By Steven J. Schleider, MAI, FRICS, LEED AP BD + C, President, Metropolitan Valuation Services
The lyrics go “Hot town, summer in the city…” and we’ll be there again soon.
Soaring temps will be further intensified by the Urban Heat Island Effect which makes NYC hotter than rural areas due to population density.
Then come the astronomical power bills as the A/C cranks to keep a building comfortably livable and workable.
Between the heat, power usage and summertime peak demand, air pollution and greenhouse gas emissions also increase exponentially.
Though New York City’s uber urban landscape is, in many ways, a near utopian model for a sustainable lifestyle, one major technology slow in being adopted here is solar power.
Solar is smart. It’s environmentally sound. It ultimately saves significant money. It reduces pressure on the traditional power grid. It’s even attractive. Why then has it not taken off in New York City?
The answer is cost. And more cost. You have to be able to afford it, or qualify for a loan. Then there’s red tape. And more red tape. The permitting and approval process can be onerous in New York City.
And feasibility. Your building is very tall. You imagine all the sunlight that can be used to heat and air-condition the building. But is the roof large enough? Is it in good condition? Does it get enough sun to generate enough energy to make the project worthwhile?
Then think of getting all that cable up whatever number of stories and the feasibility studies.
One solar panel is about 10 square feet. Can you fit enough on your roof to justify the project and expense even after rebates and incentives? What about the time it will take to get permits, applications and approvals from various entities, including Con Ed for interconnectivity and the Department of Buildings? You’ll also have to do all of the paperwork to benefit from incentives and subsidies.
If the project is a condominium or co-operative, you may face challenges in obtaining shareholder support and possibly need a special assessment.
If it’s a commercial building, the cost may be prohibitive. Then there is the question of whether solar is even possible as a retrofit.
In a suburban house, solar panels will generate enough energy for a family of four. But when you have a multi-story commercial or residential tower, the equation/ratio of what and how many solar panels can be installed vs. how much energy is generated and the length of the ROI is significantly more complex.
In 2012, Deutsche Bank answered the feasibility question about commercial building viability with a solar retrofit when it installed a 122.4 kW solar photovoltaic (PV) system on the roof of its 50-story American headquarters at 60 Wall Street.
The building was originally built between 1987-1989 for J.P. Morgan & Co., making it, if not modern, at least of more recent vintage than many of the city’s aging stock of skyscrapers.
The system is the largest solar PV array in Manhattan and currently the highest elevated solar PV flat panel array in the world. It will reduce electricity consumption from the grid and decrease carbon emissions by 100 metric tons per year.
Deutsche Bank did not release the cost of the retrofit, but as a global company, the bank has a comprehensive corporate commitment to sound environmental activities and also provides debt and equity capital for renewable energy.
Thus, 60 Wall Street is an admirable, monolithic symbol for the bank worldwide. But, unlike a headquarters building, the majority of landlords are dealing with multiple tenants of varying square foot leases at varying cost with no shared environmental policies.
All that being said, this article is meant to be informational, not disheartening, because there is a lot of good news for landlords interested in installing solar. Many of the aforementioned issues have become simpler and less costly.
New York State has made a huge commitment to advancing solar power.
The federal solar Investment Tax Credit can significantly lower project cost. As for feasibility and red tape, a solar consultant or installer can handle all of that on your behalf. Lastly, indications are that costs are coming down.
As the only LEED AP BD +C commercial real estate appraiser in New York City, I am constantly seeking out ways for property owners to build value with energy savings and sustainable practices.
I can say with certainty that, when done correctly, solar power will increase the value of your property as a result of energy cost savings, and enhanced green positioning with regard to reduction of greenhouse gas emissions and air pollution that will certainly accrue to the bottom line.
Thus I encourage exploring installing solar power. What incentives, credits, guidelines and which buildings are viable is the topic of the next article in this series covering the past, present and future of solar in New York City.