When the term “commercial real estate” is mentioned, what typically comes to mind are buildings and land. But something needs to ensure that those buildings function properly. That “something” is energy. According to Cushman & Wakefield’s Barton DeLacy, real estate professionals need to pay as much attention to investments in electricity transmission infrastructure (i.e., the “grid”) as they do to other types of real estate.
In his article “Energy Transmission is a Real Estate Issue,” DeLacy explains that the high-voltage transmission lines, wires, towers and poles are considered personal property. “Yet, consider the wide swaths of land encumbered by right-of-way easements to string lines from tower to tower,” DeLacey explained. Those rights-of-way can run hundreds of miles, extending to 200 feet in width. The problem? “Much of the HVTL (high-voltage transmission lines) network was built mid-century before many of the environmental and land-use protections enacted from the 1970s onward were in place,” DeLacy said.
Another problem is that the grid, as it now stands, isn’t supporting what’s needed by renewable power generation. Data centers are also consuming mass amounts of power. The result is that “over the past year, grid planners nearly doubled the five-year load growth forecast,” DeLacey noted.
This is a real estate issue because:
- Due to regulations and legislation, regulatory and eminent domain processes needed to assemble a power network or corridor can take nearly two decades.
- Real estate interests and “eminent domain principles of just compensation” are obstacles to extending transmission lines.
- The power grid, overall, remains regionalized in a system “that lacks the seamless fluidity of U.S. Interstate Highways,” according to DeLacy. Efforts to nationalize the grid continue to be blocked by the states.
DeLacey suggests that the transmission grid should be nationalized, with “super siting authorities” placed at the state level to push through local land-use constraints. Accelerating environmental reviews to balance climate mandates and ecological concerns is also necessary. It’s important to “recognize that our energy transmission grid serves all real estate as it both encumbers land and connects our communities,” DeLacy noted.