Real Estate Investor Magazine South Africa September 2013 | Page 24

GETTING STARTED

Get outside the box Green On Your And think

BYJOHN ROBERTS

E

xponential electricity price hikes and a growing world view on renewable energy are forcing people to rethink their power supplies. This opens possibilities to seek electricity solutions outside the box - when Eskom is asking for price hikes that will more than double electricity costs over the next five years, why continue using them as a supplier? Globally, the shift to green energy, specifically solar energy, is gaining traction. Photovoltaic (PV) solar panels are attractive and relatively easy to install; can be designed for personal preferences and, once the initial costs have been paid off, provide households with free electricity. Globally solar energy is an appealing renewable energy as it is clean, emission and noisefree, sustainable, safe and cost effective. PV technology converts solar energy to electricity and should not be confused with solar-powered geysers. Whereas solar thermals generate hot water, solar cells generate electricity. Rather the environmentally-friendly technology provides long-term solutions to South Africa’s electricity issues. The modules use sunlightgenerated electricity fed into the national grid when not consumed and drawn down for personal consumption at night. Average households consume around 5KWh of electricity annually and the challenge comes in tackling consumers’ hurdles around the upfront costs. Installing sufficient panels to fully operate a household off solar energy costs about R100000, but it also translates into an investment fixed for 40 years. Eskom’s escalating electricity price hikes potentially “pay off” those initial costs via savings to the monthly electricity bill within eight years at current levels and less as the parastatal successfully lobbies for spiralling increases. Solar geysers are equally as effective in offering homeowners savings to their electricity bills. Geysers account for around 40% of the household electricity bill and, while consumers

are still caught into pay ing the f ixed costs on their utility bills, solar geysers substantially lower the variable costs. The question then facing consumers is can they afford to pay upfront for their electricity consumption and in doing so, both save their pockets in the long - run and contribute towards saving Earth? Less tangible, but no less viable, is the potential that houses and office blocks effectively powered by solar may hold a competitive advantage when that property comes to the market. The fact that the electricity consumption is included in the cost of the home could prove to be that x factor that generates a return on investment substantially higher than the initial cost of the installation - and that is after the owner has benefitted from free electricity once those costs have been recouped via the savings. It is not a far-fetched concept. Properties within gated communities already carry premiums on their selling prices, so the future may well hold the same benefit for solar homes. The reality is that globally buildings are responsible for a third of all carbon emissions and thus represent the lowest hanging fruit in the worldwide fight to reduce those emissions. Studies have presented empirical evidence that high performance - or green buildings be they office or home - can not only be delivered at prices comparable to conventional buildings, but that investments can be recouped through operational cost savings. Consequently, the Green Building Council of South Africa now offers a course demonstrating the financial motivation for

green building techniques. The Economics of Green Building course was developed in response to market trends and industry demands and emphasises the necessity for breaking out of the traditional circle of blame and considering sustainable investment decisions for the short, medium and long - term. In their paper “Why Invest in High-Performance Green Buildings?” Melissa O’Mara and Shan Bates argue that property investors and developers are constantly seeking new strategies to deliver sustainable buildings that attract tenants and buyers, while maximising the green value. Investments in green buildings can produce measurable financial value, such as in creased rental rates and asset value, reduced risk of depreciation and higher tenant attraction and retention rates. On the other hand, tenants want buildings that attract and retain the best talent, foster collaboration and innovation and increase employee productivity and well-being. They also need to reduce their operating costs, energy use and environmental impacts - and these are factors that O’Mara and Bates argue assist organisations to meet their corporate social responsibility goals. Sustainability, green approaches and thinking differently are no longer just the buzzwords flung out by new-age thinkers. They are the elements on which the property world will hinge in the years ahead and getting to grips with the costs and implications now may well pay dividends into the future, as it is always the forerunners who make the profits.

RESOURCES

Just Property Group

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September 2013 SA Real Estate Investor

www.reimag.co.za