The Business Case for ZNE Buildings

1. The Business Case for ZNE Buildings Kevin Bates | SHARP Development

2. Classic Concerns: It’s too Expensive. I wouldn’t know where to start. It’s too Risky. What if it doesn’t work? It’s too complicated to Manage. - You can’t improve an occupied building to ZNE cost effectively.

3. It’s too Expensive – Actual Economic Results -The additional cost to renovate to meet Developer Goals($49.84/SF) -The Value of Actual operating expense savings ($.45/SF/mo.) at a 6.5% market capitalization rate $83.08/SF -The Value of above market rent achieved ($.20/SF/mo.) at a 6.5% market capitalization rate $36.92/SF -Additional rent received due to early lease-up (3 mos. vs. avg. market time of 18 mos.) $22.81/SF -Additional leasable SF due to 6” of exterior insulation (building grew 326 SF) $7.32/SF Total Additional value if sold the day after occupancy $100.29/SF Potential Value of lower reserve requirements (HVAC replacement, TI reserves, etc.) $29.85/SF

4. I wouldn’t know where to start Use Building Methods and available Technology to maximize what Nature gives you for free. • Create a High Performance Envelope. -Insulated roof (R-40); Walls (R-20); Electrochromic Glass; attention to Thermal Breaks. • Have the BMS work with multiple indoor and outdoor sensors to utilize exposed Thermal Mass, Operable Windows, and Skylights, to maximize Thermal Comfort and IAQ Naturally. • Significantly reduce artificial light loads with Natural Light (skylights & Electrochromic Glass). • Install PV Array to generate remaining power needs (roughly 25% of a bldg. built to code).

5. It’s too complicated – What if it doesn’t work • We now have roughly 25% of the HVAC tonnage that a standard building has. - Less equipment, with fewer moving parts. • As a result of our high performance envelope, use of Thermal mass for our AC, and natural air exchange: - The HVAC equipment is almost never on, reducing maintenance and extending the life of the units. - More dependable thermal comfort and higher IAQ has resulted in fewer calls to property mgmt. • Natural Daylighting and Solar Power depend on the Sun, which is more reliable than PG&E. • The products and methods that we are utilizing are dependable and time-tested,; NOT complicated: -Solar Panels – Insulation - Thermal Mass – Skylights – Ceiling fans – Operable Windows - BMS

6. You can’t improve an occupied building to ZNE cost effectively 82,408 SF Manufacturing Building Renovated to ZNE while running 2 shifts, 16 hrs/day. • Reduce EUI -LED Lights -Optimized HVAC Tune-Up -Insulation -Window Film -Reflective Insulated Roof • Generation -Rooftop Solar -Parking lot Canopies -1.02 million kW System -Generates 1.6 MM kWh/yr.

7. Economic Results ROI for the Building Owner: • Total Investment Cost: $3,332,988 • Less tax Incentives: $1,366,535 • Net Cost after Year 1: $1,966,453 • Annual Utility Savings: $421,000 • Return on Net Cost: 21.4% • Simple payback (years): 4.67 • Increased Building Value: $6,415,385 Benefits to Manufacturing Tenant: - Cost of Power set at $0 for next 20 years • Competitive advantage when pricing L-T contracts • Reduced maintenance costs (roof, lights, HVAC) Benefits to the Environment: • Offsets the burning of over 95 Million Gallons of Gasoline over a 20 year period.