15/10/2024

Navigating Energy Standards and Building Compliance: How to Leverage Off-Site Solar to Meet Your Sustainability Goals

By Eleanor Zwart

This article initially appeared in the September 4-17, 2024 Colorado Real Estate Journal.

Current federal, state, and local building performance standards have left property owners and businesses with little support and significant impending fines for non-compliance. As the cost of electricity rises and the pressure to “go green” intensifies, off-site solar provides a practical, low-maintenance, and less expensive solution to integrate renewables and avoid non-compliance fines.

Sustainability goals, state-wide emissions reduction standards, prospective financial benefits, and general concern for the environment all incentivize the adoption of renewables. Solar may appear as an attractive option due to its reliability, cost-effectiveness, safety, and ease of installation. In Colorado, building owners can leverage solar power without the need to install their own arrays through off-site solar programs.

On-site solar can be far from accessible. Factors such as high upfront costs, shaded properties, building design and orientation, space limitations, and tenancy rather than ownership can hinder solar adoption.  Grants and loans can offer some relief to the financial burden, yet renters and those in multifamily buildings still face challenges due to the physical nature of solar assets. Even property owners who install solar may not break even on their up-front investment until years down the line.

Fortunately, recent legislation passed by the Colorado General Assembly enables utility customers to purchase power generated from large, remote solar projects and benefit from their generation of renewable energy. Participating in off-site solar programs can help building owners stabilize electricity expenses, avoid compliance penalties, and advance governmental and their own sustainability objectives. In Colorado, Cloudbreak Energy, a Boulder-based firm, is making strides in expanding solar access and providing an avenue for building owners to meet energy reduction requirements and goals.

Off-site solar developers like Cloudbreak develop, own, and operate ground-mounted solar projects in locations strategically selected to optimize solar exposure and power production. They then sell their power back to the grid, and utility customers can purchase the energy from the off-site array.

Building owners and businesses in Colorado within the service area of either Xcel Energy or Black Hills Energy can capitalize on offsite solar. Xcel Energy has two programs: Community Solar (CSG) and Off-Site Net Metering (OS-NM). Through the CSG program, customers can subscribe to a percentage of production from one of Cloudbreak’s arrays and receive bill credits from Xcel for their purchase of renewable energy. This can be particularly advantageous for affordable housing developers seeking to adjust their utility allowances, create a more favorable rent structure and net operating income, and use the savings to pay for increases in other operating expenses.

For customers with greater energy consumption, the OS-NM program allows Cloudbreak to size a solar array up to 200% of a customer’s need. The customer can then purchase bundled power (renewable electricity and Renewable Energy Certificates (RECs)) from this project and apply the energy to a metered location within the utility’s service area through a Virtual Power Purchase Agreement (VPPA). Similar to CSG, customers receive renewable power for a 20-year contract term with no capital expenditure or physical impact to their property.

As cities and states place emphasis on diversifying their energy portfolio and increasing reliance on renewables, much of the transitional burden falls on building owners. Colorado’s Building Energy Performance Standards (CO BPS) and Denver’s Energize Denver initiative mandate substantial energy reductions. Boulder, Fort Collins, and Aspen have also adopted similar regulations. Meeting these lofty targets can be difficult for pre-fab structures, and borderline impossible for owners of existing properties. Off-site solar provides a pathway to reach these targets.

Under HB21-1286, owners of commercial, multifamily, and public buildings 50,000 square feet or larger must meet annual energy benchmarks to reduce sector-wide emissions by 7% by 2026 and 20% by 2030 from 2021 levels. Failure to meet these predetermined benchmarks will result in significant fines for building owners. As long as the purchase of renewables is implemented in conjunction with internal energy reduction strategies, off-site solar can be used towards compliance with one of the CO BPS compliance pathways. For this state-wide program, building owners are required to retain the bundled renewable power.

In addition to state-wide compliance, the Energize Denver program imposes energy performance requirements based on Energy Use Intensity (EUI) for buildings exceeding 25,000 square feet, aiming for an 80% reduction in greenhouse gas emissions from commercial and multifamily buildings by 2040. Off-site solar use for Energize Denver compliance only requires purchased electricity, unlike CO BPS which mandates bundled RECs.

In conclusion, off-site solar presents a viable pathway for Colorado building owners to cost-effectively navigate evolving energy standards and support environmental efforts. By leveraging programs like those offered by Cloudbreak Energy and utilities such as Xcel Energy and Black Hills Energy, stakeholders can not only meet compliance requirements but also contribute significantly to statewide sustainability goals. As the landscape of energy regulation continues to evolve, off-site solar stands out as a flexible and effective solution to drive towards a cleaner and more resilient energy future in Colorado.

Cloudbreak is finalizing its agreements to participate in Xcel’s off-site solar programs for 2025.

To learn more, please contact Eleanor Zwart at eleanor@cloudbreakenergy.com or (970) 425-3132.

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