More Than Rooftop Solar: The Renewable Energy Stack for Real Estate Investors
By Sarah Adams
Vert Asset Management
Ask an investor about buildings using renewable energy, and more often than not, they will talk about rooftop solar.
On-site renewable energy solutions such as rooftop solar or parking lot solar shades is one way to produce renewable energy, but it is not the only way. And sometimes it is not even the best way.
Real estate owners like to say every property is a snowflake – each has its own physical and economic idiosyncrasies. This is partly why rooftop solar is not for every property. A building’s orientation toward the sun and how much shade it gets are factors. An ageing roof may not be strong enough to support the weight of panels. Roofs are sometimes tenant-controlled or already filled with other equipment. Or the size of the roof may simply not be large enough to justify the cost of installation for the amount of energy produced. The economics of rooftop solar also vary by utility territory, not just by hours of sunshine. Electricity prices, incentives, and export rules are as important as the solar resource itself.
Sophisticated real estate owners don’t look at renewable energy through the singular lens of producing energy on-site. In real estate transactions, there is the capital stack; when it comes to an energy strategy, there is a renewable energy stack.
The Renewable Energy Stack
Stakeholder expectations and lease agreements are not uniform across all property types. For example, owners of student housing properties often procure energy for the entire property and bill tenants based on usage. In office buildings, tenants usually procure their own energy directly from the utility. And for many more property types, including retail, healthcare, and logistics, the operational boundary for owners is just the external structure where the tenant buys energy for their purposes with zero landlord intervention.
Despite the varied nature of property ownership, real estate owners and investors can support the demand of renewable energy in five ways:
1) energy efficiency upgrades 2) utility green tariffs 3) on-site renewable energy production 4) power purchase agreements (PPAs), and 5) Renewable energy certificates.
Each tool offers a different way to manage operating costs, reduce exposure to energy price volatility, respond to tenant demand, and strengthen a property’s resilience and future competitiveness.
Five Ways Real Estate Investors Invest in Renewable Energy
1) Use Less Energy with Energy Efficiency Upgrades – The priority investment that nearly all real estate owners will make is to reduce energy use. This doesn’t mean turning off all the lights and sitting in a dark office. There is a common refrain among real estate owners that “the cheapest energy is the electricity you never need to buy”. What it does mean is to look for investments in energy-efficient upgrades. Today, a frequent example is to replace incandescent and fluorescent lighting with LEDs.
Healthpeak, a US healthcare REIT with outpatient facilities and laboratories, completed 738 lighting and motion-sensor projects in the last 10 years, investing approximately $21 million USD with an average 5.7-year payback. 12
JBG Smith, a diversified US REIT with multifamily, office, and retail, retrofitted the lighting in their garages. These projects replaced 8,500 lamps, reduced energy use by 1,000 MWh, and realized an annual energy cost savings of $100,000.34
Efficiency is fundamental to reducing demand and making every subsequent procurement decision more manageable. A property that uses less power has less electricity to purchase, generate, or offset.
2) Buy Renewable Electricity with Green Tariffs – Some utility providers offer customers a green tariff, which is a choice to source electricity from renewable energy. In regulated electricity markets, property owners generally cannot choose among competing power suppliers, but the utility might offer a green tariff option. A green tariff does not always mean renewable electrons travel directly from a particular project to the building. The utility procures the renewable generation and its environmental attributes on the customer’s behalf.
Digital Realty, a global data center REIT, purchased green tariffs for a data center in Oregon by subscribing to Portland General Electric’s Green Future Impact program. The utility arranged approximately 120,000 megawatt-hours of renewable electricity annually from new solar or wind projects in Oregon and retired the associated renewable energy certificates on Digital Realty’s behalf.56 The arrangement gave the REIT access to renewable power without requiring a separately negotiated power purchase agreement.
3) On-site Renewable Energy Production – For properties with suitable roofs, parking areas or adjacent land, on-site solar can turn unused space into productive energy infrastructure. The economics are often dictated by utility rates or state-based incentives. Depending on the project, on-site solar may reduce electricity costs for the building, provide power to tenants, feed electricity into the grid, or support a community-solar program. Some projects lease the roof and sell the electricity or associated energy credits.
More recently, projects are paired with batteries to store excess energy for emergency use during blackouts or storms.
Logistics facilities are particularly well-suited because their large, flat rooftops can accommodate substantial solar arrays. Prologis, a global logistics REIT, has installed 1GW of solar and battery capacity across its global portfolio.78
Retail REIT Regency Centers has 29 properties utilizing solar energy through a landlord own-and-operate model to enable tenants to access clean energy at lower costs.910
4) Support Renewable Projects Through Power Purchase Agreements – A power purchase agreement (PPA) allows an owner or tenant to buy electricity from a specific wind or solar project under a longer-term contract. Through PPAs, owners with geographically dispersed portfolios can support utility-scale renewable generation without installing solar at every property.
Unite Students, a student housing REIT in the UK, is responsible for procuring all the energy its properties use, and then they bill back the tenants.11 They purchase 99% of their energy from renewables. In 2021, the company sourced 20% of its annual electricity demand for five years from the Galawhistle wind farm in Scotland.12 It has followed this up with a new agreement to source 33% of its energy from the Three Maids Solar Farm in Hampshire, England. These arrangements give the renewable-energy producer greater revenue certainty while helping the buyer secure traceable renewable power and more predictable pricing.13
Galawhistle wind farm in Scotland provides energy to Unite Group through a PPA.
5) Renewable Energy Certificates – Renewable energy certificates (RECs) are an accounting tool; they represent the environmental attributes of renewable electricity. One certificate generally corresponds to one megawatt-hour of renewable electricity delivered to the grid.
Certificates are easiest to understand when they are bundled with the electricity purchase. A utility green tariff or PPA may include both the electricity and the certificates generated by the associated renewable project. The buyer then retires the certificates so that no other party can claim the same renewable-energy attributes.
Certificates can also be purchased separately from electricity. These are unbundled RECs. A property owner may continue buying conventional grid electricity from its local utility while purchasing certificates produced by renewable projects elsewhere.
Unbundled RECs give real estate owners another way to participate in the renewable electricity market, including owners whose energy demand is too small or dispersed to support a direct power purchase agreement. Because the certificate can be sold separately from the electricity that produced it, RECs can be traded in a secondary market and purchased by customers elsewhere on the grid. The buyer retires enough certificates to match a specified amount of its annual electricity use and may use them in market-based Scope 2 emissions reporting. Scope 2 emissions are indirect greenhouse gas emissions from the energy that a company purchases, such as electricity, steam, heating, or cooling. This does not change the physical electricity delivered to the property. It transfers the right to claim the renewable attributes of an equivalent amount of generation. In aggregate, demand for RECs also provides renewable generators with an additional revenue stream and signals continued buyer demand for renewable electricity.14
Many property owners will purchase unbundled RECs to create a market signal that they are interested in supporting renewable energy development and lowering emissions attributions in their portfolios. Ventas, a healthcare REIT, purchased unbundled wind RECs and unbundled solar RECs to match part of its electricity use with renewable-energy attributes across a large and geographically dispersed portfolio (alongside other energy procurement strategies).1516
Layers of the Renewable Energy Stack
Renewable energy procurement is part of modern real estate ownership and operation. It is not accurate to measure a firm’s commitment to renewables just by the amount of rooftop solar they have. There are other pathways that real estate owners can invest in to reduce long-term operating costs, create a competitive advantage, and prepare properties for a changing energy system. Property owners interested in signaling their support for renewable energy can use any one or multiple layers that are available to their property type and location.
Article by Sarah Adams, Chief Sustainability Officer and co-founder at Vert Asset Management. She leads the firm on corporate engagement. Prior to launching Vert, Sarah worked with finance at institutional asset managers Dimensional Fund Advisors and GMO (Grantham Mayo Van Otterloo).
After pursuing an environmental policy and law path, she worked with a UK non-profit groups on environmental advocacy in finance including the WWF, Forum for the Future and UnLtd. Seeing a need for retail financial services to engage with environmental and social issues, Sarah started a consulting firm educating financial advisors on sustainable and impact investments in the UK and US.
Sarah has a BA in History from UCLA, an MSc in Environment and Sustainable Development from University College London (UCL), an MA in Environmental Law from SOAS (School of African and Oriental Studies), and an MBA from Johns Hopkins Carey Business School.
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Footnotes
Healthpeak Properties is 1.42% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2026. ↩︎
