Solar Unlocks the Profitability of Energy Efficiency Compliance

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Solar Unlocks the Profitability of Energy Efficiency Compliance

Buildings are increasingly subject to stringent energy regulations due to growing environmental concern. Regulations such as Building Energy Performance Standards (BEPS) and the Green Area Ratio (GAR) are common. They require capital outlay on energy efficiency upgrades that only pay themselves off after an unreasonable amount of time. However, solar has emerged as a profitable solution to meet GAR and BEPS requirements for Commercial Real Estate (CRE). Solar is easily scalable and has a significantly better financial profile than non-solar paths to achieve compliance with GAR and BEPS. This makes it easy to tailor a solar solution that increases income while helping to meet energy efficiency standards. In short, solar unlocks the profitability of energy efficiency compliance for CRE.

What are BEPS and GARs?

Washington, D.C. designed the BEPS program to reduce greenhouse gas emissions by setting energy performance standards for existing buildings. The program’s standard pulls directly from the median ENERGY STAR score of buildings in a given asset class. Buildings scoring below their designated standard must invest in reducing energy use intensity (EUI), or face fines up to $7,500,000. Additionally, the standard is based on median scores that change over time. A building that qualified last year may still need to make improvements to stay compliant for future cycles. The median rises as buildings work to meet the previous standard in order to avoid penalty.

For CRE developers, the Green Asset Ratio, or Green Area Ratio (GAR) in D.C., is a critical metric developed in cities such as Berlin, Malmo, and Seattle. It reflects the proportion of green area to lot area. The GAR score is a ratio of landscape elements multiplied by their respective multiplier and divided by the lot area. Landscaped planting areas, bioretention planter boxes, vegetated green roofs, trees, and permeable pavers are all typical Landscape Elements used to enhance a property’s GAR score. The vast majority of new builds requiring a Certificate of Occupancy must submit a GAR plan as part of the building permit application. GAR requirements also apply to additions and interior renovations on existing structures where the cost of work exceeds 100% of the assessed building value. Zoning permits are withheld until a building can prove it is GAR compliant.

Profitably Achieving BEPS Compliance with Solar

Buildings looking to increase their ENERGY STAR score have a few options available to them. They can install expensive new HVAC systems, invest in LED lighting, or embark on costly building envelope insulation. In short, compliance involves spending, either on efficiency upgrades or on non-compliance fines. While many businesses understand how solar panels can play a pivotal role in helping them meet these standards, the initial capital outlay is daunting.

New Columbia Solar (NCS) has helped many building owners in the DC area meet their BEPS requirements through solar without any capital expenditure on their behalf through Power Purchase Agreements. In this arrangement, NCS will engineer, finance, and construct the solar facility which they own and sell the power back to the building at a sub retail rate. In many cases, NCS is able to offer a $0.00 / kWh PPA rate in D.C. Therefore, the PPA agreement not only costs the building owner nothing to boost their BEPS compliance, it also increases the net operating income (NOI) of the building through the elimination of a substantial portion of their energy costs.

Profitably Achieving GAR Compliance with Solar

Incorporating solar power systems into their projects can significantly lift a building’s GAR score. Once again, a solar PPA is an easy and cost-effective way to enhance a building’s GAR score. Since NCS owns and operates the solar system and provides the CRE owner with a discounted electricity rate, hosting the solar boosts their NOI. This structure requires zero capital expenditure from the building owner.

CRE developers can also leverage a community solar lease to meet GAR standards. Under this agreement, NCS pays the building owner a lease and sells the electricity back to the grid. Essentially, the owner is paid to enhance their GAR, rather than the other way around. This is an especially good option for CRE firms that are not responsible for any power costs associated with the building. Additionally, solar installation demonstrates a commitment to sustainability, which can be a compelling selling point in today’s market, especially coupled with an NOI-boosting lease.

The Bottom Line

Solar power offers a win-win solution for commercial and industrial entities. It enables them to comply with green standards without any capital expenditure and a boost to their bottom line. Compliance does not have to come at a cost, especially as renewables become more and more lucrative. NCS is proud to develop solar projects that allow our clients to comply with various energy regulations in a finically accretive way. Please contact us to explore how we can help navigate these requirements.

Ava Duane

Sales Operations

Ava joined NCS in 2023 after serving in the position of Channel Manager at Prism Group, a residential solar company out of Melbourne, Australia. She has a proven track record of increasing sales performance and efficiency, having more than tripled Prism’s average weekly sales during her tenure. At NCS, Ava oversees Sales Operations where she provides market research analysis, underwriting, and administrative support to the Sales Team. Please feel free to contact Ava at [email protected].

About New Columbia Solar

New Columbia Solar is a Washington, DC-based solar energy company, financier, owner, and operator of commercial and industrial solar energy facilities. Founded in 2016, the company y has grown to be the largest and most comprehensive solar energy company in the District of Columbia. Our mission is to help landlord’s and their surrounding communities take advantage of renewable energy and the profits and energy resiliency it provides. For more information, visit: www.newcolumbiasolar.com

Email: [email protected]

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