, projects as far reaching as OWP12 are still few and far between. Focus on the topic arguably accelerated during the pandemic, culminating in high profile debate at COP26 at the end of 2021, while war in Ukraine has added a new urgency to the energy transition aspect and the question of how power is sourced. 

But as Peter Epping, global ESG head at Hines notes, offices are amongst the hardest assets to design and run on alternative energy sources. “We are already implementing onsite renewables at many sites, especially on logistics properties,” he notes. “Office buildings are trickier as you don’t have the same space for onsite generation, so we’re looking to governments and utility players to provide green electricity. We are also subscribing to green electricity in a wholesale form, and using offsite renewables where possible – this will increase going forward.”

A key issue faced by office landlords is the patchy supply of renewable energy. Notes Elena Winter, a member of the sustainability team at Union Investment: “It’s not much of a challenge to convert a property’s electricity to green power. The challenge is more for the energy sector to provide renewable energy exactly when it is needed and in the right amount. Solar and wind are much less predictable than coal-fired power plants. Storage is therefore an important issue.”

European objectives and measures fall short

According to a new report from low-carbon research specialist BloombergNEF (BNEF), the cost to the continent of switching to clean energy by 2050 could be in the order of $5.3 trillion. The unit’s European Energy Transition Outlook 2022 models two clean energy pathways out of Europe’s current energy crisis, the first of which seeks to slash coal use and increase the adoption of electric vehicles to cut the use of fossil fuels by almost a third by 2050. A more extreme pathway to eliminate fossil fuel use by 2050 pivots around the switch to electrification and green hydrogen, with wind and solar as Europe’s main energy sources. However, the European Commission’s REPowerEU plan – unveiled in May – only includes a raft of incentives for renewable energy generation while remaining reliant on fossil fuel imports from third countries. The renewable energy target for the EU for 2030 currently stands at a minimum of 32 percent, with a clause for a possible upwards revision by 2023, which doesn’t necessarily go far enough to give the real estate industry the support it needs to make the switch. Meanwhile, the EU Taxonomy is still wrestling with its definition of renewable energy sources. 

The energy sector must provide renewable energy exactly when it is needed and in the right amount.
Elena Winter Member of the sustainability team at Union Investment

One proactive industry response is to reduce the amount of electricity required by buildings, in order to improve the overall energy equation. Adds Winter: “A reduction in electricity demand is absolutely necessary, since not all energy demand can be covered by electricity and demand will increase anyway due to electric cars, heat pumps and digitalisation, etc. There is also a regulatory component in many states which requires this. Heating is much more difficult even though there are definitely technological advances in heat pumps that allow economical installation even in very large or not particularly well insulated existing buildings. District heating is also a possible solution for the future.”

Greater energy efficiency through real time data

Private investment holding company MiddleCap is one firm focusing on innovative solutions across its office portfolio to ensure that they consume as little energy as possible. Tomáš Jurdák, partner and Head of Real Estate, says: “On the way to decarbonising buildings and making them as energy efficient and sustainable as possible, it is important to consider every energy source. But there are also ways to lower the carbon footprint by using innovative technologies and considering façade design. 

“Facades should shield from excessive heat, but they can also generate solar power. Hot water can be pre-heated by the sun and by soil to use less energy and keep buildings temperate. Natural air ventilation not only brings fresh air into the space but can cut energy costs by utilising mechanical solutions only when needed, and there are many more options.”

The firm’s Southworks office scheme, which completed in June 2021, is a technology-led property that achieved BREEAM Outstanding, putting it in the top 1 percent of sustainable office buildings in Europe, according to BREEAM.

The office responds to real time data to achieve greater energy efficiency and dramatically decrease the operational carbon of the building. Jurdák adds: “Existing building materials were recycled and used in the new structure, whilst the main roof level hosts a bio-solar roof providing a source of renewable energy and adding to the ecological value of the building.”

There are ways to lower the carbon footprint by using innovative technologies.
Tomáš Jurdák Partner and Head of Real Estate, MiddleCap

Increasing occupier demand is boosting green leases

The final piece of the puzzle in the renewable energy race is the increasing pressure from occupiers for greener offices. This trend is being formalised today through the use of green leases, resulting for example in agreements between landlords and tenants about sourcing energy from renewables, reducing carbon emissions from building operations and decreasing waste and water use.

Globally, some 34 percent of occupiers already have green lease clauses, while a further 40 percent plan to sign them by 2025, according to JLL’s Decarbonising the Built Environment report.

Investors, too, are taking action, with 42 percent now having green lease clauses in place and an additional 37 percent looking to adopt them by 2025. Still, until the market defines them in a standardised way, some critics regard them as something of a blunt instrument. 

In conclusion, there are already many good solutions to make operation of the existing building stock more sustainable, but we must not neglect emissions from the construction of buildings, as these cannot be neutralised through operation alone over the lifetime of the building. The most sustainable building is still one that is not newly constructed and is operated efficiently.

By Isobel Lee

Title image: Drees & Sommer/Jürgen Pollak

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