Why Commercial Real Estate Benefits with a Renewable Energy PartnerMay 21, 2019
Energy today is changing, complicated and lucrative. In speaking with medium-to-large commercial real estate groups considering renewable energy solutions, we often hear, “We’re getting quotes and will see where they come in.” If this approach sounds familiar, you’re leaving money – a lot of it – on the table.
We’re on the cusp of a new, modern grid. If you’re just putting solar on the roof, you’re both transferring a lot of the current and future potential value to another party or foregoing it altogether. Solar energy does save money. But, there’s a lot more at stake: revenues from battery energy storage, electric vehicle charging, and future energy services. Some property owners think the electric bills aren’t their issue, but even in a triple-net lease, selling the power to the tenant could be money in your pocket.
The most obvious and common benefit of installing solar on-site is that it provides energy to the building reducing electricity costs, but more and more, solar is starting to replace gas stations with new electric vehicle (EV) charging. With the rapid adoption of EVs across the US, commercial property owners have an incredible opportunity to turn their parking lots into the
gas power station of the future, turning an otherwise costly space into a revenue generating asset. Consider this statistic recently reported by Forbes; 88% of the top 100 US cities don’t have enough charging stations for millions of EVs expected by 2025.
Additionally, in a growing number of states, battery storage allows real estate assets to earn more money through time of day shifting, demand charge avoidance, distribution grid support services, and new arbitrage opportunities. California, for example, has allocated over $500 million for residential and commercial battery installations, while Massachusetts has created incentives for over 200MW of residential and commercial battery storage to be deployed.
As electric power deregulation spreads, rules are emerging and changing. California alone has hundreds of different rules and rates, plus different incentive programs for battery storage. Additionally, value will change over time as new products and services emerge.
If all of this sounds like a lot to sort through, it is. The emerging distributed energy landscape is complex, but the opportunity and value it presents to commercial real estate is simple – reduce operating costs, increase revenue, build resiliency and sustainability.