Fast-growing businesses participating in the county’s wide-ranging energy conservation effort, in fields such as design, finance, building materials, construction, and utilities, showcased the Montgomery County Energy Summit in Silver Spring April 5.
The fastest-growing such sector may well be solar energy installation. There were 17,700 solar home installations in Maryland in 2016, up 65 percent from 10,700 in 2015, said Shawn Rumery, research director at Solar Energy Industries Association in Washington. SEIA has no figure for installations in Montgomery County. SEIA estimated that Maryland installations last year, both residential and commercial, were equivalent to electric power production of 248 megawatts, up 49 percent from 2015. Nationally, solar installations almost doubled in 2016, growing by 95 percent above 2015 to 14,800 megawatts, enough to power 8.3 million homes, SEIA indicated.
The Energy Summit, co-presented by the county government Department of Environmental Protection and the national capital area chapter of the U.S. Green Building Council, emphasized large projects to save energy, such as in office, hotel, retail and other commercial buildings.
County Council President Roger Berliner (D-4), a keynote speaker, termed the county “among the most sustainable communities in the U.S.” Berliner, chair of the Council’s Transportation, Infrastructure, Energy and Environment Committee, added that continuing the county’s leadership on energy and environmental issues is all the more important in light of the Trump administration’s perceived regression in these areas.
County Executive Ike Leggett agreed. Noting that China has gone from economic backwater to world leader in the past 30 years by many economic measures, Leggett warned, “It’s essential to advance [on energy and environment] or we’ll be left behind,” referring not only to the county’s position but the entire nation’s.
Several speakers addressed Property Assessed Clean Energy financing for commercial property owners seeking to pay for energy improvements. PACE financing offers fixed-rate loans for up to 20 years covering up to 100 percent of improvement costs, said John Stroud of Greenworks Lending, a national PACE lender. The result, he added, is that energy cost reductions exceed loan payments from the start, in turn making PACE financing “cash flow positive.” A PACE loan need not be paid off and so remains with a property if it is sold, Stroud noted.
The first use of PACE financing in the county was at the Comfort Inn Shady Grove, which obtained heating, ventilation and air conditioning and lighting improvements as well as a new roof and masonry repairs, which resulted in 29 percent lower energy use, said Bob Eisinger, managing director of Rock Grove Associates, which owns the hotel. These changes also improved guest and employee comfort and function, Eisinger noted.
Keith Derrington, a manager with Recurrent, a Rockville firm that designed and supervised the recent Comfort Inn improvements, added that, by taking into account energy savings, PACE loans to borrowers with less-than-investment-grade credit are possible. The hotel’s valuation rose by $800,000 upon completion of the changes, he said.
The Montgomery County Green Bank has been formed and will be making its first PACE loans in several months, said County Department of Environmental Protection Director Lisa Feldt. The Green Bank is a public-private partnership, noted DEP official Michelle Vigen, to be initially capitalized with $14 million that the County is receiving from the Pepco/Exelon merger. It is a private, nonprofit corporation whose board members are primarily officials of local and regional energy-related companies.
Vigen noted that the county still needs roughly $3 billion in commercial property energy retrofits, with roughly half for energy-efficiency improvements, and half in solar installations. The Green Bank’s main purposes are to “leverage private capital [and] lower the cost of capital” for these projects, she added.
Chairperson Bert Hunter said the Green Bank would also make loans for residential energy improvements. The bank will soon hire an executive director, he added, and it expects to receive its capitalization from the county in about a month. Thus, Hunter indicated, a county homeowner could apply for Green Bank financing by this summer.
Large conventional banks “don’t presently mandate” energy conservation plans in appraisal and underwriting packages on loans for new commercial buildings and large commercial retrofits, said Dennis Duffy, an official with the D.C. chapter of the Appraisal Institute, a national professional associations for appraisers.
“Once they do,” Duffy said, referring to large lenders requiring energy-saving plans, “everything will change” in terms of the importance of energy considerations in large project finance. While declining to predict just when major lenders will make this change, Duffy predicted it “probably” will happen within five years.
Already, he noted, Deutsche Bank and Prudential Insurance have environmentally-oriented commercial lending programs. Black Rock, among the nation’s largest real estate investors, evaluates energy efficiency before buying real estate portfolios, Duffy added.
David Borchardt, vice president for development with Lerner Real Estate in Rockville, noted that energy improvements can change many aspects of a commercial property appraisal, well beyond lowering expected energy costs. Such improvements can affect the “cap rate,” the interest rate at which investments are discounted, he noted, and can improve a property’s assumed occupancy and tenant retention. Water efficiency can be a major item along with energy efficiency, he added.
Borchardt agreed with Duffy that there could be a breakthrough moment approaching on appraisals and large commercial project financing. He noted a recent Harvard study touting work, sleep and health benefits for apartment and office buildings with more efficient energy and water use.
Robert Sahadi, an appraiser with the Institute for Market Transformation, emphasized the need to data to verify the amount of energy savings and their cost and other impacts.
Two key county government roles in energy efficiency are the performance of its own 400-plus buildings spread throughout the county and its building code requirements for efficient design.
Eric Coffman, chief of the Office of Energy and Sustainability in the County’s Department of General Services, said the County will have installed 11 megawatts of solar by the end of 2018, far exceeding its goal for this stage of 6 megawatts. DGS is the “landlord” of the County’s buildings. The County government’s long-term goal is to reduce its energy use by 80 percent by 2050.
Two major projects so far are underway, said Coffman, major solar installations at the County public safety headquarters in Gaithersburg, where the police and fire department management is based, and at the County jail in Boyds. These projects serve an additional security function of taking these buildings off the general power grid, noted Coffman. DGS contracted with Schneider Electric and Duke Energy Renewables to design and install “microgrids” for both properties. SolarCity is doing the solar parts of the projects.
As for building codes, the County since 2008 has required all new apartment and commercial buildings of 10,000 square feet or more to meet at least the “silver” or lowest LEED (Leadership in Energy and Environmental Design) standard. The U.S. Green Building Council promulgates standards for and advocates the use of LEED standards, which are the dominant such standards in use in the country.
Jessica Fusillo, community outreach manager for the county Department of Permitting Services, noted that the county offers property tax breaks to some buildings meeting the higher LEED gold and platinum standards. The county’s lone LEED platinum building, on Tower Boulevard overlooking I-270 in Rockville, enjoys a 75 percent cut in property taxes for five years.
Also featured at the conference were the rapidly expanding options for electric cars and charging stations. The Sentinel will address these options separately in next week’s issue.