In March, the most aggressive clean energy bill in the country become law in Washington, D.C. The Clean Energy DC Omnibus Amendment Act of 2018 will heavily impact real estate owners and developers in the city. Here’s what you need to know:
The law sets a renewable portfolio standard (RPS) that mandates 100% of the city’s electricity be sourced from renewable energy sources by 2032. RPS legislation is common on the state level, where the majority of the country’s progress on climate change is made. D.C. joins California and Hawaii as the only state legislative bodies to pass 100% clean energy goals. However, D.C.’s 2032 date is by far the most aggressive, designating D.C. as the current nationwide clean energy torchbearer. Everyone involved in reaching these goals will be a part of history.
With the new law in place, privately-owned buildings exceeding 50,000 ft2 must report energy usage through the U.S. Environmental Protection Agency’s (EPA’s) ENERGY STAR program. ENERGY STAR issues clean energy use scores for buildings, which the District Department of Energy and Environment (DOEE) will use as its benchmark for determining adherence to the law. If buildings fall below the median benchmark score in the District, the city will impose compliance fees on the buildings’ owners. Starting in 2024, all buildings exceeding 10,000 ft2 will be included in the benchmarking program.
Solar is one of the most versatile renewable energy sources, given its flexible deployment on land, rooftops, and parking lots. District real estate owners that decide to go solar will reduce their source energy intensity, a key factor in how ENERGY STAR scores a building. In tandem, solar can simultaneously fulfill the city’s existing Green Area Ratio (GAR) requirements for buildings under construction or undergoing major renovation. Unlike many other options to fulfill GAR requirements or raise ENERGY STAR scores, solar requires no out of pocket investment and it will either generate additional revenue or cut operating expenses. These savings will allow owners to repurpose funds to more expensive or onerous energy efficiency projects if procuring solar alone isn’t enough to meet their necessary benchmark score.
There are many reasons why pursuing solar conversations now will yield the best financial results for prospective customers. The 30% federal Solar Investment Tax Credit is reaching its final year before the incentive begins its three-year descent to its eventual 10% floor. While solar costs will continue to fall, it is arguable that there will never be technology costs this low with federal incentives this high. Incentives issued by the District will also decrease over time as supply increases in the city, and the incentives are mandated to step down over time. Currently, the city’s solar incentives are among the highest in the United States.
More importantly for real estate owners to understand, as solar and other renewable sources are added to the electric grid in the coming years, the city’s electrical infrastructure will become more constrained for future projects. This could lead to project delays or costly infrastructure upgrades that will be required to be paid by the project. Delays could be costly to real estate owners, thanks to compliance fees if for those who are late to the party and fall behind the median benchmark score. Early movers are far more likely to avoid any potential infrastructure obstacles.
Sol Systems is the oldest, most-experienced solar company in the District of Columbia, and a Certified Business Enterprise. For more than 10 years, the team has facilitated solar projects for private and public entities, including a 35-project portfolio for the District Department of General Services on schools and public buildings across D.C. Contact us at email@example.com.
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