I’ve been writing about the solar development industry a lot lately.  The obvious reason is that the things that I do everyday are the best fodder for blog posts.  I know that the solar development industry isn’t core to the theme of “investment real estate” that I try to stick to on this blog, but I do think that solar development will see increasing attention from the traditional real estate actors.  Alternative energy development is a real estate intensive endeavor.  In order to transition from a grid that is supported primarily by fossil fuels, into a grid supported by wind and solar, the real estate requirement of power plant generation is going to explode.

A typical gas fired power plant can fit 1000MW of generation into 40 acres.  In terms of MW/acre density, that’s 25MW/acre.  The real estate requirement for a solar farm is much larger.  Depending on technologies, it is realistic to fit 1MW on between 6 and 9 acres of land.  So the gas fired power plant in this case is 150 times more efficient in terms of real estate usage (or to say it another way, alternative energy is 150 times more reliant on the real estate industry).  What does that tell us about the future of real estate as it relates to power generation?  In order to move to a smart grid, the real estate players will have to become an integral part of the development process.  Real estate owners, brokers and developers are likely to get involved.

I would be really surprised if we don’t see some traditional real estate development firms get involved in power development in the very near future.  Some have already put the proverbial toe in the water.  I think the need for traditional real estate development firms to get involved in power development arises from a healthy demand for new generation and the general lack of sophistication in the power development industry when it comes to large scale development.  Real estate developers already have an inherent understanding of the risks associated with large scale land development and how to navigate the process.  I believe that development is inherently an experience based business and I think it is more efficient for real estate developers to outsource the technical aspects of power development to engineers and transmission specialists, than it is for some of today’s alternative energy developers to quickly understand the difficulties of large scale development.

Anyway, it’s just a theory and we’ll have to see how things shake out.

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