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“…what we are seeing now is a shifting of the tectonic plates, towards a bright new electrified future.” Graham Hoare, President of Global Operations at British Volt
As is the case with so many transition strategies, real estate has a critical role to play in determining whether the UK, and other countries accepting the green mission, can meet their ambitious goals around zero emission vehicles. It is therefore no surprise that with all eyes trained on how best to transform from a guzzling carbon-fuelled economy into one that is more sustainable and energy-focussed, there is a buzz around the enormous opportunities and challenges for the real estate sector in this space, some of which we unpack in more detail below.
In order to reach the goals which have been set and open the gates
to the phasing out of the environmentally toxic petrol and diesel vehicles, in particular with the UK move towards electric-only car production by 2030, the automotive industry must begin manufacturing batteries for electric vehicles on a mass scale and at an affordable price. This fundamental requirement has led to a sudden surge across the globe in what may well soon be considered a new asset class, “gigafactories”. This term seems to have been initially coined by Elon Musk to describe the Tesla factory under construction in Nevada (which already has a footprint of more than 1.9 million square feet and is only about 30 percent complete), but is now commonly used more generically to describe a factory capable of end-to-end production of thousands of gigawatts of energy i.e. the batteries used to charge electric vehicles.
The race to build the first gigafactories in the UK is already well underway with work having started on the £2.6bn gigafactory being constructed on the site of the former Blyth Power Station and plans for a £2.5bn gigafactory on the site currently occupied by Coventry Airport. The competitive spirit also seems set to continue with big ticket manufacturers such as Ford, LG, Samsung and Nissan revving up at the opportunity to shape the future.
It is clear that if gigafactories in the UK are to follow in the footsteps (or tyre tracks) of the Tesla frontrunner, one of the biggest hurdles will be finding large enough suitable spaces. Not only do huge sites need to be obtained or repurposed, but these sites will also need to be able to harness a vast, preferably green, power supply, be close to a skilled labour force and have the necessary links and proximity to key infrastructure.
The ability to mass produce electric vehicles and the batteries to power them will, however, only just get us off the starting line. The need to keep the batteries charged will fuel huge demand for electric charge points to be available and accessible anywhere and everywhere - the need to eliminate car owners’ fears of being unable to charge their vehicles (“juice anxiety”) has already begun, and the UK Government’s recent announcement of proposed legislation requiring electric charging points to be installed in new buildings in the UK will create a further slipstream to fast-track this process. Yet again real estate is at the core of what is needed.
Not only will electric charge points at home and street-side become more widespread, but traditional filling stations will need to revolutionise to accommodate our rapidly changing world. Gone will be the five-minute pit-stop at the motorway services - instead, those frequenting forecourts will need to stay put for longer periods, not just requiring more space to facilitate the charging cars, but also spaces for the drivers to recharge themselves while they wait for their green machines to do the same. Electric forecourts are already springing up across the UK, like the GRIDSERVE forecourt near Braintree, Essex which enables 36 electric vehicles to be charged simultaneously with high power electric chargers that can deliver up to 350 kW of charging power. This is just one of over 100 UK-wide electric forecourts planned by the company.
Going forward, consumers will come to expect electric charging points to be available wherever they happen to park their car, whether that be the supermarket, a retail park, the office or in a multi-storey car park in town. This accelerating demand in the destination charging market presents a real business opportunity to potentially monetise land which is currently wasted by utilising conscious green asset management. This should be top of the agenda for landowners who do not want to be left in the dust.
The commitments made by the UK Government and others have set the pace for the transition to climate resilient infrastructure and the transformation has already started. The opportunities this creates in the real estate sector are wide ranging for those willing and able to put pedal to the metal and drive this transition forward to be part of the green revolution.
UK Real Estate Horizon Scanning 2022
Explore further topics across our UK Real Estate Horizon Scanning 2022 publication
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