Download report: Net-metering winners and losers

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As you head off to Thanksgiving, you can take stock of how your state has progressed on renewable energy (and based on what we’re showing here today, you can hopefully be thankful).

We follow renewable energy trends because one of the central challenges of district or regionally-focused green finance strategies involves having a base of renewable energy policy that the jurisdiction authority can build from.

Renewable energy policies which reward systems owners for electricity generation can go a long way to support sustainable finance funding mechanisms. These mechanisms, depending on their structure, can allow for a transparent flow-through of renewable energy benefits, and the creation of lower carbon districts as well as achieving regional greenhouse gas emissions.

Net metering update

Net-metering is a critical influence on the uptake of renewable energy, since it allows the solar power system owner to earn money by selling electricity back to the grid. So… is your state a pacesetter on net metering? What’s its grade?

Network for New Energy has put out some new figures, detailing how different states make the grade on renewable energy. You can download a copy of the slide deck on this page as well.

Winners

In terms of net metering policies, Network for New Energy names the following states as being top:

1. Colorado
2. Delaware
3. Maryland
4. New Jersey
5. California, Oregon and Pennsylvania (tied)

Losers

According to Network for New Energy, the following states have no policy on net-metering, which resulted in them receiving a failing grade:

1. Alabama
2. Alaska
3. Mississippi
4. South Carolina
5. South Dakota, Tennessee and Texas

Friday Photo - Green Finance Upgrades Opportunities

Property owners are very focused on getting stimulus (or any!) dollars to pay for energy efficiency retrofits and weatherization projects.  And accompanying those applications are the green jobs expectations of many individuals.

This is the 23 July scene at a Los Angeles green jobs fair for energy efficiency and weatherization, in full swing, courtesy of Life.com.

Approximately $40 billion from American Recovery and Reinvestment Act funds were allocated to green collar jobs in energy efficiency, weatherization and renewable energy.

Many real estate professionals I know are not so sure how these funds will actually improve conditions in real estate finance and investment, due to the underlying weakness in market fundamentals, and the credit markets in particular.  They point out that an upside down loan on an energy efficient property is still, well — upside down.

And will directing short term government funding towards retrofitting real estate improve life for those green collar job holders?

The green finance angle for energy efficiency retrofits appears to be one of ‘upgrading relative competitiveness’ for those concerned. That is, upgrading energy performance and job skills to create relatively more competitive properties and workers.  A kick start as opposed to a final solution.

Nonetheless, given what we all know now about the financial meltdown and its effects on real estate, a green financial kick start on those two fronts — albeit experimental — provides at least an opportunity to improve the status quo beyond what we would otherwise be able to do.

The rest of the heavy lifting still remains on our shoulders.

Photo credit: Life.com

Part 1: Lessons for Future-Proofing Property Values

Since when has any firm achieved competitive advantage by just goin’ along with the crowd? Even in the current tough capital markets environment, excellence in real estate demands a continuous search for the newest ways to protect and advance asset values. This first installment of our Special Series on the Green Building Finance and Investment Forum New York,  features highlights from the talks by industry pacesetters that make sustainable real estate’s tomorrow happen today. It was a workshop chaired by Leanne Tobias, of Malachite LLC, and Galley Eco Capital’s Lisa Michelle Galley. Specifically, the session addressed threats and opportunities for investors created by rising energy costs, carbon policies, green building regulations, and changing tenant demand.

Fast Facts:

1. In today’s tenant markets, green buildings are the entry price for retaining corporate tenants - and their top talent.
2. On-site power generation and other new building technologies are not ‘star wars’ experiments, rather pragmatic, down-to-earth tools for energy price risk-mitigation.
3. Special taxation districts are a way to create financial solutions for community-scale sustainable development.

“I advise my clients to only consider

green facilities.”

– Peter Miscovich, Managing Director of Strategic Consulting, Jones Lang LaSalle

Green Buildings Are Plug-and-Play Solutions for Tenant CSR - and an Entry Requirement for Competitive Landlords in a Tenant’s Market

Peter Miscovich advises Fortune 100 companies on their corporate sustainability strategies. At GBFI, he laid out the 10-15 year roadmap on how tenant demand and demographics will dramatically impact real estate values. So what’s he saying?

• Corporate sustainability is now a permanent issue that will influence all organizational decisions, including real estate. Companies are paying attention to their energy use, and green buildings will be the required tool in their strategy toolbox to mitigate their exposure to energy and operating expense price risk. This will have major implications for the owners of existing, conventionally built commercial and industrial properties.
• Corporations will reduce their real estate footprint. Existing facilities are structurally underutilized, and the advent of telecommuting, office hostelling, and remote data management (from 3rd party vendors) will further reduce demand for office and flex/industrial space.
• By 2012, we will have a nationwide carbon policy, and those policies will directly impact real estate patterns.
• The suburban corporate campus model is outdated.
• Over the next 25 years, the vast majority of new household growth will be childless. There will be an increase in demand for smaller housing units, developed around transit.
• Given these impending changes, metropolitan areas that have scalable urban and suburban public transportation systems will prosper.

These expected changes point to demand and value implications for all commercial property types. Certified green buildings are a plug-and-play solution within overall corporate sustainability strategy. And in tough economic times, when it’s a tenant’s market, tenants — and their top talent — have more leverage to demand the green space they seek.

This has harsh implications for those landlords who want to retain corporate tenants, but will not or can not adapt space to the tenant’s corporate sustainability requirements. At the market level, this means that green commercial real estate sited near public transportation and affordable urban housing will be the favored locations of corporations over conventionally built property, because it provides them with significant soft and hard cash benefits.

Future-proofing Property-level Energy Price Risk: On-Site Power Generation and ESCO-led Retrofits

Incorporating on-site power generation into new construction and existing properties is no longer the province of special use properties like research labs and hospitals; today’s market considerations show this to be a pragmatic energy strategy that is gaining traction among the investors within the “four food groups”, too.

Fred Fucci, a partner at Arnold and Porter, LLP, addressed some of the challenges to creating and managing on-site generation capacity, as well as two other potential methods to minimize the impact of high energy costs:

• Utilize an energy services company (ESCO) to assess energy usage of existing structures, and enter into a performance contract to make recommended capital improvements.
• Use less energy, period. (Our comment: Everybody laughed when Fred said this, but heck - who can challenge that?).

Taking future-proofing one step further, Ed Brzezowski of Noveda Technologies, expanded the boundaries of technologically possibilities with his presentation of Noveda’s 31 Tannery project,  a 42,000 square foot office/flex structure with “net-zero electric” operations.

31 Tannery, in Branchburg, New Jersey, enjoys the rare Energy Star score of 100 and is a living showroom for high-performance, sustainable building technologies. Noveda, who’s business is to provide technology tools for monitoring real-time information about building energy use, were in need of new office space, wanted to show off their innovative capabilities and were resolute about walking their talk. The result? 31 Tannery uses less than 20% of the energy consumed in a conventionally-built structure, and reduces its carbon footprint by more than 1 million pounds of CO2 per year.

But wait, there’s more…. The most impressive number was the expected payback period for the advanced energy systems of 6 to 7 years, which is well within the investment horizon for institutional investors.

But participants had critical questions for Ed: do all those cutting-age systems actually cost out? Ed’s response? Yes, if you properly monitor your system performance. At 31 Tannery, they track real-time system performance down to 10 seconds, which allows them to catch and fix every system glitch that could negatively impact energy performance, and undermine their expected return on investment.

Special Taxation District Enables Community-Scale Sustainable Development

Frank Owens presented Georgetown Land Development Company’s vision of future-proofing: a to-be-built, transit-orientated, new-urbanist, mixed-use, brownfield development with on-site energy generation.

This $90 million re-development of the Gilbert & Bennett industrial site in Redding, Connecticut, will feature 300,000 square feet of commercial space, and 415 housing units, which includes loft-style apartments, townhouses and single-family homes. The 55 acre site will also feature a passenger rail link into New York City.

The development will create a special taxing district to provide low-cost financing for environmental site clean-up, rail-station improvements, and renewable energy systems. The district is a financing platform that can issue bonds, temporary notes, and other financial instruments, which are payable through the district’s fees, revenues, or benefit assessments. An important feature of this district is that, unlike tax incremental financing (TIF), the local municipality and state are not liable for the district’s debt. There is no specific limit to the number of financial instruments that the district can offer.

While the real estate market is in a downturn, and other projects are being canceled, this sustainable real estate project has lined up financing, and will proceed with medical office and local-serving retail in the project’s first phase.

By incorporating on-site energy generation, multiple transit linkages, and a compact urban format featuring multiple uses, this project is hedging against many of the forces that are affecting real estate values. Have you done the same yet with your portfolio?

*  *  *

Don’t forget to read the other installments of our Special Series on the Green Building Finance and Investment Forum New York. Our series brings you perspective and frank discussion from the industry pacesetters that are making sustainable real estate’s tomorrow happen today.

Photo Credit: 31 Tannery Project, Copyright 2008 Ferreira Construction

Photo Credit: Georgetown Land Company

Renewable Energy Market Status

“Where you stand depends upon where you sit.”

A famous politician might have thought he was dispensing pithy political wisdom when he said this, but he was also, perhaps inadvertently,  framing our understanding of the relative potential of renewable energy markets going forward.

Growing renewable energy markets from a staggered start

Remember, it has only been a week since HR 1424 was passed, extending government tax credits for renewable energy and related equipment.  And we think it is a good time for Green Journey readers to take a look at where the renewable energy markets have stood recently in terms of installed capacity.

This chart comes from the Commission on Environmental Cooperation for North America, which has put together a fantastic series of map layers depicting all sorts of environmental geographic data. You can dump the desired data into Google Earth with a click and nerd out to your heart’s content.

This particular map is a couple of years old, but still points to the idea that, with these tax credits being extended just now, many markets will be starting to increase their installed renewable energy capacity from very different positions.

Great to understand as we all monitor events in the renewable energy sector going forward.

Federal Energy Efficiency and Renewable Energy Incentives: How They Boost Your Green Business Case (Special Update for GEC Clients)

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