Next to Düsseldorf airport, a piece of the climate-friendly future is currently taking shape. The EUREF-Campus Düsseldorf is being constructed in two phases on a 105,000-square-metre site, with completion scheduled for 2025. Here, startups, scientific institutions and tech companies will be able to test concepts for transforming energy and mobility systems in a living lab. What makes this development particularly special is that the campus will meet its own energy needs through solar panels on roofs and façades, state-of-the-art energy storage systems, hybrid coolers and heat pumps in the buildings. Water from the neighbouring Lichtenbroich quarry pond will provide an innovative method of temperature regulation. When it goes into operation, the EUREF-Campus will make an immediate contribution towards achieving Germany’s climate targets for 2045. A sustainable ensemble that is fully aligned with the energy transition, business parks that generate their own power from biofuels, energy neutral buildings that use only as much energy as the PV system on the roof generates – future energy production is all about decentralisation. The EU is working on a buildings directive which stipulates that new builds must be zero-emission as of 2030. This means they must consume little energy and be powered by renewables as far as possible.
The German government wants all real estate classes to commit to climate action plans. It has also introduced a new law that gives open-ended real estate funds a greater role in the energy transformation. In addition, more and more federal states are planning to make the installation of solar panels on buildings mandatory, or have already done so. The war in Ukraine has also prompted landlords and tenants to call for greater self-sufficiency in the energy sector.
Given these factors and with a view to the future viability and value of their buildings, investors, operators and project developers will have to carefully select, plan and refurbish their properties in the future – and thus automatically contribute towards decentralised energy provision. This opens up a host of possibilities around the self-generation of energy, from companies supplying their own tenants or other companies to installing charging points and feeding energy into the mains grid. But a number of obstacles must be overcome. “For us, cooperation with EUREF AG on the campus in Düsseldorf is primarily about meeting our sustainability targets,” says Patrick Brinker, Head of Real Estate Investment Management at Hauck Aufhäuser Lampe. While his team takes care of structuring, financing, marketing and future management of the EUREF-Campus, municipal utility company Stadtwerke Düsseldorf controls the electricity and energy supply and can increase or reduce power to the campus depending on energy system requirements. “But we don’t actually earn anything from generating electricity,” says Brinker.
That is still the case for many investors, but why? While small amounts of solar energy generated on balconies or rooftops of houses are tax free for private individuals, anyone who generates so much electricity that they can sell it to tenants or third parties has to pay trade tax on the income.
Tax limits hamper decentralised energy production
Up to now, there have been strict limits on active management under investment tax law. Properties owned by a special investment fund with tax privileges are only allowed to generate commercial income of up to 9.9 percent of their total income through electricity generation from renewable energy sources. If their commercial income exceeds this limit, the fund will be dissolved on tax grounds and tax would have to be paid on the gain in value to date – and no one wants that.
But that could soon change. To accelerate the energy transition, the German government has recently agreed the draft version of a Future Financing Act. This will enable open-ended real estate and infrastructure funds to acquire substantial amounts of land without buildings for the sole purpose of gaining or building renewable energy facilities in order to generate energy.
There are two restrictions. Firstly, to ensure the fund retains its character as a real estate asset manager and energy generation does not become the main focus, the space allocated to renewable energy may only comprise a maximum of 15 percent of fund assets. Secondly, it will only be possible to acquire land with a connection to the existing portfolio. Observers warn that the German government will need to amend the Investment Tax Act accordingly if these changes are to have any real effect.
Generating decentralised energy is rife with complexity for property holders in particular. Logistics and commercial property expert Garbe Industrial Real Estate holds properties with roof areas of up to 80,000 square metres. These are areas that do not have to be repurposed or purchased or have their use agreed with neighbours; they are available now for the company to generate its own energy. There’s just one thing: “Local network operators are sometimes not able to take all the power we generate, or could generate, on our roofs,” says Rainer Pillmayer, Managing Director of Garbe Infrastructure, which handles expansion and operation of renewables and the corresponding infrastructure for the company across Europe.
Property operators are often unable to dispose of self-generated electricity
Depending on the region and network operating company, feeding energy into the mains grid has to be arranged individually for each property. In the case of commercial premises away from major cities, there is sometimes a lack of network nodes to handle the electricity or not enough suitable recipients. And while it may typically be easy to swap gravel for solar panels on large low-rise buildings in the logistics sector, the load-bearing capacity of other commercial rooftops can be restricted by air conditioning units or other structures.
To supply power to various different tenants, connections to individual building units also need to be in place. Retroactive installation of a PV system can turn into a major construction project that disrupts tenant operations. And lastly, in densely built-up areas a building may block another building’s sunlight, meaning that solar panels will not work effectively. Even if all the conditions are right, property operators are often unable to dispose of the electricity they have generated. “In many cases, commercial tenants have their own energy plans or long-term contracts with providers and aren’t interested in the electricity that is produced in-house. Operating and consumption times also need to be a good fit with the solar energy output,” explains Pillmayer. Garbe has set up a separate company, Garbe Renewable Energy (GREEN), with the aim of bringing together all activities relating to decentralised energy generation, such as the use, transfer and sale of electricity, and also the maintenance of systems across its huge portfolio.
Roofs let to operators for energy generation
Letting roofs to a building operator or solar installation operator is an alternative that involves less administrative or technical effort. At their peak, the PV systems of several department stores in the Hauck Aufhäuser Lampe portfolio generate around 7,000 to 8,000 kilowatt hours of electricity, enough to supply the buildings and charging stations. “Our strategy makes sense for us because we receive revenue-based rent for the roofs,” says Patrick Brinker. “However, this only works if you have good partners you can rely on.”
By Kathinka Burkhardt