Why Distributed Generation Belongs in Every Property Manager’s Playbook

America's commercial real estate sector is facing an energy reckoning. Across the country, owners of office buildings, warehouses, and other commercial properties are facing soaring electricity prices. And it’s more than a seasonal anomaly—it’s caused by a systemic shift in energy supply and demand, requiring proactive and sustainable strategies to tackle.

What’s driving the spike? A combination of rising raw commodity costs, labor shortages, and an aging power grid has created an inflationary loop on the supply side. Meanwhile, demand is skyrocketing, fueled by the rapid electrification of our infrastructure and a voracious appetite for power from AI and data center projects. For years, utilities operated under the assumption of modest demand growth—but in the last two years the five-year forecast for load growth has shot up five-fold, from a 2.8% increase to as much as 15.8%, according to Grid Strategies. The result: pressure on infrastructure, permitting bottlenecks, and steep cost increases.

In response, commercial property owners face a stark choice: continue relying solely on centralized grid energy, with all its volatility and delays, or reclaim control through distributed energy solutions.

What is Distributed Energy?

At its core, distributed energy is about producing power at or near the point of consumption, like solar panels on a home. In commercial real estate, distributed energy takes on broader, more powerful forms: solar panels paired with battery storage, fuel cell systems tucked into parking lots, or even microgrids powering entire office parks.

The beauty of these solutions lies in their versatility. A warehouse can pair solar with storage to smooth out peak demand charges. A hotel might install a natural gas-powered fuel cell for consistent power even during grid outages. Property owners can tailor systems to their energy needs and operational requirements—whether it's shaving peak load, ensuring uptime during blackouts, or locking in long-term price stability.

Why Distributed Energy, and Why Now?

The urgency is growing. Building new utility-scale power plants or expanding grid infrastructure takes years, often tangled in permitting red tape. Meanwhile, businesses can’t afford to wait. Some warehouse and AI clients are already being told they must wait three to five years just to receive grid interconnection.

Distributed energy offers a workaround. By generating their own power on-site, companies can bypass long utility delays and ensure energy availability today, not in the next decade. And they can protect themselves from market volatility. Through mechanisms like individual Power Purchase Agreements (PPAs), commercial owners can effectively lock in energy rates for 15–20 years—shielding themselves from inflation and price uncertainty.

This model also transforms energy procurement from a short-term transactional exercise to a long-term strategic investment. For decades, deregulated energy markets in the U.S. led businesses to treat electricity procurement as a one-to-three-year decision. But given today’s volatility, it’s time for energy planning to become a core part of real estate investment and asset management strategies.

The Benefits of Self-Determination

The distributed energy movement is quintessentially self-deterministic. It’s about controlling costs, operations, and environmental impact.

From a business standpoint, the benefits are clear: reliability, shorter lead time, cost stability, scalability, and reduced environmental impact.

Importantly, distributed energy also enables greater tenant satisfaction and retention. For long-term tenants—especially those with energy-intensive businesses—having consistent and affordable access to power can decide lease renewals or site selection.

First, Define Your Priorities

Commercial real estate owners should start by asking themselves, what matters most to my business? Is it cost predictability? Operational resiliency? Environmental stewardship?

Once those priorities are clear, the path becomes easier to navigate:

1. Plan for your energy needs over the long term: Whether you plan to own the property for five or 25 years, distributed energy facilities will enhance your asset’s value and performance when you design them to support your long-term energy needs. For example, if your tenants run energy-intensive businesses, those systems can provide them a competitive edge by managing costs, improving their continuity of operations and incentivizing them to become long-term tenants.
2. Think portfolio-wide: Owners with large portfolios should plan from the start to partner with a firm that can deliver at portfolio level rather than limiting them to a by-project arrangement. This is another reason it’s critical to partner with the right expert from the start—to set your portfolio up for success and smooth out the process for subsequent projects.
3. Partner with experts: Work with experienced providers who understand not just the technology, but also project financing and regulatory compliance. It goes without saying that your partner should have a solid financial basis and track record. Distributed energy companies offer end-to-end service, from consulting and design to creating agreements that meet both budget and operational goals once the facility is up and running.

Building the Energy Future You Need

For these reasons, distributed generation should be a major part of the infrastructure and building envelope toolkit that is being evaluated by all property owners. Doing the investigation and the analysis of the things that matter can really help inform decisions about what technology solutions as an owner you should be making.

On a larger scale, the challenges facing America’s electric grid are real and distributed energy isn’t just a stopgap measure for those. It’s the foundation for a new kind of infrastructure—one that aligns energy production with energy use, and puts power (literally) back in the hands of property owners. Now is the time to invest and plan over the long term for your portfolio’s energy future—a future that’s not only reliable and cost-effective, but also locally powered.