ENERGY FINANCE


ENERGY AS PROPERTY


Energy investments are very similar to property investments. The whole business model of renewable energy is almost the same as that of property. Only energy has two major upsides extra. A building is just a bunch of bills without good tenants. Good tenants makes good real estate. Bad (or no) tenants makes bad real estate. Good tenants insures future rent income. Future rent income justifies real estate investments and thereby real estate finance. Energy harvesting investments are like real estate investment, only better. Real estate investments are not mobile, the result of energy harvesting investments (energy) is. Real estate investments are very vulnerable for economic 'weather', fuel-less energy investments not: there will always be energy demand (local, regional, national, continental) and operating renewable energy harvesting facilities doesn't require fuel, so has very low operational costs, so has a huge spread between direct operational costs and direct operational output. The whole capital flow that was going into real estate will be diverted to energy investment, just by the lower risk profile of energy investments. The facility can be used as collateral, the output can be seized by default, there are almost no operation costs, the financier can share in the energy price rises (Energy as ROI), the output can be transported and there will always be a demand for it (as almost any nation has an energy deficit). The markets of commercial property are under heavy pressure as the global economy is redistributed from the West to the East and real estate can follow this production/wealth redistribution. Production goes East. The west is becoming to expensive. Globalization is just global wealth distribution by the market (instead of by socialism). The West has to adjust to lower prosperity levels and that will not be a nice process. Office demand is declining steady in the West as production goes East, but also because the office demand per employee is declining (due to more administrative mobile/home production due to information digitalization. The office market will implode is the XML based office IT model is implemented, which will end the whole old model of information streams in offices. Before the XML model IT is basically used to process old information streams, XML based information streams will reduce the human production facet on offices. Administrative control work will replace administrative production work. The sky above commercial real estate market is autumn dark. The sky above the 'Energy as Property' market is glooming and will be wide open and full of summer sunshine. Energy as Property is a concept capable of generating a massive energy transition investment wave.


Author: Gijs Graafland


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