Weitmar has an industrial past; collieries and steelworks shaped this district in the city of Bochum, Germany. In an exciting twist, it is now home to the EZZ Energy Center of the Future, which will supply 81 residential units with net zero power and heat, making them largely energy self-sufficient. The first two buildings have already been hooked up.

This showcase project by real estate company Vonovia is being financed entirely from the company’s own resources and is pivotal for the whole industry. It demonstrates energy strategies that are already possible today – and may well become standard practice in just a few years. For Vonovia’s Head of District Systems, Tobias Hofmann, it’s clear that “the EZZ has already fulfilled its purpose, given the insights we have gained to date.”

Elsewhere, engineers are also developing solutions for districts that are capable of meeting most of their own energy needs. One example is in Freiburg-Dietenbach, where there are plans to build housing for 16,000 people. A site formerly occupied by sewing machine manufacturer PFAFF in Kaiserslautern is another inspirational project, as is Neue Weststadt in Esslingen, which involves five apartment blocks alongside a campus with a high-rise tower. The objective is to achieve greenhouse gas neutrality. Generating electricity and heat directly where it is needed, based on renewables, delivers high efficiency and avoids CO2 emissions.

Tailored to local requirements and resources

As yet there are no standard solutions. However, pioneers are already driving innovation that will make things easier for those who follow. In the first phase, Vonovia has opted for a combination of photovoltaics, heat pumps, an electrolyser, a hydrogen storage system and a fuel cell. Green power not only covers a high proportion of the electricity requirement, it also provides heat, with an electrolyser being used to produce hydrogen which is then stored. A fuel cell subsequently transforms the hydrogen back into electricity and heat. But this is just the start. “The EZZ is designed as a modular system,” explains Hofmann, “we can add in technologies and remove them at any time.” Geothermal energy is one example. The EZZ is a living laboratory and Vonovia intends to leverage the findings in future modernisation projects. As Germany’s biggest housing company, it wants its existing building stock to be virtually net zero by 2050.

Elsewhere, waste heat from nearby industrial facilities will be used or, in rural areas in particular, wind or biomass energy. In urban areas, connection to a decarbonised district heating network is an alternative – self-sufficiency is not an end in itself. “You have to base what you do on local requirements and resources,” says Gerhard Stryi-Hipp, head of the Smart Cities research group at the Fraunhofer Institute for Solar Energy Systems ISE. “There’s no blueprint out there.” 

This gives the real estate industry a new role as an operator of business models around energy.

While planners of new build projects have the opportunity to do everything right from the outset, the big challenge lies with existing buildings. There are, however, elements which experts believe make sense almost everywhere: examples here include high levels of building efficiency, large-scale solar, and heat pumps. Retrofitting can be costly and time-consuming, though. Converting the heating to a central solution involves building an energy centre as well as laying pipework. Similarly, charging points for electric cars require thick power cables. “Good planning is important, right from the start,” says Konrad Jerusalem, managing director of Argentus, a Düsseldorf-based real estate consultancy. As a rule, district-wide solutions are more efficient than single-building solutions because they allow synergies in terms of procurement and operation. It’s also possible to balance out fluctuations in demand more effectively – by using surplus solar power to charge entire fleets of electric vehicles, for example. And in a mixed-use development, different patterns of consumption between living and working can partially offset each other. 

District-wide solutions are generally more efficient than single-building solutions

In any case, a much more holistic view needs to be taken of the different uses within a neighbourhood, according to Lars Scheidecker. The CEO of Union Investment Real Estate Digital GmbH and his team are developing a digital ecosystem for commercial properties called “Run this place”. Says Scheidecker: “If individual buildings are integrated more tightly and better connected with their surroundings, this results in synergies that benefit the entire neighbourhood and its users.” He gives the examples of e-charging or making flexible use of space that is temporarily available. “Both of those options and much more besides can be tailored to the local situation when deploying a digital ecosystem.”

The more complex the components, the more important orchestration becomes: When should electricity be provided directly to tenants, when should storage capacity be replenished? To manage these aspects, Vonovia is working in Bochum-Weitmar with Ampeers Energy, a Munich-based startup that has developed a digital energy management system which leverages artificial intelligence. The system is continuously self-optimising and draws on weather forecasts and also user behaviour. Although the world may well have been simpler for portfolio managers, developers and investors in the past, Ampeers’ Chief Marketing Officer, Jörg Kruhl, stresses the positive aspects: “This gives the real estate industry a new role as an operator of business models around energy.” While regulations and tax issues currently create barriers, there is fundamentally no reason why solar power generated on the roof of a building can’t be sold to tenants, for example. Doing this via a separate company is a potential way forward. This would create a new revenue stream, while tenants would benefit from lower utility costs.

Some energy suppliers view the development as a threat to their business. Others regard the change as an opportunity and are taking on contracts to set up the necessary infrastructure. “That kind of business offers much higher margins,” says Jerusalem. In Sigmaringen, southern Germany, the local municipal utility company is planning a development on the site of a former barracks that will be almost entirely self-sufficient in energy. It will use solar power, a heat pump, compact heat and power plants, wood chip boilers and heat storage to save 3,300 tonnes of CO2.

Many of these new technologies are still more expensive than conventional solutions. Solar panels and a heat pump cost more than a condensing boiler. Savings are only achieved during operation, such as when replacing gas with green electricity generated on-site. Many projects, therefore, will only work financially if developers are willing to bear the upfront costs – and if investors reward that commitment. Fraunhofer expert Stryi-Hipp believes that’s the only way: “Companies that don’t at least strive for zero carbon run the risk of producing stranded assets.” 

So-called green inflation could soon favour self-sufficiency: ecological transformation of the economy will initially increase demand for energy and therefore push up prices. “The cost-benefit equation when considering new projects will therefore shift in favour of these concepts,” says Jan von Mallinckrodt, Head of Sustainability at Union Investment Real Estate GmbH. At Vonovia too, the consensus is that any cost-benefit analysis should be forward-looking. “We’re investing in a more economically efficient future,” says Hofmann.

If buildings are integrated more tightly, this results in synergies that benefit the entire neighbourhood.

Lessons learned and rising demand drive innovation

Vonovia is expecting to obtain the “first real results” from operating its EZZ in winter 2022. Lessons have already been learned, though, such as with regard to the local heating supply when several buildings were extended upwards. Whereas comparatively low temperatures suffice in the new build sections, the old radiators require a higher flow temperature. The engineers solved the problem via a low-temperature local heating network with transfer stations and a solar-powered high-capacity heat pump. The new apartments are supplied directly via the network, while for the existing apartments the temperature is boosted from 40 to 80 °C. “This solution is the first example of creating real added value,” says Hofmann. In terms of heating requirements, the scheme will now be “100 percent self-sufficient” and additional gas purchases are no longer needed. 

Not every housing company has the financial muscle to follow the lead of this industry mover. Ampeers manager Jörg Kruhl believes that standardised solutions are essential, “otherwise handling the sheer number of modernisation projects will not be achievable.” From mid-2022, his company is thus aiming to provide “Decarbonisation as a Service”. Basic models for different types of development will be adapted to the specific scenario. For unique properties, which include many office ensembles and commercial districts, there will still need to be custom solutions in future. 

But with this trend only just getting under way, demand is driving innovation. In Vienna, a hydropower plant supplies heat and cooling to the TrIIIple and Austro Tower residential towers, for example. The concept was devised by industrial engineer Andreas Glatzl, the client was Soravia. 

In New York, star architects SOM recently unveiled a plan for skyscrapers with giant tanks of algae to capture CO2. Sounds utopian? Maybe. But 20 years ago, many would have said the same thing about an Energy Center of the Future in Weitmar.