Financing Energy Transition with Real Estate Wealth

Abstract

Transition to a low carbon energy system requires extensive private investment and novel financing instruments. Corporate power purchase agreements (PPAs) have been proven effective in increasing renewables financing. The challenge is to scale this corporate model to smaller energy consumers that form a significant part of the global total energy demand and carbon dioxide emissions. This paper examines collateral strength and global potential of the real estate sector as an offtaker for PPAs. The strength is evaluated by constructing a detailed energy and economic model for 90,000 buildings in the Helsinki Metropolitan Area (HMA), Finland. The global potential is evaluated by creating country-level profiles with global data of interest rates, energy consumption, and energy costs. The results suggest that real estate is a strong offtaker as the HMA’s value of real estate collateral compared to required wind power capital expenditures (that could cover electricity demand of the buildings) is approximately 100:1, and for cash flows, the ratio is 70:1 between gross rents and PPA costs. Analysis of global data suggests that the majority of buildings’ energy consumption in OECD countries as well as a large part of China’s energy consumption could fall into low access finance under the presented concept.

Ukrainian Market of Electrical Energy: Reforming, Financing, Innovative Investment, Efficiency Analysis, and Audit

“…The financing possibilities in the electrical energy market are determined by indicators of the financial state of its entities [43,44]. The capability of simple and extended reproduction characterizes the availability of equity.…”

Financing Risks and Countermeasures in Real Estate Industry

“…There is a large difference in the accumulation of debts among housing enterprises, and there is a huge hidden debts off-balance sheet. Therefore, it is necessary to adhere to a structured and long-term control thought, with the principle of " Housing is for living in, not for speculation" (Vimpari, 2020). With the fundamental orientation of "speculation", conduct a structural grading assessment based on the real debt situation of real estate enterprises, clarify the differences in the degree of risk of real estate enterprises, improve the stable expectations of participants in the real estate industry, and promote the healthy development and virtuous circle of the real estate industry.…”

Identification and Analysis of the Key Factors That Influence Power Purchase Agreements on the Road to Sustainable Energy Development

“…A power purchase agreement (PPA) is a performancebased contract for the purchase and sale of energy between an energy buyer and an energy provider, through which the energy buyer establishes the total amount of energy they want and the price agreed in the contract they will pay [15]. According to Vimpari, [16], in 2019, already 20 GWs from renewable energy source investments were developed based on PPAs signed between private companies. Another aspect to be mentioned is that one of the reasons why the PPA market in Romana is not well developed is because for almost 10 years, these contracts have been banned at the national level.…”