March 13, 2019

CATALYZING THE FUTURE OF ENERGY

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As a country, we are in the process of a transition from a model for electric power infrastructure that has existed since the days of Thomas Edison.  Like the shift in mainframe computing to a distributed one with devices everywhere, we are going through a massive shift in electricity from central generation where utilities own assets (both old and new) to a new distributed one that is privately owned with renewable energy and storage located on the sites that serve commercial load.  In this new electricity model, the owners – not necessarily the utilities – get the profits and the benefits of these assets.

Grid Modernization with Distributed Generation (courtesy Hawaii State Energy Office)

With this shift in ownership from utility to privately owned energy infrastructure, new business models for electricity are emerging where many of the largest property owners can create a true new distributed electrical model and grid.  Collectively, this new smart energy infrastructure delivers

We have already seen large commercial energy users shift to direct power purchase agreements for low cost wholesale renewables, but that is based largely on the old central generation model.  We have increasingly seen the use of warehouse, industrial property, and large retail rooftops being used for local generation.  But the game is changing rapidly with increased use of distributed generation and low cost storage.  In some markets and in specific locations, we are already seeing the economics shift to self generation.  Because these are recent changes, many commercial properties owners either don’t know that the economics of solar and storage have shifted in their favor or they do not have the appropriate incentives to make the change.  Eventually the pricing in all markets will shift as will the rules allowing – if not encouraging – self generation and point-to-point electricity sales.  

What is in the gap for many commercial property owners is knowing when and how to move from the old utility model to a self-generation model.  This is where Catalyze steps in as a partner.  Catalyze is monitoring these economics and helping commercial real estate operations know when to invest into this new model for individual properties, to portfolios, to new property acquisitions, and developments.  In total, Commercial Real Estate is on the front end of a huge shift where they can increase the value of their properties, increase tenant value, resiliency, and profits when it becomes part of the new energy infrastructure.  Yes, this is a huge opportunity and excruciatingly complicated.  That is why commercial real estate will need strong partners that can manage these decisions and assets over their life cycles, can continue to deliver value as an energy service partner, and can finance these ahead of them financing these assets themselves.