If you believe building code mandates always end up costing you more money, you’ve got a pleasant surprise coming with California’s new solar requirements for multi-family homes.
These mandates could end up putting more money in both your and your tenants’ pockets.
Starting Jan. 1, 2020, all new residential buildings in the state under three stories tall must include solar panels. New updates to Title 24 of the state’s Building Energy Efficiency Standards were approved in May as part of California’s effort to achieve net-zero-energy. This means new homes must produce more energy than they use by 2020; new commercial buildings must become net-zero by 2030.
Multifamily properties will see even more changes in 2019. AB 802, which will take effect in June, requires all California multi-family building owners to disclose their properties’ energy usage to reveal their level of Title 24 compliance. Leveraging solar energy will be a critical component in compliance strategies.
While that initially may sound like an expensive proposition, SDC Energy and its partners has developed a turn-key solution that meets the state’s requirements without adding to your construction budget. In fact, you may end up saving money while increasing your project’s net operating income for years to come.
Rather than building standard shade structures, we’ll install solar-enabled carports that help protect your tenants’ most valuable possessions – their cars – while generating clean energy to reduce their utility bills and creating a new revenue stream for you.
Research has shown that constructing buildings with more efficient systems in place can lead to higher revenues, longer leases, and significant construction cost savings. A survey of 2,800 apartment residents -- three in five of them under the age of 34 -- found that 84% of tenants say that living in a sustainable or eco-friendly building is very important or moderately important to them. And nearly two-thirds said they would pay more to live in a green community.
Partnership Powers New Projects
Unique in the solar industry, Powering Title 24 is a new program that combines solar carports, virtual net-metering software and tax-enabled financing to help apartment builders and owners convert Title 24 mandates into long-term benefits.
Together, SDC Energy and its partners can heat up your solar benefits:
✓ Baja Construction supplies 70% of all multi-family carports in California and is the leading carport manufacturer for the solar industry. Baja installed a 12-MW carport project for the Long Island Power Authority -- the largest in the U.S. -- and currently builds 32 MWs annually throughout North America.
✓ Grid Technologies offers a virtual metering system called Ivy that monitors solar energy generation and distribution, incorporates solar electricity sales into a single tenant bill, and creates a passive revenue stream.
✓ SDC Energy brings all the pieces together through managing solar projects from origin to operations, while providing custom tax-enabled financial solutions through our private investor network.
Whether you’re a builder, property owner or lender, Powering Title 24 converts the potential headache of California’s new solar mandate into a long-term benefit for everyone.
Carports Capturing the Sun
Why carports? There are several reasons, notes Bob Hayworth, owner of Baja Construction:
✓ Putting photovoltaic panels over parking areas means you’re building a solar racking system, not just a carport. Unlike stand-alone shade structures, solar carports generate tax credits and accelerated depreciation benefits that offset all of the construction costs.
✓ Unlike roofs, carports aren’t expected to be waterproof. Installing solar panels on a building’s rooftop involves complex engineering that isn’t required for a carport -- streamlining the cost and eliminating risk.
✓ Installing solar carports does not impact the building’s aesthetics or design; instead they often compliment the project’s appearance.
✓ Solar improvements are exempt from property tax valuations. Carports without solar panels drive up tax assessments. PV carport systems don’t.
Ivy Weaving a New Grid
Once the solar system is installed, there are technical challenges to making the most of it. That’s where Ivy comes in.
Until recently, solar power generated for multi-family buildings in California could only be used in common areas, such as lights in a hallway or lobby. And because solar panels often generate more power than is needed during the day, a billing mechanism called net metering sells unused solar power back to the local utility.
Now, however, the state has approved using “virtual” net metering at multi-family properties, allowing individual tenants to capture benefits both from the solar power generated on-site and from the credits of selling excess power back to the utility. In addition, California legislators in 2015 approved AB 1236 requiring municipalities with fewer than 200,000 residents to create expedited permitting processes for electric vehicle charging stations. The Electric Power Research Institute has found that 80% of all EV charging takes place at home. Although more than one-third of California’s homes are in multi-unit dwellings, less than 5% of home-based EV charging occurs in residential complexes. Our solar canopies will change that.
Grid Technologies offers Ivy, an energy monitoring database that collects tenant usage information through sub-metering. Ivy’s algorithms keep track of each tenant’s solar usage, generate a solar usage charge to add to the tenant’s rent bill, and monitor the system’s overall performance.
Tenants generally save between 5% and 10% on their utility bills. EV charging stations can also be added to the solar project providing tenants with a way to conveniently charge their growing number of electric cars. Overall, tenants are very pleased to encourage clean energy generation.
After a demo of Ivy, a building owner asked his tenants whether they wanted solar, says Dover Janis, co-founder and CEO of Grid Technologies. “All the tenants were very eager to support going green,” Janis says. “That made the decision a no-brainer!”
What’s more, adding solar boosts property values up to two and a half times the cost of the installation. Solar’s ongoing revenue stream appeals to lenders, too, because the net operating income from solar increases a property’s overall revenue stream.
Financing Pulling It All Together
As the value propositions compound and build on each other, the financial benefits make SDC Energy’s job easier, too.
“Installing a solar project for the common areas has been a decent value proposition so far for property owners, but now solar can be a key feature for the entire project,” says Charles Schaffer, president of SDC Energy. “With virtual metering allowing everyone to benefit from the solar installation, we’re seeing a net positive across the board. Plus, if you have the only property on the block with solar, that’s a competitive advantage for keeping occupancy rates up.”
SDC Energy's tailor-made financing matches each project with the right investor. This direct approach to commercial PV financing means asset owners can benefit from the most flexible terms and reap remarkable value from their solar investment, he says.
Final Title 24 compliance requirements haven’t yet been released, he notes. But the unified approach offered through SDC, Baja and Grid is making financial sense to builders right now, well in advance of the 2020 mandate.
Solar projects can be scaled up or down to fit each property’s needs, or as Title 24 rules become more clear. However, including solar now future-proofs a building against increasing government -- and tenant -- demand for renewable energy.
“It’s more efficient to install solar at the time of construction than going in and retrofitting afterward,” Schaffer says. “Our experience doing custom projects tailored to individual sites means we have a proven track record that the multi-family construction market can count on.”
*Photo Courtsey of Baja Construction