Real Estate Impacts of Alternative Energy Technology
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Transcript of Real Estate Impacts of Alternative Energy Technology
WEBINAR SERIESZeroNet Energy Solutions
March 16th, 2011
znesolutions.com
#001
The Impact of Alternative Energy Technology and Legislation
on Real Estate
brought to you buy:
ANALYZE
SOLVE
IMPLEMENT
OPTIMIZE
2010
2015
2020
2025
2030
LEGISLATION AB32 is the Global Warming Solutions Act of 2006, which sets the 2020
greenhouse gas (GHG) emission reductions goals (to 1990 levels) into law.
Prop 23 would have
suspended AB32, but was soundly defeated
in November 2010.
Jan 2011 – ARB completes rules regarding market mechanisms, including
‘cap-and-trade’.
Jan 2012 – GHG rules and market mechanisms adopted by ARB (incl. cap-and-trade) take effect and are legally enforceable
2012-2015 – Yr. 2012 limits reduced 2% per year, applied to Utilities & large
industrial plants.
2015-2020 – Yr. 2012 limits reduced 3% per year, applied to a wider array of
businesses/fuel distributors.
LEGISLATION
Cap-and-Trade: The portion of AB32 imposed by the ARB for purposes of achieving the AB32 GHG reduction goal. It initially impacts Utilities and
large industrial plants, then is applied to a wider business audience including fuel distributors, beginning Yr. 2015.
2015
2020
2025
2030
LEGISLATION
AB32 is the Global Warming Solutions Act of 2006, which sets the 2020 greenhouse gas (GHG) emission reductions goals
(to 1990 levels) into law.
“CARROTS”
• Up to $0.30/sf tax deduction for interior lighting improvements.
• Up to $0.60/sf tax deduction for high efficiency HVAC system
• UP to $1.80/sf combined tax deduction for 50% energy reduction for whole building
• Reduce companies’ and business owners’ energy bills by $40b per year and spur a clean energy renovation boom by implementing a tax credit up to $4.50/sf for energy improvements
• Most of this focus is in California
CURRENT FEDERAL TAX INCENTIVE FOR UPGRADING COMMERCIAL PROPERTIES TO
ENERGY-EFFICIENT SOLUTIONS
PENDING LEGISLATION (OBAMA’S ‘BETTER BUILDING INITIATIVE’)
ZNE smart-factHVAC alone accounts for 31% of the electricity usage in the United States.
• 30% Federal Tax Credit or Grant for Renewable Energy Production implementation (solar, wind, fuel cell).
• MACRS Accelerated Depreciation Benefit – up to $500,000 in 1st year.
• Various State and local rebates and incentives.
• Various Utility Company rebates.
• Enhanced Real Estate Values.
“CARROTS”
ENHANCED REAL ESTATE VALUER
eal E
stat
e V
alue
Real Estate Value
Ene
rgy
Red
uctio
n
INCREASE IN REAL ESTATE VALUE WITH REDUCTION IN ANNUAL ENERGY COSTS
$5,1
83
$15,
548
$31,
095
$51,
825
$77,
738
$108
,833
$145
,110
$186
,570
$233
,213
$285
,038
$342
,045
$404
,235
$471
,608
$544
,163
$621
,900
$704
,820
$792
,923
$886
,208
$984
,675
$1,0
88,3
25
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000 ($60,000)
($50,000)
($40,000)
($30,000)
($20,000)
($10,000)
$0
Source: Nevin/Watson: evidence of Rational Market Valuations for Energy Efficiency
SAMPLE ANALYSIS
John ManionSenior Vice President(949) 468-2306
SAMPLE ANALYSISCASH FLOW ANALYSIS
SAMPLE BUILDING - 25,494SF COMMERCIAL BUILDING IN IRVINE (ALL ENERGY COMPONENTS)
YEAR
PRE-ZNE ENERGY COSTS(1)
EST. ENERGY COSTS
WITH ZNE SYSTEM(2)
ENERGY GENERA-
TIONSCE
REBATE
$4.50/SF TAX CREDIT AND
30% FEDERAL
TAX CREDIT
FEDERAL DEPREC-
IATION BENEFIT (MACRS)
STATE DEPREC-
IATION BENEFIT (MACRS)
TOTAL ANNUAL SAVINGS
CUM-ULATIVE SAVINGS
INCREASE IN REAL ESTATE
VALUE(4)
TOTAL ANNUAL
GAIN/ (LOSS)
CUM-ULATIVE SAVINGS
0 Gross Project Cost for ZNE System: ($1,235,490) ($1,235,490) ($1,235,490) ($1,235,490)
1 ($89,149) ($34,634) $63,746 $13,317 $414,675 $320,868 $82,509 $895,114 ($340,376) $637,456 $1,532,570 $297,0802 ($93,607) ($36,366) $66,934 $13,317 $36,768 $9,455 $126,473 ($213,902) $31,884 $158,357 $455,4383 ($98,287) ($38,185) $70,280 $13,317 $36,768 $9,455 $129,819 ($84,083) $33,460 $163,279 $618,7174 ($103,202) ($40,095) $73,794 $13,317 $36,768 $9,455 $133,333 $49,250 $35,140 $168,473 $787,1905 ($108,362) ($42,099) $77,484 $13,317 $36,768 $9,455 $137,023 $186,273 $36,900 $173,923 $961,1136 ($113,780) ($44,204) $81,358 $81,358 $267,631 $38,740 $120,098 $1,081,2117 ($119,468) ($46,413) $85,426 $85,426 $353,057 $40,680 $126,106 $1,207,3178 ($125,442) ($48,734) $89,697 $89,697 $442,754 $42,710 $132,407 $1,339,7249 ($131,714) ($51,170) $94,182 $94,182 $536,936 $44,850 $139,032 $1,478,756
10 ($138,300) ($53,729) $98,891 $98,891 $635,827 $47,090 $145,981 $1,624,73711 ($145,216) ($56,416) $103,836 $103,836 $739,663 $49,450 $153,286 $1,778,02312 ($152,478) ($59,237) $109,029 $109,029 $848,692 $51,930 $160,959 $1,938,98213 ($160,101) ($62,199) $114,480 $114,480 $963,172 $54,510 $168,990 $2,107,97214 ($168,106) ($65,309) $120,204 $120,204 $1,083,376 $57,240 $177,444 $2,285,41615 ($176,511) ($68,573) $126,216 $126,216 $1,209,592 $60,120 $186,336 $2,471,75216 ($185,336) ($72,001) $132,527 $132,527 $1,342,119 $63,110 $195,637 $2,667,38917 ($194,602) ($75,601) $139,153 $139,153 $1,481,272 $66,260 $205,413 $2,872,80218 ($204,333) ($79,381) $146,111 $146,111 $1,627,383 $69,580 $215,691 $3,088,49319 ($214,550) ($83,350) $153,417 $153,417 $1,780,800 $73,060 $226,477 $3,314,97020 ($225,277) ($87,517) $161,088 $161,088 $1,941,888 $76,710 $237,798 $3,552,768
Internal Rate of Return after 20 Years (excl. increase in RE value) = 19%Internal Rate of Return after 20 Years (incl. increase in RE value) = 50%
Cumulative Savings From ZNE Energy System
($2,000,000)
($1,000,000)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
YEARCum. Savings w/o RE Value Increase Cum. Savings w/ RE Value Increase
SAMPLE ANALYSISSAMPLE COMMERCIAL PURCHASE
25,494sf COMMERCIAL BUILDING - IRVINE
Buiding Sq.Ft. 25,494sf Purchase Price $4,206,510Purchase Price/SF $165
RENEWABLE ENERGY INVESTMENTSolar roof top $716,250Solar light poles $64,800Solar carport $255,840HVAC $254,940Cool roof $67,188Lighting conversion $15,000
Total Cost of Energy Upgrades $1,374,018Total Purchase Price w/ Energy Invest. $5,580,693
IMMEDIATE RENEWABLE ENERGY CREDITS/GRANTSHVAC $38,241Lighting Conversion $38,241Cool Roof $58,397Solar Roofing $225,679Street Lights $19,440Solar Carport $68,150
Total Immediate Credits/Grants $448,148
Down payment without Energy Investment ($420,651)
Down payment with Energy Investment ($558,069)Immediate Cash Back w/ Energy Investment $448,148
Effective Down Payment w/ Energy Invest. ($109,921)
• Plus immediate $637,456 increase in Real Estate Value.
• Plus $320k+ in 1st year accelerated depreciation.
• Plus $63k+ savings in 1st year energy cost.
SOME OF THE CONSEQUENCESPROS
• Dramatic increases in renewable energy investment, with a positive economic impact that favors California.
• Dramatic increases in CRE improvements and transactions, and resultant high multiplier effect.
• Energy savings reduces cost-of-business, offsetting the forced costs of implementation.
• Increased loan size limits to promote energy upgrades and retrofits.
• U.S. begins to reduce foreign oil dependency and adopt energy efficiency measures that are prevalent in many other industrialized countries.
CONS• Higher tax burdens with more government
involvement and debt.
• Some ‘clean energy’ technologies cause long-term side effects (car batteries, etc.).
• Lenders are slow to react.
• Powerful industries/lobbyists delay implementation.
• Flawed implementation rules associated with ‘cap-and-trade’ and other programs.
• Initial higher costs of business may drive jobs from California.
ZeroNet Energy Solutions (ZNE) offers ENERGY Analysis, Reduction, Production and Monitoring solutions
for the following business segments:
IndustrialCommercial
Residential (master plans)Government / Military / Public
TransportationHospitality
Continuing CareEnergy Farms
Non-profits
1. Measure your energy demand
2. Propose cost effective solutions inclusive of all tax credits, grants, deductions and rebates
3. Implement the solution and optimize your system
ZNE : OUR PROCESS
Inefficient!
Traditional HVAC Systems
Set Temp
60Hz
Compressor
0Hz
90º F
73º FToo cool!
Too warm!
Too cool!
Too warm!
ON
OFF OFF
ON
OFF
ON
Long duration!
High starting current creates energy loss
Uncomfortable!
75º F77º F
Conventional ON/OFF control
Schematic Design Phase
INVERTER Compressor Advantages
Set Temp75º F
60Hz
Compressor
0Hz
150Hz
30Hz
Starting current at low level
Room temperature is steady
High rotation speed up to 100-120Hz generates accelerated performance!
Keeps rotation speed at low levels after temperature is stabilized.
Adjust rotation speed precisely to keep steady room temperature
90º F
ON
Very Efficient!
Comfortable!Very Fast!
Smooth INVERTER control
Schematic Design Phase
ENERGY REDUCTIONHVAC (cont.)
* Based on EnergyPro Building Energy Analysis | Office Building
ENERGY REDUCTIONHVAC
* Based on EnergyPro Building Energy Analysis | Office Building
Variable Refrigerant Flow (VRF)
ENERGY REDUCTIONHVAC (cont.)
* Based on EnergyPro Building Energy Analysis | Office Building
VRF Systems Worldwide
LED & CFL LIGHTINGConverting to LED & CFL based lighting offers an 80-600% energy savings in the category.
Why?1. Long Lasting2. Durable3. Cool4. Low maintenance5. Highly efficient6. Cost-effective7. Practical for use with Solar
ENERGY REDUCTIONLIGHTING
ZNE smart-factMany cities in the US are replacing their incandescent traffic lights with LED arrays because the electricity and maintenance costs can be reduced by 80% or more.
ENERGY PRODUCTIONSOLAR
Rooftop/Ground Mount StreetlightsCarport
ENERGY PRODUCTIONSOLAR (cont.)
Solar Panel
Luminaire
Control BoardCharge ControllerBatteries
Motion Sensors
ENERGY MONITORING
Mark Boud – [email protected] Goodsell – [email protected]
Michael Story – [email protected]
For a copy of today’s webinar, or a complimentary energy analysis:
Contact
Michael Story | [email protected]
znesolutions.com
ZNE ENERGY SERVICESAnalysis | Reduction | Production | Monitoring