Solar Energy: A secret weapon for increasing property value

Building owners can lower their electricity bill by 20% to 40% by switching to solar

With nearly 300 days of sunshine each year, Colorado arguably has one of brightest solar energy outlooks in the country.

Colorado Gov. Jared Polis’s ambitious plan to achieve 100% renewable energy by 2040 only strengthens this position. Through a new collection of laws designed to reward energy efficiency, limit greenhouse gas emissions and support the expansion of community solar gardens, Colorado is poised to take a leadership position on the national solar stage.

Over the next two decades, state agencies like the Colorado Energy Office and the Colorado Public Utility Commission, in partnership with private industry, will be responsible for bringing this forward-thinking legislation to life.

In fact, Colorado enacted the first statewide community solar program – the Community Solar Gardens Act – in 2010, and utilities like Xcel Energy continue to award these subscriber-based projects to firms that make it easier for customers to access low-cost clean energy. Earlier this year, Unico Solar Investors, in partnership with Namaste Solar, was selected by Xcel Energy to build six new community solar gardens totaling 12 megawatts (MW) of capacity.

However, for all of its benefits – and for as many success stories that exist – commercial and industrial solar has yet to realize its full potential. Misconceptions around utility cost competitiveness, maintenance and lease agreements have, for years, caused stagnation and confusion among property owners.

The facts, however, provide a compelling case for solar within today’s commercial real estate market.

Unlocking hidden value in commercial properties

It’s no secret that commercial and industrial buildings have a significant impact on our energy consumption. According to recent data, these types of buildings consume 72% of the nation’s electricity.

While green building standards for new construction continue to improve, many legacy commercial and industrial buildings, especially in Colorado, are sitting on a massive untapped resource: underutilized rooftop and ground space.

As the economics of large-scale solar improve and the market opportunity expands, property owners, instead of leaving money on the table, can increase the value of their property by changing the way they buy power.

According to a 2018 report from the Solar Energy Industries Association, building owners can lower their electricity bill by 20% to 40% by switching to solar, improving their margins and bottom line. That same report revealed that solar is competitive with utility power on an unsubsidized basis. This means that even if property owners cannot install solar on their buildings, they should consider the benefits of a solar installation elsewhere, like underutilized ground space on the property or a subscription to a community solar garden.

Adding to the appeal, power purchase agreements are often flexible. In fact, Unico Solar Investors allows clients to transfer or purchase the agreement at any time without consent.

Take a downtown office building, school or industrial warehouse, for example. Rather than pay fluctuating retail electricity rates, property owners can lease land or rooftop space to a third-party in exchange for producing solar energy for the property, without adding risk to the asset.

These power purchase agreements allow property owners to secure a low, long-term electricity rate in order to reduce risk and exposure to volatile utility prices. Over time, the spread between the retail electricity rate and the power purchase agreement grows to create real savings for building and business owners.

In the Denver Tech Center, Harlequin Plaza, a two-tower office campus that shares a below-grade mechanical plant, deployed a successful multi-tenant solar power system without exposing the property or tenants to risk. Today, 22% of the building’s electricity needs are produced by solar energy, offsetting nearly 10,000 metric tons of carbon dioxide and generating more than $1 million in net income over 20 years.

By matching a building owner’s goals with the drive to utilize natural resources in a thoughtful manner, buildings throughout Colorado – and the country – can transform the built environment in a cost-effective manner, achieving lasting efficiency and sustainability through solar energy.

Adam Knoff is associate director and co-founder of Unico Solar Investors, a wholly-owned subsidiary of Unico Investment Group that develops, owns and operates solar energy systems for its own real estate portfolio and for third-party clients.

Categories: Management & Leadership