When you think about fast-growing energy companies or electricity providers, Frasers Property Australia probably isn’t the first name that comes to mind.
However, over the past five years, the green building developer has leveraged solar panels and embedded networks across its growing property portfolio to rapidly scale its wholly-owned energy retailing business, Real Utilities.
The rapid growth of Frasers’ energy business raises a very interesting and potentially lucrative proposition for developers, investors and banks alike: will green building owners and developers replace big oil and coal as the leading energy providers in a carbon constrained world?
To date, the company has signed up 1800 customers across 15 commercial, industrial and residential sites to its carbon neutral power offering. Across its sites, it currently has a total of around seven megawatts of solar and one megawatt hour of battery storage.
Off the back of Frasers’ strong development pipeline, Real Utilities general manager Paolo Bevilacqua predicts the business could triple or quadruple in size over the next three to four years.
The growing list of clients now includes Mazda Australia. Real Utilities is providing green power to the auto giant’s new state-of-the-art national parts distribution centre at Fraser’s 4Ten industrial development, which is in the outer northern Melbourne suburb of Epping.
Real Utilities supplies Mazda with all the power it uses at the 37,235 square metre facility. This energy is sourced through a large 900kW PV array on its rooftop, backed up by grid power offset by certified carbon offsets and certified renewable energy certificates.
The big value proposition for industrial customers, such as Mazda, is they get “green power for the price of brown”, while delivering on their own net zero commitments.
Meanwhile, small residential and small businesses get 100 per cent carbon neutral electricity for a price that’s benchmarked to be lower than the cost of conventional brown power from the big three electricity retailers.
Green buildings spur the growth of a new branch
Frasers originally launched Real Utilities off the back of work it had done on sustainable development projects such as Central Park and Fairwater in Sydney.
Mr Bevilacqua told The Fifth Estate that launching a utilities company “gave us structure around how we ran that business, and also ensured customers had the right protections and felt comfortable that we were able to provide them with the full service that they would get from any other established energy retailer”.
The Real Utilities offering was subsequently rolled out to office towers and retailers—including small businesses and major nationwide chains—at Frasers’ shopping centre developments. These centres included Brickworks at Burwood in Melbourne’s eastern suburbs, and Eastern Creek Quarter in the western Sydney suburb of Blacktown.
To date, nine retail tenants at the upcoming second stage of Frasers’ Eastern Creek Quarter development, which is set to be launched mid-year, have already signed up to Real Utilities.
More recently, Real Utilities has begun offering 100 per cent carbon neutral power to Frasers’ industrial customers through large scale solar, optionally backed up by batteries and biodiesel generation.
A more reliable option – because the grid doesn’t always work
While the fossil fuel lobby likes to question the reliability of renewables because “the sun doesn’t always shine and the wind doesn’t always blow”, it’s ironic that one of the biggest benefits of carbon-neutral power for businesses is actually more resilient.
In the real world, it turns out the grid doesn’t always work – especially in bad weather. Solar power, backed with battery storage and biodiesel, can keep businesses operating during grid outages.
“Late last year when Melbourne had a significant storm event, one of Frasers’ industrial estates went into a grid outage. That facility’s solar battery biodiesel solution meant that it was able to get going again and operate, while the grid outage was in place for a few hours,” Mr Bevilacqua said.
“Resilient energy offerings are increasingly becoming important for these customers because what they’re doing in the facilities is becoming more sophisticated, and they’re also aware of the increasing nature of grid outages or adverse weather events that could impact their operations.”
Through Real Utilities, businesses don’t have to fork out the upfront capital costs for solar cells, batteries and biodiesel generators – they’re all included in their power bill. So are maintenance bills and any risks around system performance.
“It’s not like we’re adding the cost through their power bill. The rate they’re paying for power is still for large business customers equal to the best rate they could have got in the market for conventional brown power.”
Unique challenges on big industrial sites
One of the biggest challenges that come with installing large-scale solar at an industrial site comes from getting approval to connect it to the grid.
That creates some risk for Frasers and Real utilities, because structural decisions around whether to build a roof that supports a large solar array needs to be made early in the design process.
“Originally, we only had given approval for a 30 kilowatt system because there were constraints in that network, and the network was not going to be upgraded for two years after completion. At that point, when it was upgraded, we could increase the size of the system,” Mr Bevilacqua said.
“We had to make the call on whether to upgrade the full roof, even though we can only put in 30 kilowatts, pay the additional costs and take the risk and we’ll be able to get the balance installed later. “
According to Mr Bevilacqua, the keys to comforting grid operators about industrial-scale solar arrays are early engagement and including battery storage in projects. However, recouping the costs of batteries by selling energy back into the grid can be challenging, unless you have enough scale.
“You need to have a bit of an aggregated amount of dispatchable load to secure some of the frequency control ancillary service market. So that’s been a bit of a challenge in pilot projects.”
So are green building owners the energy giants of tomorrow?
Selling energy to building occupants is a hidden opportunity for green building owners and managers. But Mr Bevilacqua adds that the venture also benefits Frasers by helping it to meet its own net zero targets.
“I’d almost question how some of the commitments around zero carbon can genuinely be achieved without having a look at a different model around energy by developers and major landlords,” Mr Bevilacqua said.
“We all recognise that the majority of our carbon footprint is scope three carbon emissions, carbon used by our customers in the buildings once they are operating.”
Looking to the future, Mr Bevilacqua is interested in tapping into growth opportunities beyond Frasers’ own existing development pipeline.
“Whether that’s through very select strategic partnerships with other developers, or even looking at how we can further increase the uptake of solar and batteries on those industrial sites we already have planned,” Mr Bevilacqua said.
“The future is about just continuing to learn by doing and testing the opportunities and getting customer feedback and growing the business to deliver some of these benefits on a cheaper pathway to zero carbon.”