Development Trends: Powering Up
Is alternative energy the solution for developers looking to save money and go green?
By Jeffrey Steele, Contributing Editor
A high-profile multifamily community in Portland, Ore. gains part of its power from four wind turbines on its roof and uses solar cells to efficiently heat its hot water. A 254-unit community in San Diego leverages its upgraded solar array to give residents 100 percent of their energy from the sun. A new initiative brings dozens of solar-powered electric vehicle charging stations to multifamily properties in San Francisco. And a 112-unit luxury apartment community in New Jersey employs photovoltaic energy to supply common-area electricity.
We’ve come a long way since fossil fuels furnished 100 percent of the power at multifamily properties nationwide. Is the value of wind and solar power in today’s industry manifested in energy savings and a greener world, or in the marketing firepower that highly visible installations help generate?
“It’s not really about the energy savings,” said Jerry Yudelson, a Tucson-based author, speaker and sustainability consultant who is referred to by some as “the Godfather of Green.” “Solar power is a stalking horse for other benefits to the developer, the resident and the community. You can get a lot greater energy savings with simple design features, like an extra six inches of insulation in the walls. But people can’t see it, can’t feel it and can’t tell their friends about it.”
Kelsey Mullen, a San Diego-based sustainability consultant who served as LEED for Homes director from 2008 to 2014, said the majority of properties pursuing LEED certification during his tenure didn’t include solar or wind energy. “There are many other features, and many other ways to go green.”
Wind power is not a practical solution in meeting multifamily energy needs for multiple reasons, Yudelson believes. The giant turbines needed to generate wind power are not likely to attract prospects seeking lovely physical settings. Most wind power serves industry in remote and windy areas that aren’t locales sought by large numbers of apartment developers and residents.
At Indigo@Twelve|West, the Portland apartment community cited earlier, and other communities that incorporate it, wind power is “a feature,” Mullen said. “Those turbines on top of the building are like a big neon sign reading, ‘I Am Green, I’m a Sustainable Building,’” he explained. “There’s a benefit from the system, but many times when wind turbines are installed, it’s an advertisement.”
“The turbines don’t provide much benefit,” Yudelson added. “But they are highly visual and make it an iconic building. I call them kinetic sculptures, and they help the building get some of the highest rents in town.”
Solar power, on the other hand, offers a far more tangible benefit, and one that better fits within the physical context of many apartment communities.
“Solar is another story entirely, because solar is visible, goes well with the broader Energy Star and LEED initiatives, and may attract residents on the high end,” Yudelson said. “The nice thing about multifamily and solar in many parts of the country is that many buildings are low-rise and mid-rise. You have a flat roof and it’s something that’s visible. So in those parts of the country where you already have people interested, it might be a marketing tool. It’s like, ‘How can I stand out from the competition? Can I get slightly higher rents and faster lease up, or entitlements from the local planning body, if I include features like solar?’”
A leader in leveraging solar power is San Diego’s Aquatera Apartment Homes. When first constructed, the community benefited from a 282-killowatt photovoltaic solar energy system that provided 90 percent of its common area electricity. This spring’s installation of panels generating 539 kilowatts yielded an 821-killowatt plant that enables Aquatera to be 100 percent solar powered. While solar energy infrastructure is becoming both more affordable and more efficient, and today requires fewer panels to generate more electricity, there remains a problem, Mullen said. Given the square footage of many multifamily communities, there is insufficient roof space to make even newer, highly efficient solar panels impactful enough to justify their installation.
Building-Integrated Photovoltaics (BIPVs), or photovoltaics integrated into vertical surfaces of high-rise residential buildings, have limited functionality, he said. They are relegated to glass covering the floor assemblies on each floor. To be efficient, photovoltaic films stretched over high-rise glass must be dark, which would not please residents interested in seeing out their apartment windows. “I’d like to see photovoltaic film become transparent,” Mullen said.
Affordable and market-rate
The Elon Musk-owned SolarCity and other entities like it are providing third-party financing of multifamily solar power systems. According to Yudelson, “They take a lease on the roof and get their investors to finance the solar equipment in exchange for the significant tax credits possible with alternative energy in multifamily.” Third-party financing of solar is as applicable to affordable as to market-rate properties.
Yudelson suspects some solar power in affordable housing communities exists due to entitlement issues.
“Affordable housing is always difficult to get built, so you want to load it up with as much good stuff as you can,” he said. “You have to obtain the government money and the local approval, and you want to do something worthwhile to cut the utility bills of the people who will live there. So it’s kind of a win-win-win for all involved.” An example of affordable and workforce housing incorporating solar energy is the 115-unit Birch Hills Apartment Homes in Brea, Calif., where photovoltaic panels power common areas, and heat pool and laundry water. Another is Studio 819 in Mountain View, Calif., with 49 workforce units. There, an extensive photovoltaic system offsets the common area energy load.
On the other end of the spectrum, developers of higher-end or luxury apartment communities may increasingly view the inclusion of solar power as a way of reaching performance and financial goals, Yudelson said. They might see solar power as a means of gaining planning approval six months earlier or lease-up three months faster. “There’s a return on investment of the infrastructure,” he observed. “And if there is no cost to me as a developer because it’s being financed by a third party, what’s not to like?”
Tax credit question
How much solar energy infrastructure will be incorporated in multifamily communities in the years ahead will likely hinge on whether the federal tax credits will be continued beyond 2016, Yudelson said.
“I think you’ll see a gold rush next year, because they have to be installed by the end of next year to qualify for the tax credits,” he predicted.
If the tax credit program is continued, adoption rates will rest on word of mouth from one developer to the next about the return from alternative energy inclusion, he said, and Mullen agrees. “If one developer is making it work, and making it pencil, that will influence the thinking of other developers,” he said.