Lendlease’s Australian Prime Property Fund (APPF) Industrial has signed a renewable energy agreement to contribute up to $20 million to facilitate the use of solar and alternate clean energy technologies across its portfolio.

APPF Industrial will partner with renewable energy fund Solar Bay to deliver solar systems, energy storage and renewables initiatives for its assets and tenants – a first for Australian industrial investment market.

Solar Bay will install, operate and maintain solar photovoltaic systems on assets that qualify through Power Purchase Agreements after negotiating the deal and a period of exclusivity for the portfolio.

The funds also have the ability to support investment in alternative technologies, including battery storage, thermal chilled water storage, electricity demand management systems and alternative fuels.

Lendlease funds management managing director Scott Mosely said the move continues the construction, property and infrastructure company’s track record in implementing market leading sustainability initiatives across its property portfolios

“Interest from our tenants for solar energy solutions has been very strong and we expect the discounted electricity from the use of solar to provide significant financial and environmental benefits,” he said.

“This APPF Industrial solar initiative delivers on our commitment to ESG, as well as supporting tenants in meeting their own environmental commitments.”

“As investors and managers seek to decarbonise their investments, we believe that  net zero carbon real estate will deliver long-term risk adjusted returns, attracting and retaining tenant and investment partners.”

Tesla renewable energy batteries on wall

Battery storage, thermal chilled water storage, electricity demand management systems and alternative fuels could all come from the project

Solar Bay investment director Andrew Archibald said the opportunity for on-site renewable energy solutions has never been greater.

“Industrial facilities are well placed due to their large floorplates, allowing for extensive on-site generation via rooftop solar,” he said.

“When paired with battery storage, demand management, and the electrification of transport, the outcome is a competitive energy solution for both tenant operations and transport, with near-zero emissions. Solar Bay are delighted that Lendlease is taking such a progressive approach in their carbon reduction strategy.”

Colliers International’s Hugh Gilbert said the move will benefit their industrial tenants through cost savings and a positive effect on the environment.

“The majority of institutional landlords have failed to prioritise renewable energy and currently less than  5 per cent of buildings in the country’s biggest industrial market, Melbourne West, have solar systems. However, we are beginning to see more interest from institutions in the renewable space, with many currently assessing initiatives and programs at a portfolio level,” he said.

APPF Industrial recently ranked first in Australia and New Zealand for the industrial sector in the 2020 GRESB Real Estate Assessments.