With the rising energy and material prices together with political risks looming in the background, the future of the Nordic and Baltic real estate market can be described as volatile at best. The Nordic Real Estate Forum 2022, held in Tallinn on March 31st, analyzed the opportunities and challenges the sector is facing.
Our Fusebox team was represented by our Strategic Partnership Manager Aleksandr Sepp and Kristian Lahtinen, the Country Manager for Finland. This is their take on the future of the real estate sector.
Strategic Partnership Manager
Every penny matters
For me, the Real Estate Forum gave a good overview of the problems and opportunities the sector is currently facing. It was good to see that not all the topics were negative. The real estate sector is steadily moving towards a greener future with examples like the LEED certificate paving the way for smarter, highly efficient, and cost-saving buildings.
On the negative side, what all the keynote speakers agreed on was that the prices of both energy and construction materials are going to keep rising in the foreseeable future. Not only that but the Governor of Eesti Pank, the central bank of Estonia, noted that by the end of the year we would be looking at double-digit interest and inflation numbers.
All this combined has made a lot of real estate developers cautious about the future. Talking to different company owners and listening to the speakers it is evident that the time to act is now. Whatever turn the market takes, the main idea is to look through all the expenses your company has and find ways to reduce them.
Energy consumption is the largest expense
For most commercial buildings, the best place to start cutting expenses is their energy consumption. For example, a typical office building’s HVAC system (Heating Ventilation, and Air Conditioning) accounts for approximately 40% of total building energy consumption and 70% of base building energy consumption. Naturally the bigger the building or the energy price, the larger the expense.
What a lot of building owners do not know yet is that this cost can be reduced by about 10% by connecting the building automation system to the Fusebox platform. The smart system will then automatically balance the HVAC system’s energy use according to electricity prices and the general demand for electricity in the grid. This lets the building participate in the energy balancing market, generating actual revenue for the building owner.
How to make actual money from lowering your consumption
Let us look at an example of a typical office building that is using our smart system. With 7000 m2 of space, the building uses about 1.7 MWh of electricity a month only for its HVAC system. Thanks to using Fusebox’s smart controller, the building can save up to 8 tons of CO2 by simply regulating its electrical heating and air conditioning.
In our example, the building would also be able to participate in the electricity balancing market, letting it generate revenue for its owner. Taking into consideration the amount of MWh that can be regulated each month, then the building would generate about 3000€ for the owner each year, just for participating in demand response.
From the example, you can see that in fact, it is possible to save on energy consumption and on CO2 while at the same time making money on a regular basis. It is not hard or even expensive to upgrade your building to use Fusebox’s smart metering and it takes minimum involvement from the building owner. The investment pays off in less than 2 years, which is amazingly fast when compared to for example the 15 years for solar panels.
As you can see, there are quite a few options to tackle the rising costs and energy prices and even make some money off it. The main problem is (which I also noticed at the Forum), that almost no one knows about these possibilities, be it the demand response or smart energy consumption. If you want to know more, then give me a call at +372 534 40574 or send me an email at email@example.com and I am more than happy to consult on this.