Boosting Distributed Solar, Distributed Clean Energy Investment among Institutional Real Estate Investors

Densely packed commercial, residential and mixed-use buildings and real estate predominate and define cities the world over. With comparatively little in the way of open space, and what is available typically commanding premium prices, reducing cities’ energy consumption and pollution by deploying distributed, solar and other distributed, clean energy resources poses a vexing challenge for those aiming to improve urban quality of life while keeping the lights on and the energy flowing.

Distributed Solar Rooftop among Institutional Real Estate

Ambitious, innovative young companies such as Black Bear Energy are proving those challenges aren’t insurmountable. Three Black Bear Energy clients – GID, USAA Real Estate and LBA Realty – recently launched distributed, clean energy projects that will see on-site, solar PV power generation and battery-based energy storage systems (BESS) installed along with energy-efficient LED lighting.

Solar Magazine spoke with Black Bear Energy co-founder and CEO Drew Torbin to gain and share insights into the company’s pioneering efforts, as well as distributed clean energy projects and prospects in cities and among real estate developers and institutional investors.

Buildings, corporations and energy use

Meeting the building and energy needs of city-based businesses and residents has always held commensurately large commercial potential. That’s especially true today as city leaders the world over strive to make their cities smarter and more sustainable – economically and environmentally, as well as in terms of overall quality of life.

Sustainable Cities Banner World Bank
Credit: World Bank

Approximately 70 percent of global energy production is consumed in cities. Sixty percent of world population is expected to live in cities by 2030 – more than half do now. Reducing energy consumption, greenhouse gas emissions, pollution, water and natural resources consumed in cities could go a long way towards reducing environmental pollution, resources degradation and loss – a trend that’s resulted in what ecologists have dubbed the “Sixth Great Extinction.”

The market for distributed, “behind the meter” renewable energy and energy efficiency systems and technology is global. Corporations of all stripes are playing a growing, pivotal role in fueling market development and growth. Commercial, residential and mixed-use building and property owners loom large in that regard.

According to a market research report released May 24 by Abu Dhabi-based International Renewable Energy Agency (IRENA): “Companies in 75 countries actively sourced 465 terawatt-hours (TWh) of renewable energy in 2017, an amount close to the overall electricity demand of France...With the continued decline in the costs of renewables, the report suggests corporate demand will continue to increase as companies seek to reduce electricity bills, hedge against future price spikes and address sustainability concerns.”

“Renewable energy sourcing has become a mainstream pillar of business strategy in recent years,” said IRENA Director-General Adnan Z. Amin.

While environmental concerns initiated this growing trend, the strengthening business case and price stability offered by renewables can deliver a competitive advantage to corporations, and support sustainable growth.

Presented during the Ninth Clean Energy Ministerial in Copenhagen, the report revealed that half of the more than 2,400 large companies analyzed are voluntarily procuring or investing in renewable energy self-generation to power their operations. Renewable energy resources account for at least half the power consumption of more than 200 of them. Electricity self-generation is the most common means of sourcing energy followed by renewable energy certificates (RECs) and power purchase agreements (PPAs).

Clean energy advisory services for real estate investors

Black Bear Energy’s two co-founders – Drew Torbin and Kim Saylors-Laster – launched and managed successful renewable energy and energy efficiency programs for major US corporations before creating Black Bear Energy in 2015 – Torbin for Prologis and Saylors-Laster for Walmart.

Black Bear provides clean energy advisory services to institutional real estate investors that own and manage commercial, industrial, residential and mixed-use real estate across the US. Keeping a low profile, the pioneering company’s client base has grown to 30 institutional property investment companies with more than 3 billion square feet (278,709,120 square meters) of real estate assets under management solely by word of mouth.

Black Bear Energy Rooftop PV Installation
Black Bear Energy rooftop PV installation. | Credit: Black Bear Energy

To date Black Bear has advised and helped clients invest in and implement distributed solar and energy efficiency projects at shopping malls, stadiums and parking lots of various kinds. “We’ve done work in just about every different type of commercial real estate asset and environment,” Torbin said in an interview.

Most recently, Black Bear Energy joined with three of its clients to announce new project launches. Construction of a 2.4-megawatt (MW) DC solar power system on the rooftop of an industrial building in Cranbury, New Jersey owned by USAA Real Estate will generate more than 3.1 gigawatts (GW) of emissions-free electricity during its first year of operation.

Construction of two commercial solar PV systems on multi-family residential properties GID owns in Cambridge and Somerville, Massachusetts – a combined, total capacity of 824 kilowatts (kW) – is to begin this month (May). Via a third new project, LBA Realty expects to save more than $1.9 million over the next 10 years as a result of installing BESS and carrying out LED retrofits in eight of its office and industrial properties in Arizona, California, Colorado and Nevada.

Distributed, clean energy and resiliency

Spanning commercial, industrial and residential properties, the three projects demonstrate the economic feasibility, and benefits, that property owners and investors can gain by carrying out distributed solar, renewable energy, energy storage and energy efficiency projects.

Enhancing energy and built environment resiliency – the ability to recover from and continue operating in the event of extreme weather events and grid power outages or energy shortages – figure prominently in all three. That extends to encompass the ability of on-site, distributed energy resource management systems to adapt and deliver energy optimally as tenants’ energy usage and expectations, as well as market and regulatory environments, change over time, Torbin explained in an interview.

“The owner of a ‘Class A’ office or commercial space today expects a building to be energy efficient. If an investor is considering purchasing a residential property from a leading owner, they expect the owner will have explored clean energy and energy efficiency opportunities,” Torbin told Solar Magazine.

That links directly into the reason Torbin and Kim Saylors-Laster launched Black Bear Energy. “We think of ourselves as agents, or instigators, of positive change. We assist institutional real estate owners make informed decisions that lead to enhanced resiliency for assets throughout their portfolios.”

Solar Panels at Carmel Valley Kilroy Centre
The solar panels at the Carmel Valley Kilroy Centre. | Credit: Clean Power Exchange

An outdoor sports enthusiast, Torbin, and his family, appreciate the value environmental conservation and accessibility to natural ecosystems provide. The same is true for Saylors-Laster.

That said, when it comes to business, Torbin, Saylors-Laster and Black Bear Energy take a hard-nosed, pragmatic approach when advising their clients regarding distributed renewable energy, energy storage and energy efficiency investments. “We like to keep things very straightforward and simple – we help our clients create added value for their existing portfolio investments.”

“There has to be a clear, identifiable goal when making ‘green’ energy investments, and it has to make economic sense. You shouldn’t expect anything else,” Torbin said.

Boosting commercial property owners’ distributed clean energy investments

The US Solar Energy Industries Association (SEIA) recently released two documents in a bid to add momentum to growth of distributed solar and clean energy investments implemented on commercial properties. Drawing on work done by Washington, D.C. law firm Ballard, Spahr and CleanFund Commercial PACE Capital, the first is a standardized “contract that combines the benefits of a Power Purchase Agreement (PPA) with Property Assessed Clean Energy (PACE) to provide customers with a valuable new financing option,” SEIA explains.

“The PACE PPA further builds out SEIA’s suite of model contracts so all solar transactions can be efficiently negotiated and financed,” said Mike Mendelsohn, SEIA’s senior director of project finance & capital markets.

Our goal is to broadly open the U.S. commercial real estate sector for solar deployment, and the PACE PPA is a valuable tool to allow that progress to happen.

Co-authored by SolarKal, the second document is an educational report that explains the value of on-site solar to commercial property owners. Titled, “Solar Energy & Commercial Real Estate (CRE): Insights for Your Investment Property,” the report authors highlight the added value commercial property owners can realize by deploying solar energy systems on-site. That encompasses the potential “to raise rents, lower operating expenses, negotiate lease extensions, and increase the net present value, or NPV, of their buildings.”

Instigators of positive change

Both Torbin and Saylors-Laster have witnessed, and contributed, to growing awareness among US corporations and real estate investors of the value they can gain by investing in distributed solar, BESS and energy efficiency. “We both saw the exact same thing: A large organization with lots of resources can make a lot of sense, and derive a lot of value, of what is essentially a disorganized market [the US market for commercial-industrial solar and distributed, clean energy systems and technology].”

Tesla SolarCity Commercial Rooftop PV
SolarCity’s commercial solar and energy storage. | Credit: Greentech Media

That said, the US market for commercial-industrial solar, BESS and energy efficiency, LED retrofits more specifically, has improved greatly over the course of the last 20 years, Torbin continued. “I can remember the first project I did around 12 years ago [as head of Prologis’ renewable energy development group]. I had to explain each and every aspect of the project in detail. Corporations and property owners are much more familiar with solar and how it impacts their core businesses and liquidity.”

“Another part of the equation is that the market is expanding across the country.” Also key to growing awareness and investment, installed costs for “behind the meter” solar, battery energy storage and energy efficiency improvements continue to decline, which enhances investment returns while also yielding intangible returns, such as the organization contributing to reduce greenhouse gas emissions and pollution while also spurring “green” economy and green energy job growth.

Community solar, EV charging and the fast-changing, distributed renewable energy-energy efficiency landscape

Solar Magazine: Solar Industry News and Insights

Working closely with institutional real estate owners and investors to identify and evaluate clean energy investments that can add value to their portfolios lies at the core of Black Bear Energy’s business. That extends to keeping them informed as new opportunities arise due to new clean energy legislative and regulatory initiatives. Black Bear advising clients regarding the potential for them to participate in community solar projects is one example.

Community solar is touted as a cost-effective way of extending access to emissions-free solar power to city and other urban centers. Colorado was the first US state to launch a community solar program. Minnesota’s community solar program has proved especially popular, and Black Bear is working with clients to assess opportunities for them to host solar PV installations that produce power for community solar programs there, Torbin said.

“For example, an industrial property owner might have large, flat roof space that can support a couple of megawatts of solar power generation. The property owner could rent the roof space out to a community solar program operator and receive income that’s not predicated on the operator, or their community solar subscribers, buying energy from it,” Torbin explained.

Black Bear always keeps a sharp eye on the fast-changing landscape of new, solar and distributed, clean energy technology, as well. Prospects for property owners to install electric vehicle (EV) charging systems are at the forefront of the new, distributed clean energy technology wave at present. “We’re paying a lot of attention to ‘electrification’ [the conversion of equipment, appliances and devices presently powered by fossil fuel combustion to electricity] at present, and vehicle electrification is a big part of that. We’ve helped some clients with that. It’s not a major part of our business, but we expect to be more active in coming months and years [given rapid growth of self-driving vehicle R&D and investments in EV manufacturing],” Torbin said. comment↓


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