Goals are just words if you don’t have a plan

Tuomas Vuorinen and Anton Närekorpi
Grab your keys and open the lock! A thorough portfolio analysis reveals the kind of property potential that investors have not seen before.

International investors and decision makers are setting new goals for carbon neutrality. The pressure is on properties, which are responsible for about 40 per cent of carbon dioxide emissions in Finland.

Many investors have made carbon neutrality the holy grail of their brand goals. Some of them are still figuring out how to reach that goal. The actual plan is still on the drawing board.

There are many questions, and the challenge is considerable. If you have 500 properties in your portfolio, where do you begin the work towards making them energy efficient? What if you have 30 properties? How do you make sure that the work is financially worthwhile?

We have helped companies like Varma, Catella and LähiTapiola put together a profitable carbon neutrality strategy that includes a solid roadmap towards carbon neutrality.

Our portfolio analysis is based on the initial data from our customer’s property portfolio, such as data on energy use and location. Property investors usually have this data at the ready, but it is still not being taken advantage of fully. We enrich the data with ten different data points, for example, data on the price development of energy markets and detailed market prices of energy overhauls. We then add our own experience from hundreds of energy projects into the analysis.

We use the analysis to look for property-specific opportunities to use geothermal energy and solar energy, as well as other opportunities to improve energy efficiency. With energy investments the focus is usually on the difference between technical solutions. In our opinion, it is equally important to identify issues related to energy markets and the location of the properties. Houses, offices, and logistics centres benefit from different types of solutions. It is also a completely different thing to produce geothermal energy in Espoo than, for example, in Oulu.

The results of the portfolio analysis are ready in a few weeks. Local emission coefficients, technical feasibility as well as the property investor’s strategy all affect the outcome of the analysis.

The concrete goal of the analysis is to divide the properties into meaningful investment baskets according to the size and content of the investment portfolio. The baskets show on which properties it is worth carrying out energy efficiency and production improvements, what improvements are sensible and when they should be done. At the same time, the baskets show how much needs to be invested in the properties and what kind of benefits can be expected. It is usually a good idea to start with the most effective and profitable projects and proceed systematically one basket at a time.

For example, Varma’s residential real estate portfolio consisted of 60 properties, which we divided into five different baskets according to the analysis. The energy overhauls carried out on the first basket of 13 properties cut the CO2 emissions of Varma’s entire property portfolio by a fifth. The entire project will move Varma towards its ambitious climate goals.

Our goal is to find the most profitable path to the climate objectives of the property investor. Along that path are concrete improvements that are timed for the coming years. All this is supported by a thorough portfolio analysis and experience from hundreds of energy overhauls.

The customer ends up with an energy efficient portfolio which contains everything for increasing its value. The reduction in carbon emissions ensures that the portfolio attracts capital also in the future.

How do you reply if your financier asks how you are going to reduce the carbon footprint of your properties to zero by 2030? Your answer could be complicated or it could be simple, for example:

We do a portfolio analysis on the entire portfolio to identify the necessary improvements and organise the carbon overhauls in order of priority. Then we make the necessary investments yearly in a controlled manner.

Authors, Tuomas Vuorinen (on the right) and Anton Närekorpi (on the left) are account managers at LeaseGreen who create value for property investors by finding the best energy investments from an extensive portfolio. LeaseGreen is a cleantech services company specialised in the energy efficiency of large properties.

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