C&I property owners: Avoid being left in the shadow of the energy market transition

Are you a commercial & industrial (C&I) property owner wondering how you can embrace the energy transition, rather than be left behind?

‘Australians are installing renewable generation at twice the rate per capita of its nearest rival, Germany…90% of all investment in Australian generation since 2012 was in wind and solar’
- Daniel Westerman, Chief Executive Officer, AEMO at a speech to the Committee for the Economic Development of Australia in July 2021
The energy transition is here - and accelerating
Nearly 3m Australian households have taken the choice to embrace renewable energy by installing solar on their rooftops. Despite a pandemic that led to major lockdowns, 2020/21 was a record year for PV installations in Australia.*
11.4 GW of rooftop solar installed in the NEM with a 30% increase from the previous year- Utility scale solar installed in the National Electricity Market, AEMO.
Potential for solar generation in the C&I property sector**
Large C&I property owners in the National Electricity Market (NEM) have the same choice: invest in energy supply on their rooftops; or purchase from the electricity market. This choice is greatest for C&I owners with significant land holdings and roof space.
If you own large C & I sites they are likely to be the prime, high street of ‘electricity grid real estate’ with ‘blue chip’ property features that include: a good existing connection to the electricity grid; large roof area for solar generation; unused space to install storage; and site operating hours that better match sunshine hours.
Regulatory changes are creating a generational ‘why now’ opportunity for the C&I sector to participate meaningfully in the energy market:
  • C & I customers will have greater access to additional revenue from exporting energy, and potentially be remunerated for providing energy market services***
  • The distribution companies that own the poles and wires have an obligation to provide export services to owners of on-site generation
  • The distribution companies need to consider non-capital expenditure solutions to managing two-way flows of energy on their network which may lead to rewards for the owners of solar and batteries who help meet network needs.
The redesign of our electricity market is moving us to a two-sided market and C&I owners can be the ‘uber drivers’ who supply electricity supply needs where, when and how it’s needed.
With transport sure to move from liquid fuel to electricity, the demand on the grid will grow exponentially and every C&I site will need to become a local, green ‘petrol station’. Tenants will expect no less.
More than 26 gigawatts (GW) of new Variable Renewable Energy is needed to replace coal-fired generation, with 63 per cent of coal-fired generation set to retire.
6-19 GW of new dispatchable resources are needed to back up renewables, in the form of utility-scale pumped hydro, fast responding gas-fired generation, battery storage, demand response and aggregated Distributed Energy Resources participating as virtual power plants.
- AEMO’s 20-year development plan for the National Electricity Market, media release here.

In this new energy market frontier, C&I owners have an advantage over large wind and solar plants. Solar and wind farms need significant investment in new transmission lines to send the energy to where it’s needed. If you own significant C&I assets, you are able to generate energy where it is used and your sites are already connected to the grid. You can combine on-site use of on-site generation, and export. You can develop a renewable energy business attached to your property holdings.

However, the energy market is complex and to get started requires significant upfront CapEx and then long term energy market exposure. This is not a C&I property owner’s core business and the CapEx is often better spent on property expansion.

This is where new energy market players such as CEP.Energy come in.

CEP.Energy helps C & I portfolio owners participate in this energy market opportunity while servicing the on-site energy needs of their tenants.
With long term rooftop and ground leases, CEP delivers new rental income streams, an end to end renewable energy solution and takes the development, cost and energy market risk out of owners’ hands.

The owners of Narellan Town Centre, Australia’s largest privately held shopping centre in Sydney’s south west, have enjoyed the benefits of this unique, innovative model.
Under a 30 year rooftop and ground lease and embedded network partnership , CEP is developing 10,000kW of solar and 20,000kW of battery storage, and supplying locally generated renewable energy to the centre and its 220+ tenants, while participating in supplying the local network, click here to read more.

As the Head Developer, CEP works with its top tier national delivery partners, Enerven and Energy Intelligence to deliver the outcomes to the centre and its tenants over a 30 year period, and the owners simply count the benefits from day 1, without the upfront cost and risk.
In this future, disaggregated energy market, C&I property owners have existing assets to lease to CEP to expand revenue streams and meet the expectations of their tenants. Every day waiting is to forgo rental yield and hold your tenants back from meeting their sustainability goals and contribute to the national task of reducing carbon emissions.

To understand more about the opportunity visit CEP.Energy and follow us on LinkedIn.
Cameron O’Reilly,
Senior Adviser to CEP.Energy and Associate Director, Marsden Jacob Associates.
Marsden Jacob Associates are leading economics, public policy and strategy advisers.
This is the first of a series of thought leadership articles CEP.Energy will be sharing.
You can access our articles here

* Clean Energy Regulator data.
**A study undertaken for the Property Council and the Clean Energy Finance Corporation
***Australian Energy Markets Commission (AEMC),