LOOKING AHEAD AT UTILITIES
There is nothing sexy about laying underground utilities. Who wants to talk about gas pipes, water, sewer and electrical? It’s a little more interesting when we’re talking about nuclear, wind and solar energy, but it all still comes back to that darn utility bill.
Well, sexy or not, utilities are a hot topic these days. Even if our tenants pay their own utility bill, real estate investors need to be paying attention to the topic and the trends. Transitioning to clean energy sources and net zero, means a HUGE spike in electrical, nuclear, wind and solar demand. And as every investor knows, increase demand without increased supply –uh oh, looks like our bills are going up in the near future!
This past weekend, we had the privilege of listening to a speech by the Alberta Minister of Affordability and Utilities, Nathan Neudorf. And yes, it was very interesting. This former carpenter, turned politician, is tasked with leading Alberta towards a Net Zero target, AND keeping housing affordable. Tough portfolio, if you asked me! All this at a time of record population growth for this province. Yikes, that’s a tall order.
How efficient is wind power: 30%-45%. Solar farms and home solar panels vary, but their efficiency averages out around 30%. This summer there were significant issues with our alternative energy sources when smoke blocked the sunlight, and at similar times there was very little wind. Nuclear sounds great, but how can we build that many plants, as fast as possible, and at a huge expense? All of a sudden it makes perfect sense why Alberta is saying Net Zero by 2030 simply isn’t possible. And some people are asking, “at what cost to the end user?”
Now, before anyone goes jumping up and down about Global warming and that crazy Oil and Gas province, let me be clear: we’re not against energy transitions. We’re worried that it will take time. Does anyone know how many homes are heated with natural gas? I’m just saying, it gets COLD around here in winter—no heat is not an option.
Another new development around utilities also came to our attention this week. The next National Building Code is due to come out in 2025. Which means that the early roll out and “discussion” is already starting. Energy efficiency is a very high priority in the latest updates. And for the first time, there will be a National Renovation Code: https://issuu.com/wall2wall/docs/091623_builidingexcellence_edition/16.
I’m not clear about what this will mean for condo and multi-family renovations, but there are some elements that will now be standardized across all municipalities. We’re looking forward to learning more about the proposed (read as almost a sure thing) changes in the coming months.
And as for that other utility, water, well it’s not a sure thing either. Did you know that Cochrane is as little as 6000 people away from maxing out it’s water license? Some are saying that Calgary’s water demand may reach it’s limit by 2036. Affordable housing is great, but all those houses need water. Suddenly we have another wrinkle in the plan. Has anyone ever seen such a need to conserve water in BC before 2023? Doesn’t it always rain in Vancouver? Apparently not.
As we plan our portfolio’s and pursue Financial Freedom, real estate investors are now paying attention to both energy and water conservation. Our new building designs and our renovations will be impacting our bottom line and the environment for decades to come. We think smart utility measures may also attract idealistic and younger tenants. So, it looks like even more learning is in our near future!
