When net positive is business plus
June 01, 2017
June 01, 2017
Helping developers find the sweet spot between efficiency and profitability in commercial buildings
In a decade of working in sustainability, I’ve found that I usually face an uphill battle keeping the sustainable and energy-efficient features in building designs. Unless energy efficiency targets are mandated by law, the argument for sustainable features often comes down to doing the right thing for the planet and achieving a marketing advantage—both of which may be harder to justify for a commercial enterprise. But more recently, a strong business case has emerged for energy efficient features in these properties. Under the right conditions, a Net Zero or Net Positive (in which a building produces as much ‘Zero’ or more ‘Positive’ renewable energy than it consumes) commercial development can benefit the owner’s bottom line. In fact, targeting for NZE/NPE (Net Zero Energy/Net Positive Energy) in commercial real estate can be a very smart business move.
Recently, we’ve found a way to incorporate many of the awesome sustainability features we love and build them into a persuasive business argument for Net Positive buildings. Where once we talked about sustainability features that made buildings more marketable, healthier, or even productive, now we can talk profitability too. As designers, we’re always looking to balance social, economic, and environmental impact. With a Net Positive commercial development such as Evolv1 in Waterloo, Ontario, a collaboration between Sustainable Waterloo Region, developer the Cora Group, anchor tenant EY Canada, and architect Stantec, we have the satisfaction of engaging with all three.
What changed? Energy has been rising in price so the upfront costs of installing photovoltaic (PV) systems have begun to seem more realistic. Owners are becoming more aware of the benefits of sustainable design. PV installations in North America have exceeded projections and, as the systems become more popular, the price has fallen.
Does Net Positive make sense for the project?
Typically, in evaluating sustainable technologies, we look at the premium cost of high-end systems and compare that with energy saved and energy cost savings over the lifespan of the building. That allows us to determine whether going that extra distance is economically feasible and commercially viable. To achieve a balanced approach to NZE/NPE, we perform a similar technical analysis that accounts for economic factors.
But with a project targeting NZE/NPE such as Evolv1—because the developer’s investment will eliminate the entire energy budget over its entire lifespan—the economic case becomes obvious. Take the costs for a normal building and its energy consumption over its entire lifetime in today’s dollars—that’s the budget for the Net Zero building. The question becomes how to achieve that on budget.
PV is expensive but it’s getting cheaper all the time. Our calculations balance environmental bang-for-the-buck across a full menu of features. Rather than putting the whole budget in one place, we say: ‘Let’s invest money where it makes sense, until it doesn’t make sense anymore and then try something else.’ We implement energy conservation measures (ECMs) until it becomes cheaper to install generating technologies like PV.
Commercial buildings are Net Positive friendly
What kind of buildings are ready to go NZE/NPE? An office building, as it happens, is one of the building functions that can feasibly meet NZE/NPE under the right conditions. Building types with intense power needs, such as a data center, are far less likely to meet NZE/NPE as this point. Achieving NZE/NPE targets also helps focus the program for the building. Including a fast food franchise, for example, might be nixed early on as too power intensive on site.
A feasibility study showing the merits of sustainable may be impressive, but it’s not always likely to sway a commercial developer who is considering costs of systems and operations in its plans. Instead, it’s the idea of lessening risk that can unlock the developer’s interest. A NZE/NPE building that produces its own energy has a built-in resilience against energy cost escalation which makes it even more appealing to a potential developer.
Net Positive offers an opportunity for the owner/developer to make money back on its investment. Think of it this way, the commercial developer with a NZE/NPE building can act almost like its own utility and sell the power the building generates to its tenants. How much would these tenants pay for gas and electricity? Think of that as additional revenue. The tenants are paying monthly utilities that pay off the PV panels the developer has installed. The panels will eventually pay for themselves and continue to generate income over the life of the building. In regions with volatile energy pricing, a locked-in rate can be very attractive.
The developer is, of course, free to market the building as energy generating, Net Positive alongside whichever sustainable features have been incorporated (e.g., green walls inside for air quality, healthy or renewable materials, or a bike room).
Commercial NZE/NPE buildings are also prime candidates to receive the latest in wired technology. Connected buildings offer us sustainability-minded designers and owner/operators the ability to monitor and measure impacts of sustainable features on the built environment. And this can help us quantify the occupant health and wellness benefits that a building imposes on tenants.
Today, as surprising as it sounds, NZE/NPE is emerging as much more than a showcase for do-gooders but as a commercially viable option. As analyzing and implementing the technology and making the business case for building NZE/NPE becomes more familiar, we are likely to see the Net Zero/Net Positive building go from rarity to regularity.