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SPOTLIGHT/ENERGY EFFICIENCIES

EMPOWERED: CHOICES AND

CHALLENGES IN ENERGY EFFICIENCY

JOHN SALUSTRI energy consumption data using ENERGY STAR Portfolio
®
Editor-in-Chief Manager . This data may be used by tenants, lenders,
®
Salustri Content Solutions vendors and regulators to account for utility costs and
energy efficiency in their decisions.

THIS IS A PIVOTAL TIME for energy strategies in the Close to 500,000 buildings—representing about half of
commercial real estate industry, which is both a catalyst the nation’s commercial property space—have used the
and a beneficiary of historic change. A menu of low-cost ENERGY STAR Portfolio Manager benchmarking tool,
options that were not viable as recently as a decade ago according to the Environmental Protection Agency (EPA).
is now available to property owners and managers. These ENERGY STAR-enabled assets can realize decreased
and further innovations could cut commercial buildings’ operating costs of 11% over one year and a five-year
1
energy consumption by more than 20%. decrease of 28%.

“Next to taxes and debt service, which aren’t controllable, Influential as these regulatory and operational consider-
utilities are the highest expense for commercial buildings, ations are, technology may be the single most powerful
and they are controllable,” observes Matt Eggers, vice change agent for the electrical distribution system. The
president of Yardi Energy. “So, if you are attempting to plummeting cost of solar power and new tools for energy
reduce operating expenses and increase income, utilities efficiency are undermining the grid’s once-unchallenged
are at the top of the list.” position as a single-source supplier.

New tools and strategies can substantially reduce a Solar installations accounted for 30% of all new electric
property’s energy consumption, boosting efficiency and generating capacity brought online in 2017, following
enhancing the bottom line. It is not far-fetched to imagine a 39% share the previous year, the SEIA reported.
a future in which large numbers of buildings could, in Installation costs have plummeted 70% since 2010, and
effect, serve as their own power plants and depart the solar generation capacity has increased 68% annually on
grid entirely. The result would be a surge in NOI for average during the same stretch, the SEIA estimates.
commercial properties, which account for 18.2% of total
U.S. energy consumption. “This cost decline has made solar the cheapest form of
new generation in some markets around the U.S. and the
On the regulatory front, momentum is clearly on the side world,” Eggers reports.
of renewable resources. Since 2006, a federal investment
tax credit has served as a primary engine for expanding Other forces disrupting the power grid include energy
solar energy nationwide. The initiative covers 30% of efficiency, fuel cells, demand response technologies, battery
the cost of a solar system as a tax credit back to the storage, electric vehicles and micro-grid technologies.
system’s owner. Since the solar investment tax credit’s
introduction, commercial solar installation has increased Impactful Efficiency Technology
more than 1600%, according to the Solar Energy While the economics of solar have improved dramatically,
Industries Association (SEIA), a national trade group. driving major gains in deployment, other technologies are
In addition, 10 states and 29 municipal governments having a significant impact by reducing building energy
require at least some buildings to track and report demand.

1 “Why you should design to earn EPA’s ENERGY STAR,” www.energystar.gov, March 13, 2018, www.energystar.gov/buildings/facility-owners-
and-managers/new-construction/why-design-earn-energy-star/overview-energy-star

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