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Newly Launched Ballot Petition Demands Broader Solar-Energy Options

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Our state’s nickname, The Sunshine State, is more than just a bumper-sticker slogan: Florida has the best solar energy resource east of the Mississippi.

This potential, coupled with Florida’s size and growing population, means that we should be a national leader in affordable solar-energy generation. But we’re not.

Two of Florida’s big power companies have recently announced new large, utility-scale solar projects. However, the private investment market is clamoring to invest in solar in Florida, too. Florida’s distributed (roof top) solar market, which is funded by private investment dollars, is being artificially constrained by unnecessary barriers.

So far, Florida’s big monopoly utilities have been effective at controlling who generates power from the sun and what they can do with it. These barriers stifle innovation, constrain customer choice and prevent job creation, hurting my business and hundreds like it.

Kent Crook

Kent Crook

That why longtime solar advocate, CEO of Wiremaster’s Electric, an electrical-services company in Miami, and board member of the Florida Alliance for Renewable Energy, Kent Crook, supports a newly launched ballot petition to expand solar choice by allowing customers the option to power their homes or businesses with solar power and choose who provides it to them. This petition is not a mandate, and it won’t raise taxes. It simply removes barriers in order to expand the choices for Floridians who want to power their homes and businesses with clean, renewable solar power.

Solar choice would enable customers to contract with solar providers who can offer innovative financing plans to provide solar power systems at no upfront cost — much as we already purchase and finance homes or cars. Landlords likewise will have the opportunity to provide the economic benefits of solar power to tenants. And this ballot would also permit solar providers to sell power directly to the customer at a long-term fixed rate. Fixed rates lock in long-term savings and offer more control over our energy future. In addition, recent studies have shown that solar-energy systems increase homes’ resale value.

These benefits are great news for middle- and lower-income customers who may have been locked out of the solar market because they did not have the upfront cash to invest in a solar system. Clean, nonpolluting energy sources like solar can also reduce traditional energy’s health impacts, which disproportionately affect low-income and minority communities in our state and around the country. Thus we are able to leave cleaner air and water for future generations to enjoy.

Despite protests from the big power companies, solar energy does not raise electricity rates, and because the fuel source — the sun — is free, it will help customers control electricity rates. Monopoly power companies like Florida Power & Light make their money by building new power plants. They earn a guaranteed rate of return, which is then passed on as profits to its shareholders. The company doesn’t seem to consider its low-income customers when gutting customer energy-efficiency opportunities or building costly new power plants.

Monopoly utilities are understandably scared of losing their monopoly and the lucrative profits that the government guarantees them. When homeowners and businesses are able to generate their own power, it means less profit for power companies.

 By allowing the private market to invest in solar, investment risk is shifted away from the monopoly utilities’ customers to the private market, saving customers money and reducing the need to build new expensive power generating facilities.

It’s called the free market, and competition will benefit us all. More solar energy customers means businesses will hire and train more solar installers and electricians — resulting in more well-paid, local jobs that cannot be outsourced.

A recent poll found that 74 percent of state voters support a proposal to change the law and allow Floridians to contract directly with solar providers to power their homes or businesses with solar energy. Residents of the Sunshine State clearly support solar power, but they are currently being denied the right to choose it as their power source.

Floridians for Solar Choice is bringing the issue directly to the people. Sign the petition at www.FLsolarchoice.org.

 

Source: Miami Herald

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Top 8 Predictions For Green CRE In 2015

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Several green building trends emerged over the past 12 months that will impact commercial real estate in the United States in 2015, according to Doug Lawrence, founder and managing principal of 5 Stone Green Capital—Bainbridge, an institutional real estate company.

Lawrence serves on the investment and natural resources committees of the University of Connecticut Foundation and the advisory board of Rutgers Business School.

Here’s what he foresees for emerging trends in green real estate in the year ahead.

1. Aging baby boomers and Gen X, Y and Z will continue to move to cities, requiring more affordable housing—and expecting it to be green.

CREPredictionNo1U.S. cities are growing faster than the suburbs. Baby boomers will need urban housing that supports their health and community needs, but so will the younger generations flocking to live in urban environments. As a policy matter, this means cities will be pressured to create housing that serves a wider range of income and age demographics. Affordable housing is likely to be the target of municipal agendas throughout the country.

Green multifamily really wins within this demand picture. The ability to reduce overall operating expenses through green technology, therefore also reducing occupancy costs for tenants, should improve residential affordability. Green multifamily properties featuring optimal health designs will become increasingly attractive. These would include better air filtration systems to reduce dust, pollen and airborne pathogens that may trigger asthma; more daylighting to improve natural vitamin D production; and antibacterial countertops and doorknobs.

Expect multifamily vacancy rates to continue to fall for affordable and seniors housing sub-sectors. Absorption rates will remain solid for new multifamily construction. The 18-to-34-year-olds seem psychologically predisposed to green housing and, thanks to tight lending standards and high student loan debt, this group will not be seeking single-family homes in the near future. Thus, multifamily demand looks pretty good for 2015, and green multifamily will be the likely winner with the younger generations.

2. The anti-climate-change voices will yell even louder.

CREPredictionNo2Some naysayers will stop arguing that there is no increase in carbon dioxide (CO2) in our atmosphere. Instead, they will argue that increasing CO2 is good for the global economy because CO2 is necessary to increase agriculture. Under this theory, more CO2 in the atmosphere would mean a golden age for crop production. Green real estate investors will continue to reduce their carbon footprint under the belief that doing so increases profitability and is good for the environment as well.

3. Renewable technology, particularly solar, will continue to fall in price and improve in efficiency.

CREPredictionNo3Solar panels that can convert up to 70 percent of the sun’s light spectrum into electricity (from gamma rays to X-rays) are already in beta testing. This could be a game-changer for real estate owners, especially in the multifamily and industrial sectors, as well as for those with properties in dense urban environments in high-cost electricity states.

The cost of solar energy could fall below that of fossil fuel-generated electricity per kilowatt hour, even with the drop in oil and/or gas prices. As technology improves, real estate managers will explore new ways to provide energy to tenants and users at more efficient prices.

4. Urban resiliency and climate change will become topics for deeper discussion among policy-makers.

CREPredictionNo4Following rising average sea levels in a wide range of American cities—from Los Angeles to Galveston, Texas to New York and Boston—and more frequent and more damaging storms, cities are becoming very focused on hardening essential infrastructure.

The real estate industry may see new building codes that emphasize sustainability, as well as resiliency.

5. Utilities companies and smart developers will form partnerships for distributed generation.

CREPredictionNo5It’s getting harder and harder to build new power plants, yet we have more people for whom to provide electricity; meanwhile, business demand for electricity is increasing as the economy strengthens. U.S. power plants are not only aged, but also use incredibly large amounts of fresh water for cooling. Moreover, some experts predict that as much as 10 percent of coal-fired electricity-generating plants in the United States may be shut down over the next few years. More demand, coupled with fewer production resources, may spur real estate owners and power companies into an alliance.

The concept of distributed generation, wherein solar-powered rooftops are used to create renewable energy that feeds the grid, will become more attractive. In this way, the utility company will gain a production source to feed growing demand without having to go through nightmarish public hearings to obtain the production increase. Meanwhile, the real estate owner may see a new revenue stream, or at least a reduction in energy consumption. All in all, partnerships between developers and utility companies may reduce overall operating expenses for garages, public areas, elevators and other electrical hot points.

6. The sharing economy will continue to grow.

CREPredictionNo6Sharing economy enterprises are thriving, particularly in urban markets. Think office sharing, or even Airbnb.com. These phenomena are no longer fads, and they are changing how we think about office space, hoteling and more.

Many experts assume that the more we share, the less stress we will have on the environment, but it may still be too early to tell whether that’s true.

7. Food production will become more urban and commercial buildings’ rooftops will increase in value.

CREPredictionNo7It’s becoming less profitable to truck a tomato from California to New York and, due to the increasing demand for locally-grown produce, the term “farm-to-table” has become embedded in our vocabulary. The demand for food that is grown without pesticides, fungicides or other chemicals is increasing. We already see grocers like Whole Foods establishing hydroponic farms on their rooftops. Such production reduces transportation costs and improves produce freshness and variety. Other grocers, including Safeway, have gone green by deploying solar arrays and other renewable energy technologies on their stores’ rooftops in order to reduce peak-demand electricity charges. Large rooftops will therefore continue to find new value as non-traditional tenants begin to use them in new ways.

8. Mortgage finance and insurance organizations will consider green standards.

CREPredictionNo8As the government-sponsored entities Freddie Mac and Fannie Mae continue reviewing and improving their standards for green buildings, other mainstream lenders and insurance companies will catch up with the trend. Insurance companies will see green buildings as a way to reduce risk. Lenders will potentially see lower volatility in net operating cash flows. As the capital markets go green, so will more building owners and investors.

The Dow Jones Sustainability Index is proving that green business outperforms the non-green Dow Jones Industrials Index. Green building will mimic that outperformance and, as a result, gain momentum in 2015.

 

Source: NREI

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New Idea: Third Party Solar Financing For Commercial Properties

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The most recent initiative makes it a goal for the costs of solar to continue their trend downward to meet those of conventionally generated electricity by the end of this decade.

This comes with the announcement by the White House reinvigorating solar energy through the Department of Energy’s SunShot initiative.  These goals don’t only come from government offices.  Laboratories too are leading the way. Technological advances are helping along the trend, as silicon may be able to be replaced as the main ingredient in solar panel construction.  A recent discovery that a light-absorbing material known for a century may work in solar panels and dramatically increase their efficiency has the industry talking.  Thanks to the combined developments, the cost per watt of solar-generated electricity may fall to the 10-20 cents per watt range where fossil fuel-generated electricity resides.

All that said, the opportunity for commercial space users to take advantage of these new technologies and for commercial landlords to convert their properties into energy-producing ones remains mired in the financial barriers and customs of an industry that views (and pays for) property improvements for multi-tenant buildings in very specific ways.  To answer the question of how the costs and benefits of solar improvements are apportioned usually needs to begin with how such improvements are paid for.

One California company says they have used real estate legal forms to address this problem. Working with a leading law firm, EPR Squared, a real estate firm specializes in cracking the tough problem of opening commercial rooftops to solar.  In solar improvement,  as with most other features of commercial property usage, the all-important capital source is the third party financier.  But the territory is new and forms and deals have little precedent to work with.  Establishing revenue flows on a tenant or space subdivision basis to cover construction costs and to apportion energy-generation benefit requires a new kind of real estate deal. EPR Squared says they’ve constructed such a boilerplate.

According to real estate research firm data cited by Energy Producing Retail Realty, Inc. Founder/CEO, Chris Pawlik, 90 percent to 95 percent of commercial building rooftops remain essentially beyond the reach of third-party financing, “When you have a commercial building with multiple tenants,” Pawlik said, third parties “can’t technically finance those unless the owner takes it on, and commercial owners won’t do that.”

Third-party financiers, he explained, “can get an agreement signed or financing in place because they have the credit of the off-taker that takes care of the risk.” With a twenty-year commitment, third-party financiers have certainty that their loan will repaid. But, Pawlik said, “owners typically own properties five to seven years and tenants are typically in properties five to ten years. You can’t have a ten- to twenty-year agreement in situations like that.”

EPR Squared’s idea is to create a real estate interest on the property and have it be a separate interest from the improvements and from the land. It is similar to agreements with property owners for cell tower and billboards, though, Pawlik stressed, the solar legal structure is not identical. DLA Piper, which Pawlik called “the gold-standard, top-tier law firm” for commercial real estate, “has finalized the form documents we need to take to the owners to show them how this structure would work.”

EPR2 has “a dozen or so deals in the pipeline with groups that have either portfolios of properties or single properties,” Pawlik said. The first deal, he explained, must be one that demonstrates to the 60,000 California real estate brokers, agents and mortgaging agents that “this is almost identical to a real estate transaction.” When they see commissions in it for themselves, he said, “we can really scale the idea and bring it to a size at which pension funds and insurance companies will start looking at it.”

 

Source: Commercial Source

 

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