Using the Lease to Drive Clean Energy Innovation, Wellness, and Tenant Engagement

1. Using the Lease to Drive Clean Energy Innovation, Wellness, and Tenant Engagement

2. Net-Zero Energy LeasingUsing the Lease to Drive Clean Energy Innovation, Wellness, and Tenant Engagement Matt Jungclaus June 25, 2019

3. RMI TRANSFORMS GLOBAL ENERGY USE TO CREATE A CLEAN, PROSPEROUS, AND SECURE LOW-CARBON FUTURE.

4. Net-Zero Energy Definition and Growth Net-zero energy (NZE) buildings are highly efficient and consume only as much energy as they produce or procure from clean, renewable resources on an annual basis. • Industry context: • 700% increase in NZE buildings in the last 5 years • Becoming the new normal • Goes beyond LEED, WELL in energy

5. Source: Johnson Controls 2018 Energy Efficiency Indicator Survey

6. Leased Buildings are Critical for Getting to Zero Leased buildings need to be addressed to aggressive climate goals nationwide – including Boulder’s goal of 80% reduction in GHG emissions by 2050. Halfof all commercial buildings are leased, nationally.

7. The Path to Net-zero energy for leased buildings • Key: • Action requires both tenant and landlord • Action requires only landlord

8. Unique characteristics of a NZE lease 1 2 Disclosure Energy budget (plug loads) 4 3 Recommissioning Cost recovery

9. Plug loads must be addressed to achieve NZE • NZE Building Energy by End Use • Office Plug Load Usage

10. Value to the tenant

11. Value to the building owner

12. Value to the Broker • Rent premium • Reduced Vacancy Brokers that understand the value of a net-zero energy building and can communicate it effectively to tenants will see significant benefits: 20% faster lease up  Broker time savings 3.5% higher rental premium  Higher fee for broker More satisfied tenants  Better word of mouth & client retention

13. Boulder Commons: Attractive Economics Developer/Landlord Tenant • 12% incremental cost • Differentiated market offering • Faster lease up • Less risk during downturned markets • Anticipated higher sale value due to lower cap rate • Developer earns 6% ROI on PV through fixed energy charge – low risk • Rent at/below market • Predictable energy costs and control of energy expenses • Meets corporate sustainability objectives • Workplace promotes employee productivity and satisfaction

14. Defining NZE for Boulder Commons • On-site energy generation = On-site use • Each tenant has a plug load budget • Monitored monthly; confirmed annually • Office and common areas included • Restaurant areas excluded

15. Boulder Commons Plug Load Budget 7 kBtu/SF/YR • Printer/copier energy save mode • Laptops, not desktops • Energy star appliances • 1 monitor/person • Monitoring, continuous reporting • Power strips w/ timer or occupancy sensors • Monitor big loads independently

16. IF Tenants Exceed Plug Load Budget • Landlord purchases excess electricity from utility • Landlord purchases equivalent renewable energy offsets • Tenants pay additional cost

17. Resources: Leases, Excerpts, and Case Studies • Boulder Commons and Bullitt Center NZE leases • NZE lease language excerpts • ULI Tenant Energy Optimization Program • Green Lease Library • Green Lease Leaders Program • BOMA Green Lease Guide • BOMA-RMI Guide: Working Together for Sustainability • Point Energy Innovation Report: Profiting from the Sun • Plan NY’s Energy Aligned Clause • General Services Administration High Performance Leasing Provisions Summary and Leasing Criteria Available online: https://www.rmi.org/wp-content/uploads/2018/01/NZEGuidebook_digital.pdf

19. Net-Zero Energy LeasingUsing the Lease to Drive Clean Energy Innovation, Wellness, and Tenant Engagement Matt Jungclaus, P.E. Manager Rocky Mountain Institute - www.rmi.org mjungclaus@rmi.org https://rmi.org/wp-content/uploads/2018/01/RMI_NZE_Lease_Guide.pdf

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