Construction sector under pressure.

Like property owners, building and construction companies too face big risks from the gas price surge. The sector finds itself in a profitless boom, with big issues around skills and supply chain shortages.

Rising energy costs and energy shortages are yet another supply chain that builders just don’t need at the moment.

Francesca Muskovic, national policy manager for sustainability and regulatory affairs at the Property Council of Australia told The Fifth Estate there are complex challenges for the sector.

“We’ve got challenges across a range of areas. We’re not just talking about the availability of things like heat pumps, to electrify our building stock. There’s well publicised shortages of other building materials. There aren’t easy quick fixes to that.

“What governments can, and should, be doing now is investing in the skills and training of the workforce that is going to be needed to deliver this transition over time. 

“There is a jobs opportunity in all of this that governments have been a bit slow to seize on. We’re talking about skilling up our existing trades, our electricians, our plumbers and the like to deliver all electric homes. And even in the commercial space, we need to be talking to our engineers and architects about where things need to go.” 

One of the challenges that a lot of Ms Muskovic’s members are coming across now is that clients want to go all electric but there is an existing culture or default to continue to specify gas “because that’s sort of the easy known option. 

“We really need to turn that paradigm on its head,” she said.

Renewables and on-site solar behind the meter

While the energy crisis poses some risks, it has also created opportunities for some developers, such as Frasers Property Australia, that offer renewables behind the meter through its wholly-owned subsidiary, Real Utilities.

“It’s increasingly seen as an advantage and a point of differentiation in the market when you can go out with a product to say this home is not only more efficient and comfortable and healthier to live in, it’s going to cost you a lot less to run in the first place,” Ms Muskovic said.

Earlier this year, Frasers Property Industrial and TMX announced Zenexus, one of Australia’s largest privately-owned suppliers of major brand storage, hardware and retail products, had signed a seven-year lease for a new 15,000 square metre combined head office and state distribution centre at Rubix Connect, in Melbourne’s Dandenong South.

In recent weeks, Zenexus partnered with Frasers’ Real Utilities subsidiary to install, own and manage an integrated solar, battery storage and biodiesel generator local energy network to provide 100 per cent Climate Active-certified carbon neutral energy to the facility.

“We think there’s a really strong offering for our own customers of our property product to add on this energy product, so it’s creating a bit of a point of difference. It’s not to say that we wouldn’t partner externally, it’s just not something we’re actively pursuing at the moment,” Fraser’s general manager of Real Utilities, Paolo Bevilacqua told The Fifth Estate.

“We still feel there’s a bit more growth within our internal pipeline for Real Utilities, within the product typologies that we are servicing here. House and land type projects is one example.”

“We’re well positioned. Our sites have got, in almost all cases, on site generation behind the meter, and that obviously shields us a bit from those impacts on buying from the grid. But we’re not self-generating 100 per cent on site, so the impact [of higher energy prices] will still flow through to us.”

The industry’s policy response 

Last week, a broad coalition of 29 peak business and community groups called on governments to boost energy efficiency, transition to clean energy and support the vulnerable in response to the gas crisis.

The long list of groups (included below) range from the National Farmers’ Federation, Ai Group and the Property Council through to the Australian Council of Social Service, Green Building Council of Australia and the Clean Energy Council.

“Who would have thought that heat pumps would be on the front line of the energy crisis and energy security? We’re enormously focused on highly efficient buildings powered by renewables as we transition through this crisis,” Green Building Council of Australia chief executive Davina Rooney told The Fifth Estate

“We’re obviously going to have to work on a variation of short term and long term needs while we work through this crisis in a staged way. As the [energy] ministers meeting said, there is no silver bullet to this crisis, but it’s going to be a series of staged solutions over time. And as always, we’d like to see energy efficiency used as a first fuel, particularly in a crisis.”

With the challenges and long-term opportunities open to the built environment sector, it’s important for governments at all levels to show leadership around issues such as building electrification and renewables. 

“That transition is not going to be made easier if we don’t have the federal government, state and territory governments, and local councils working together on this. They all have really important and distinct levers to pull and there is some urgency around this. We need to reduce emissions rapidly in this decade,” Ms Muskovic said.

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