Novel Twists on Green Energy Investing for Commercial Property Owners
- Mar 2, 2018 5:43 pm GMT
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When it comes to investing in cleaner, more reliable and more resilient energy, most of the activity among commercial real estate owners seems to revolve around traditional energy efficiency improvements. There's still a lot to be said regarding the value that can be derived from investing in “negawatts,” however.
In addition, a new breed of clean energy and energy efficiency services providers are offering a broader range of innovative products and services geared specifically for commercial property owners. Black Bear Energy specializes in advising commercial real estate owners considering investments in the latest clean energy and energy efficiency products and services.
Having represented West Coast real estate investment company Kilroy Realty Trust's deployment of 5.2 MW of commercial solar PV systems, Black Bear recently acted as Kilroy's adviser and agent in a deal that will see Silicon Valley-based Stem deploy more than 7.5 MWh of its Athena intelligent battery energy storage solution on-site at four Kilroy commercial properties in Los Angeles and another four in San Francisco.
Black Bear played a principal role in designing and structuring the project, which incorporates some interesting twists. We delve into some of those here in part two of our interview with Black Bear CEO Drew Torbin.
Green energy, clean tech advice and agency for commercial property owners
“We're essentially an owner's representative, or a buyer's agent, when it comes to renewables and clean tech,” Torbin explained in an interview. “Primarily, we help commercial property owners, such as Kilroy, understand all that's involved when it comes to investing in new energy products and services, such as solar-storage, LED lighting systems and others.
“From there, we help them identify, execute and obtain the best economic and contractual terms.” As is the case with Kilroy Realty, Black Bear typically advises and represents clients with multiple projects over the course of their relationship.
Black Bear has been working with Kilroy for a few years now, looking at different properties with an eye towards identifying opportunities to add value to their portfolio by creating “green” energy, Torbin told Energy Central. “We worked on solar first, then evaluated the porfolio for storage. We wound up putting out a competitive procurement tender and Stem was selected as a result. The contracts have just been signed. Some will move faser than others, but we expect eight will be online by the end of the year.”
Black Bear overlays policy and utility rate structures on projects and sites' technical design and engineering specifications when helping clients structure their investments, Torbin said. “There's a solar-friendly rate in California, so moving fixed charges to take advantage of turned out to be the best decision in that it increases the overall profitability of the project.
“What Kilroy has done by investing in energy storage is reduce peak demand charges at these sites. They're also going to provide resiliency benefits to the grid and wind up with a smoother load profile, which means that grid operators won't have to go deeper into reserve capacity.”
Innovative twists on commercial real estate “green” energy investments
Stem will install its Athena intelligent battery energy storage system at some of the same Kilroy commercial properties in Los Angeles and San Francisco that Black Bear previously helped Kilroy install on-site solar PV systems. The solar PV and lithium-ion battery energy storage systems will run separately, in parallel, rather than functioning as an integrated solar-plus-storage platform, however.
That's down to the market regulatory environment in California, Torbin explained. “The solar PV systems are generating power when the sun shines irrespective of whatever else is happening in the buildings energy-wise.” That by itself will reduce grid energy consumption.
Focused directly on helping commercial real estate owners invest in clean energy and energy efficiency, the Rocky Mountain Institute (RMI) played a key role in getting Black Bear off the ground. “We were shopping our business plan around and they provided the original seed funding to launch Black Bear,” Torbin recounted.
RMI also participated in Black Bear's Series A round of venture capital fundraising. “They have been of great benefit to us, providing seed capital that has enabled us to grow from there over the last three years,” Torbin said.
“This is the age of the enlightened, empowered consumer. It has taken a long time – these companies had always been viewed as utility rate payers with no choice. Now they have all these choices as to how, where and by whom their energy is generated and how electricity is used.
'What am I paying, what risk-reward profile am I going to take on? These are all new options and Black Bear links into them to create value. We're moving from an operational savings channel and creating value for our clients in terms of rent, which is the best type of income for a real estate investor. The concept is brand new and it's coming on very quickly.”