Power as a Platform: The Role of Real Estate in the Grid of the Future

Susan Uthayakumar

Power as a Platform: The Role of Real Estate in the Grid of the Future

21 August 202517 June 2025
Susan Uthayakumar, Chief Energy and Sustainability Officer, Prologis

As electricity demand accelerates across global markets, real estate is emerging as both a constraint and a solution. From microgrids to distributed generation, buildings are evolving into critical energy infrastructure—and capital strategy must evolve with them.

In today’s evolving world, energy demand is soaring—driven by data centers, electric vehicle infrastructure, and the electrification of buildings and logistics operations. Yet across global markets, power availability is lagging. New grid connections can take years, and in some cases, utility infrastructure simply isn’t ready to support high demand uses.

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According to the International Energy Agency, global electricity demand is expected to double by 2050. This growth is not limited to North America. In parts of Europe and Asia, grid access delays are prompting national governments to review permitting timelines and capacity planning.

This disconnect is not rooted in a lack of foresight by utilities. Instead, it reflects the sheer complexity of modernizing century-old infrastructure in the face of skyrocketing demand and regulatory hurdles. The grid, in its current form, was not built for this level—or distribution—of demand.

The question is not whether we need more power. It’s how we deliver it in time.

REAL ESTATE AS ENERGY INFRASTRUCTURE

Historically, buildings have been treated as passive consumers of power—drawing electricity from the grid to meet operational needs. That model no longer holds. As demand intensifies, real estate is increasingly expected to act as a platform for energy generation, storage, and smart load management.

Industrial and logistics real estate is a particularly clear example of this shift. These facilities must now support autonomous material handling systems, highly efficient heating and cooling systems and other uses required for a modern distribution or manufacturing facility. All require significantly more electricity than traditional uses—and often in areas where grid capacity is already constrained.

Data centers further highlight the challenge. With artificial intelligence driving an explosion in compute workloads, electricity consumption in the sector is projected to more than double in the next five years alone. In certain global regions, power availability is already the top constraint on new development, sometimes surpassing even land or water availability.

Across asset classes, real estate owners, investors, and occupiers must now think differently. Power availability is no longer a utilities problem—it’s a real estate imperative. Sites that can solve for power early and flexibly will be better positioned to meet tenant needs and unlock economic activity.

BRIDGING THE GAP WITH INTERIM SOLUTIONS

While long-term grid upgrades are underway in many regions, they will take years—if not decades—to complete. In the interim, the private sector is deploying distributed and modular energy systems to bridge the gap.

Microgrids, modular energy systems and behind-the-meter storage solutions are being used to energize sites ahead of traditional interconnection. These systems offer localized generation and resilience, using a combination of solar, batteries and clean backup technologies such as linear generators. Because they operate independently of the broader grid, they allow operations to begin without waiting for utility upgrades.

One such example is a heavy-duty truck charging hub in Torrance, California, developed by Prologis, which operates entirely on a behind-the-meter microgrid. Designed to power up to 96 trucks simultaneously, the system includes battery storage and linear generators—all working in tandem to deliver clean, reliable power. This approach enabled the facility to become operational despite facing multi-year delays in utility interconnection, offering a model for how interim power solutions can meet immediate needs at scale while aligning with long-term sustainability goals.

Importantly, these systems are not simply workarounds. They are building blocks of a more distributed and adaptable energy future. Many are built to be portable and reconfigurable, allowing operations to launch in areas where grid connections are delayed or uncertain. Once service is established, the same systems can provide backup power or support grid stability by participating in energy markets.

Intelligent software platforms play a key role in maximizing asset performance, using real-time data to manage loads, prioritize essential functions and respond to grid conditions. This allows even power-constrained sites to run reliably and efficiently.

THE STRATEGIC VALUE OF DISTRIBUTED GENERATION

At the heart of this transition is a broader shift toward distributed generation—the production of power close to the point of use. In the real estate context, distributed generation most often takes the form of rooftop solar arrays and onsite battery storage. Together, these technologies offer speed, resilience, and grid relief—providing electricity directly to buildings, reducing peak demand and creating backup capacity during outages or delays in utility service.

The strategic value of distributed generation lies in its ability to reduce peak demand and ease pressure on transmission and distribution systems. It’s a pressure valve for a grid that is increasingly stretched thin. During extreme weather events or unplanned outages, distributed generation assets can maintain uptime and continuity. Over time, they also offer decarbonization benefits, allowing buildings to operate with lower emissions by avoiding fossil-based grid peaks.

A recent example is a grid-scale battery storage project in Texas, where batteries were installed next to a logistics center, where land was available and is helping to stabilize the ERCOT grid by providing power during peak power times, helping to ensure that Prologis customers and the local community where we operate have access to reliable power. Integrating large-scale battery projects demonstrate how real estate can broader grid reliability goals.

Individually, these assets are relatively small. But aggregated across a portfolio—particularly in dense urban areas or logistics hubs—they can represent significant load reduction. Coordinated portfolios of distributed generation assets can participate in demand response programs or form the foundation for virtual power plants, providing services back to the grid and improving system-wide efficiency.

As the scale of distributed generation platforms grows, their role in energy strategy will shift from supplemental to central. What once was seen as optional infrastructure is becoming core to real estate value and energy resilience.

REAL ESTATE-UTILITY COLLABORATION: A SHARED OPPORTUNITY

The emergence of real estate as critical energy infrastructure offers an opportunity to reimagine the relationship between the private sector and utilities. Rather than being at odds, both parties can benefit from greater alignment.

Utilities face significant constraints: aging infrastructure, labor shortages and increasing pressure to decarbonize while maintaining reliability and affordability. Distributed energy systems—if deployed in a coordinated way—can help utilities manage growth without overextending capital budgets. For example, distributed generation assets located near substations or in constrained service areas can help defer or eliminate the need for major upgrades.

Utilities increasingly see value in working with real estate platforms as “living laboratories” for grid innovation. Distributed assets—when aggregated and digitally managed—offer utilities a way to test demand-side flexibility programs, enhance outage response and pilot grid services without massive capital outlays. In many cases, large real estate portfolios span multiple utility jurisdictions, offering a unique vantage point on cross-regional energy needs and resilience opportunities. Deepening this collaboration could enable faster deployment of new technologies, more accurate load forecasting, and a more customer-centric model of energy planning.

To unlock this potential, collaboration must begin early. Developers and utilities need shared visibility into project timelines, load requirements and interconnection priorities. At the same time, regulatory support for streamlined permitting, standardized interconnection processes and grid-interactive technologies will be essential.

RETHINKING ENERGY RISK IN REAL ESTATE STRATEGY

As grid limitations become more acute, energy availability is shifting from an operational detail to a strategic investment factor. Traditionally, electricity was considered an abundant and commoditized input. Today, it is an increasingly scarce, localized and time-bound constraint. For real estate investors, this represents a redefinition of risk—and a new lens through which to assess long-term value.

Energy risk manifests in several ways, including delayed site activation due to interconnection bottlenecks and rising utility rates driven by infrastructure strain. For developers and asset owners, addressing these exposures proactively—through modular energy platforms, or energy-as-a-service partnerships—can unlock new competitive advantages.

Critically, energy resilience is also becoming a tenant expectation. As occupiers—from logistics operators to e-commerce companies to data users—set decarbonization targets and scale electrification, they are seeking partners who can deliver both space and power. Buildings that are energy-ready, or companies that are capable of rapidly deploying interim solutions, are more likely to attract and retain future-facing users.

IMPLICATIONS FOR GLOBAL CAPITAL

For institutional investors, the shift toward energy-aware real estate is both a challenge and an opportunity. As electricity becomes a gating factor in everything from data center expansion to modernization of distribution centers, energy strategy must become part of portfolio strategy.

Assets that can adapt to grid volatility will be better positioned to deliver stable performance amid an evolving energy landscape. In high-demand asset classes like logistics and data infrastructure, the ability to solve for power will soon rival traditional value drivers like location and yield.

At the same time, distributed generation platforms offer new avenues for value creation. In addition to reducing reliance on utility infrastructure, distributed generation systems can support sustainability targets, offer revenue from grid services participation and enhance the long-term relevance of a property. As energy becomes both more valuable and more constrained, capital will increasingly flow to assets that can both consume and create it. Those who act early—integrating power strategy into real estate—won’t just mitigate risk. They’ll help define the infrastructure model of the future.

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ABOUT THE AUTHORS

Susan Uthayakumar is Chief Energy and Sustainability Officer for Prologis.