Look Ma, We've got a Solar PPA!

A solar PPA seems to be a wonderful way to start converting to solar energy, if you have a roof with the right exposure. Not so fast. Solar PV is probably one of the worst options for property appreciation, if you consider the alternatives. I know, happy, shiny salesmen are coming through your door with free solar panels, just asking when they can install them? Why is that not a good deal? After all, you're saving on your power bills? It says so right here in black and white! Again, not so fast. A bit of caveat emptor is in order.

Solar PPA: follow the money

The Solar PV Model

As with any good crime story, the answer is always: "Follow the money." In this case here is how solar PPA's really work, and why they are not to the benefit of real estate owners in the vast majority of cases. First, here's the economics of a solar PPA for the power company:

1. An energy company offers a building owner a "free" solar panel. That concept should tip you off right away.
2. They cash in on all the tax and other incentives, not the owner of the property.
3. They get to claim that solar PPA panel as a credit for them towards their fulfillment of the green portfolio standards in the state.
4. They get to retain a customer for 20 years. Nothing else would do that in this age of deregulation.
5. They occupy valuable roof space for their benefit, for a very small cost. In essence they are renting space on your property for free, that might have a higher value. Owners give up potential property appreciation.

WHY SOLAR PPAS SWINDLE CONSUMERS OUT OF ASSET APPRECIATION

The simple answer is, the property owner is locked out of putting that space to better use for 20 years, even if vastly better options exist, and they do. A few examples will suffice:

1.  Generally, the efficiency of solar PV in converting sunlight to energy is 15-20%. Solar thermal is arguably at least 700% more efficient. The technology itself is about 500% more efficient (up to 98% efficiency vs. 15-20%), and it allows for storage of energy in the form of process heat, which effectively gives it even greater utility.
2. Modern, building mounted, wind turbine designs in many cases have even higher returns than solar PV, and, if the location is suitable, should probably be evaluated first.
3. Roof gardens are another competing solution, and it should be noted they could possbily exist side by side with solar thermal on a canopy of evacuated tubes, but they would be locked out by solar panels.
4. In general, these offers tempt building owners to make decisions on emotions, after all a solar panel on your roof tells the neighbors how green you are, but they run afoul of the need to first make a capital budget for your property, and have a well thought out energy plan, if you are going to attempt a conversion to renewables to any degree, or come off the grid entirely. Before you make yourself an energy plan and a capital budget, you should not make snap decisions about any of these components regardless if they are free or not, and you certainly should not lease hundreds or thousands of square feet of your valuable roof space for mere pennies.

All of these cases point to the fact that the value of that space may be far greater than what an owner get out of it with a solar PPA, so these agreements are a theft of potential building appreciation, which you could realize by doing a real energy plan. The square area you are giving up to the provider of the Solar PV, might have been enough to put a solar thermal installation that could have provided all the heating and cooling for your entire house for the next thirty years, which is a lot better than the pennies you save on your power bill with a solar PPA. In short, it might be cheaper to just make a $50,000 donation to the shareholders of SolarCity, but pass up the PPA.

Make your own green energy plan

If you own property you should definitely look at the potential for investing in green energy infrastructure, but to do so requires some thought. You need to make yourself a 30 year energy plan, even if you are planning to sell your property in 10 years, for an effective green energy solution will really come back to you in the form of property appreciation. However, there are a number of interdependencies going on, and you have to figure out in what sequence you should do things.

It is possible that you decide at some point you have space for that solar PPA, but now it becomes a financing option for a part of your plan, but again, chances are the solar PPA is the worst alternative, or very nearly so, for your valuable roof space, since its low efficiency means that it occupies a lot of space. A proper plan will guarantee future property appreciation with every energy price hike.

If you do that 30 year plan with a view to property appreciation, and you do have space for that Solar PPA, fine. Figure out if that's the most advantageous form of financing. You should evaluate a solar PPA vs lease, and really research the benefits of it with a Power Purchase Agreement Calculator. Of course there are PPA Agreements for other technologies as well, but your job is to FIRST have an overall plan, otherwise you will compromise your financial future. You may be leaving 20% of the value of your property on the table. So, make your own capital budget for energy retrofits, it is your property appreciation calculator.

Conclusion: solar PPAs are not your first choice for property appreciation

As one of the best con-artists I ever met used to say, logic and reason are the horse the emotions ride in on. A solar PPA grants the right of use of the roof space on a building to an energy company, and it makes a good show of green energy, at the expense of potential future property appreciation.

Greenwashing Galore, in Energy and Otherwise

Greenwashing is a derogatory term which is gaining some currency because of all the marketing hype. Even the FTC has recently beefed up its marketing guidelines to prevent greenwashing, and who knows, may go after offenders. The criteria are interesting, and should be grounds for some rethinking of certain business strategies. Greenwashing lawsuits are on the rise.

If you call your product or service "green" you need to be able to back it up with specific benefits and verifiable claims. There goes the ConEdison GreenTeam. There is nothing green about them that I can tell. On this blog I have discussed in-depth how energy efficiency and green energy are not synonymous, and even often mutually exclusive, even if green energy must incorporate energy efficiency in its own right. Clearly, the implied claim rests on the more general confusion that 'energy saving' is somehow green, let alone interchangeable with green energy in achieving sustainability.

The implicit assumption in many programs is that renewable energy and energy savings will add up to create sustainability, but that is only the case in very limited circumstances, and requires proper economic analysis and engineering. In most cases, the opposite is true. Does it make any difference if the Titanic goes down in 5 minutes or 10? Do you want to invest in that proposition? This is about rearranging the deck chairs on the good ship and it has no relevance to any meaningful concept of sustainability. This approach is all about appearances, it is a mere marketing ploy, because energy savings merely increases demand, so it expands the franchise. If in doubt, check out the recent book by Steve Hallett: The Efficiency Trap: Finding a Better Way to Achieve a Sustainable Energy Future. This book is the behavioral corollary to the problem of diminishing returns with "investing" in energy savings, which arguably is not an investment at all. It is unclear why property owners should foot the bill for becoming better customers of their energy providers if they have other options.

Energy Savings do not add up

The confusion generally starts from the top, for even at the highest levels the confusion that all energy savings and energy efficiency is 'green' is nearly universal. Besides Steve Hallett's behavioral argument that efficiency expands demand, the sad economic fact is also that energy savings is a dead-end street from an investment standpoint, because of diminishing returns. On top of that, because of good engineering reasons, energy efficiency and renewable energy are often mutually exclusive. In many cases, the energy savings incentives reduce the adoption of renewable energy, and are thus anathema to sustainability. Accordingly, for the most part, institutions like NYSERDA are often really a customer retention program for the energy industry.

• Energy efficiency of a fossil-fuel burning energy infrastructure prolongs the use of fossil fuel by extending its economic attractiveness.
• Energy efficiency is only green in the context of renewable energy.
• Incentives based on energy efficiency are a waste of money, for they postpone the switch to renewables, and subsidize energy companies and equipment manufacturers at the expense of property owners. Energy companies could legitimately offer incentives for investments in efficiency on the basis of customer retention, but public moneys should not be used, nor levies on customers, like the NYSERDA funding through the SBC.
• Energy savings in a fossil fuel context may arguably be green, if there is no feasible alternative, then it's simply the best alternative. But as long as economically viable renewable alternatives exist, any semblance of a green claim for any energy savings that displace viable investments in sustainability are a patent lie.
• Any financing or tax incentives that promote specific equipment or equipment standards (such as Energy Star) as prerequisites for qualification for subsidies, or even financing at all, should be outlawed if they distract from the overall project and force property owners to make sub-optimal decisions. However well intended, this type of tokenism amounts to greenwashing.

Greenwashing: falsifying claims

• Tankless hot water heaters are nearly always a bad idea, and certainly should not qualify for an energy star program. Domestic Hot Water storage is one of the cheapest and most affordable energy storage solutions in renewable installations. Both with solar thermal and with geothermal, heat can be stored, for geothermal in pre-heated water, and for solar thermal as process heat, or also as preheated water for consumption. Tankless hot water heaters should only ever be used where we are unable to access either of those two technologies.
• Solar PV PPAs, are nearly always a bad idea, and a gross consumer swindle. A nice shiny solar array on your roof saves you pennies on your electric bill, and shows the neighbors your house is "green," but it deprives you for 20 years of valuable real estate, which could have been put to better use with either wind power, which in many cases has better energy yield, or solar thermal which has 700% higher efficiency (because of 500% higher output and the ability to store energy). Property owners are simply getting bamboozled by would-be energy efficiency experts, aided by various incentive programs.
• Generally any program, such as most PACE programs, NYSERDA MPP, (and equivalent programs in other states), and special, subsidized financing for energy retrofits, which mandate energy savings to trump renewable energy really lure property owners into making substantially bad decisions, without ever considering better alternatives.

How energy savings kills renewable energy

Green Fools Only

Energy savings claims, and the appeal to "green" mainly trade on emotional appeal, but they are simply a sales tool for equipment manufacturers and for energy companies. In the selling process, there is a whole energy savings and energy efficiency industry that has sprung up, some contractors, but many of them posturing as consultants, who in essence posture as if they are helping building owners, but between employing the false objective of energy savings, and the high school level financial modeling based on the payback of equipment, the economic decisions that property owners should make are dumbed down to the point that owners sacrifice the potential for property appreciation by embracing ineffective programs.

As long as we are modeling energy savings as a one time objective at a given point in time, and employ equipment payback as the criteria, and falsify the decisions further with incentives,  we are bamboozling property owners into inferior economic decisions, which limit the potential for property appreciation. The simple fact is renewable energy is not an energy savings technology, but an investment in generating capacity, and a permanent upgrade of the asset, which would require a proper capital budget. It is a proper investment decision. Energy savings is not really an investment but an operational expense, so it is bizarre that in effect energy vendors are getting owners to be liable for investments to ensure that they continue to buy their energy, as in solar PPAs. In other words, by using payback as a criteria, presentations are always handicapped in favor of quick energy savings fixes, and the more capital-intensive renewable energy choices drop to the bottom of the list, because the 25 or 30 years of no energy bills do not enter the equation, and people are fooled by the fact that it takes a few years more to pay off the equipment.

The methodologies that are used handicap renewable energy and are backhanded subsidies to the fossil fuel industry.

Conclusion

Energy savings does not add up to sustainability. It has green pretensions but it cannot deliver. It may or may not technically violate the FTC's rules for green marketing claims, but it does the opposite of what it claims. Prioritizing energy savings in existing fossil fuel based infrastructure serves to postpone sustainability, and is de facto a form of greenwashing, and deprives property owners of superior options.

Compound Returns from Renewable Energy

There are many ways to look at our energy conundrum, and to understand why we're so dysfunctional, and not getting the job done with renewable energy. As argued here repeatedly, one of the primary obstacles is putting the cart before the horse with honorable sounding secondary objectives, which obfuscate sound financial decisions. Energy efficiency, energy savings and clean air standards are examples that cause such distortions, and lead to policy failure. They are secondary objectives, not primary ones. The worst policy failures are resulting from confusing energy efficiency with renewable energy, and treating them as if they were interchangeable, or worse yet, additive, when they are often mutually exclusive in practice.

The effect of majoring in a minor by putting these secondary objectives first, is to postpone the switch to renewable energy indefinitely, and to subsidize the fossil fuel industry at the expense of property appreciation. Therefore it produces the opposite of energy independence and undermines any attempts to ever meet Clean Air standards, such as New York City pretends to want to do. Energy Star, NYSERDA MPP, NYC Clean Heat, PlaNYC, various tax incentives, are all examples where false priorities foul up sound financial decision-making about renewable energy. Collectively they have more to do with why we are not making the progress that we claim to want than anything else. They are examples of policy failures. Their ally is the fallacious financial practice of property owners making energy decisions based on payback of equipment, instead of net present value add to property values.

In short, government incentives have assisted property owners in making more bad decisions about energy faster, by rewarding them to ensure they keep making the wrong decisions, and the beneficiaries are the fossil fuel industry primarily, and to a lesser degree the manufacturers of energy efficiency equipment. It all comes at the expense of property values, so owners of real estate are destroying their capital asset base, to the extent that there are renewable alternatives that make economic sense, and in many, if not most cases, there are. False priorities supported with government incentives amount to government sponsored capital destruction in our economy, and serve to prevent the switch to sustainability. In NY State there is even an Energize New York Finance Handbook, and an exam to make sure you learn how to destroy your property values even quicker, using other people's money (but you're still liable). There is even an entire not for profit industry to help you manage your property into the toilet, such as "Energize New York, comfort and savings for your home."

Sustainability is only sustainable if it is also profitable

Adam Smith's invisible hand arguably does not always work, but sometimes it does. And here we have a capitalist society, embracing soviet style 20-year plans to make sure we prevent the invisible hand from working... But the good news is, there is a way to sort it out on an individual level, though eventually the whole structure of false incentives will have to be revised.

Every property owner can, with a simple spreadsheet make a 30 year energy plan for their property. And if you are lazy, you can make it a thesis project for your kid. It does not matter if you're going to sell it sooner than that or not, for if you invest wisely, it will come back to you when you sell it. After all, real estate simply has a long economic life, but if your analysis shows that your property is a wreck, and incapable of being made somewhat energy independent, sell it quickly while the going is good. The energy companies and the government will keep you in the poor house by confusing your decision-making and keeping you a slave to the energy companies longer than you have to be. Proper financial modeling is the way out, he process is a simple 30-year NPV analysis of all energy decisions about your property. Do not ever give in to the energy efficiency argument, it will keep you in bonds to carbon energy forever. Salesmen of energy efficiency and Solar PPAs are stealing appreciation of your property from you.

If you do that 30-year CAPM model, you will not easily make wrong energy decisions again. Never allow yourself to be seduced by the sellers of energy efficiency, and any government incentives, or subsidized finance from your energy company (talk about the fox watching the chicken coop). Remember always: Good financing or incentives can NEVER make a bad project good, it can ONLY make a good project better.  Hang that on your kitchen wall before you start talking about anything to do with energy in your property. Now for the good news: Renewable energy pays, because of compound returns.

Compound Returns from Renewable Energy Make Sustainability So

Payback of a piece of equipment may be useful as a quick and dirty calculation to see if it could have promise, but you need to have a coherent, holistic energy plan first, or else you will be cheated out of your money, and squandering it. The obvious mistake is if you start using equipment payback for your actual energy plan, such as models from NYSERDA and similar organizations elsewhere tend to do. Incentives are then added to the mix to make other objectives more attractive to property owners, either from a societal standpoint (and most often indirectly benefiting the energy companies and/or the manufacturers), or for the energy companies directly, and then if you add up all these wrong decisions and you score enough points in their system, you are rewarded with subsidized finance to help you destroy the value of your property faster. The shareholders of the energy companies thank you.

But now you know. And armed with your 30-year energy plan for your property, here is what you do: You do your model first. You focus on selecting the technologies that make the most long-term sense for your property. And next you figure it out with the NYSERDA MPP model, or your Energize New York application, or whatever is appropriate in your case, and you now figure out backwards how to maximize your use of incentives, and how to exceed their standards so that you do qualify for the subsidized financing, including PACE bonds. But never follow the methodology of these institutions, for it will destroy your property value. Your own economic energy plan must be king, meeting their objectives is a secondary criterion that gets you the financing you want, but you must take ownership of the plan.

Here's the payoff: on your list of potential things to do you might have a geothermal heat pump and a wind turbine, with paybacks of 8 and 7 years respectively, and they are kind of at the bottom of your list. But then you find out, when you integrate it in your model, that the heat pump allows you to store output from your wind energy in the form of pre-heated hot water. By doing so, you no longer have to sell excess energy back to the grid at wholesale rates, so you are now improving the payback on your wind turbine. Put together, they might have a 6 year payback, but again, the 30-year projection tells all.

Or, you were evaluating a tankless hot water heater with a 3-year payback and a solar thermal system with an 8 year payback, but your thirty year model reveals that the solar thermal system works out better in the long run, in part because with solar thermal you can harvest process heat, and if you take that effect into consideration, it may turn out that it's a better investment than tankless hot water heaters. Thirty years of no energy bills beats 30% energy 'savings' hands down. And of course solar thermal beats out solar PV because it produces 5x more energy per square foot, and on top of that allows storing process heat. All of which you would never see in a payback analysis, but you will see it in your 30-year model.

Or, you were evaluating a geothermal hot water against solar thermal hot water, and it turns out that on a payback basis solar thermal won, but then you started to look at your integrated model, and you could put your geothermal heat pump on a time of use meter, and integrated it with self dimming LEDs (100% dimmable!) for premises/common area lighting, and suddenly the geothermal hot water system won, and now you could look if you could drive your HVAC from geothermal also.

Sustainability through compound returns

Examples abound where the thirty year model shows you synergies of two (or more) technologies that you would not otherwise figure out, but most importantly it is the time value of money that allows you to see that 30 years of no energy bills beats 30% reduction in energy consumption most of the time, and a bigger capital outlay is warranted, and feasible if you can access subsidized financing. Such compound returns through synergy are worth gold.

Conclusion:

Renewable Energy done right produces compound returns through integrating several Clean Energy technologies at once. Energy Efficiency of a fossil fuel system produces strongly diminishing returns after you hit about 30% 'savings,' which is literally fool's gold. Only energy-efficient renewable energy gives you financial sustainability.

From Liability to Asset with Renewable Energy

To move something from the liability column to the asset column is a dream opportunity and an art form that occurs only once in a great while in business. It is the operational way to asset appreciation. The renewable energy revolution will facilitate a complete metamorphosis of some buildings, and leave others behind in the dust. Because we remain stuck in the old model, people are slow to discover it, and moreover there are many brakes on the system, rules and regulations, and tax incentives, and other programs which falsify the decisions. It is easy to see in newer, net-zero (or close to that) buildings, it is harder to see the opportunities in existing construction. Changing the paradigm is never trivial, because the resistance of the old system is so tremendous. We have been used to it for so long.

In NYC there are numerous initiatives to try to push us in the right direction, but many of them tend to backfire in terms of the transition to renewable energy. By creating massive incentives that focus on "energy efficiency," or even on clean air, renewable energy is swept under the rug. It will take savvy investors to realize the opportunities that do exist, and to not squander money on marginal efficiency improvements, but instead to focus on the long-term prospects of switching to a renewable energy infrastructure.

Marginal operational improvements versus investing in renewable energy

The existing focus on energy efficiency and clean air works out to be a customer retention program and an inadvertent subsidy for the fossil fuel industry, and along with the common practice of evaluating technologies piecemeal on the basis of payback of the equipment, rather than value-add to the NPV of the building as a whole, it raises the hurdle for renewable energy.

Whole Building Plans for Renewable Energy!

If a renewable energy solution has a payback of seven years, it loses out against a raft of quick fix energy efficiency solutions, because as long as payback of the equipment is substituted for proper financial modeling, the quick fixes will win out. But once you do a proper 30 year capital budget and a financial model, it will quickly turn out that 30 years of near zero energy bills will often beat a mere 30% reduction of energy bills. The only challenge then is how to get there economically.

In short, any renewable energy plant we can integrate into a building is directly constructive to long-term asset value, for it replaces a liability with a permanent part of the asset, which is the building, and in some cases it may even move energy into the revenue column. Programs like the NYSERDA MPP have virtually institutionalized bad financial planning among building operators, for they reinforce the bad habit of focusing on marginal improvements based on payment of equipment, compensated by subsidies including subsidized financing to incentivize building operators to do the things that are good for the utility and not for the building, and by limiting the conversation to some small improvements at one point in time the whole long-term financial planning for the building is ignored, including the fact that there's no follow-on strategy once you have started investing in energy efficiency alone.

NYC Clean Heat favors fossil fuel

Never mind the short-term argument that the switch from #6 and #4 oil to natural gas reduces emissions, the point is that if this prevents buildings from switching to renewable energy, it is prolonging the fossil fuel era, and prolonging the period of CO2 emissions. It is my estimate that 50-75% of buildings affected by NYC Clean Heat could make the transition to renewables economically and gradually within 10 years, but instead, subsidized finance is wasted on an interim fix of transitioning to natural gas. This is capital destruction, at least in the case of those buildings that could have realistically switched to renewable energy instead. Obviously, a switch to renewable energy would also help NYC meet clean air standards much more permanently in the long run.

In short, the NYC Clean Heat program in as much as it will do these things, will in the long-term undermine NYC's objectives of meeting Clean Air standards and ensure failure. The renewable alternative is being overlooked, but would lead to strong asset appreciation of the buildings. The reasons are partly wrong financial modeling by owners, and partly incentives that make it more attractive to make the wrong choices.

Asset appreciation should drive renewable energy adoption

Taking buildings even partially off the grid with renewable technology, replaces a liability (energy bills) with a fixed asset (generating capacity), and once an existing building starts a process of renewable energy conversion, the follow-on investments show potential for compound returns. Example: your new wind turbine could drive your geothermal hot water plant, and have enough power left over to supply the common areas as well as some of your tenants. Another example is that if you can convert to hydronics and/or heat pumps, you could eliminate all window A/C's and supply cooling to tenants cheaper than it would be with window ac's, and make money doing it (BTU metering).

Most old line apartment buildings could be cash positive in energy with renewable technology over ten years. Underwriters should take note. Also, false proxies such as specifying energy star equipment should be eliminated from underwriting. Instead a proper long-term energy plan should be the focus.

The majority of old line apartment buildings are suited for most forms of Clean Energy, from Geothermal to Wind Energy, to Solar. The magic is in integration. For more information, see www.dabxdemandsidesolutions.com

Conclusion:

Only renewable energy is directly constructive to asset appreciation, if it can be done economically. Energy efficiency of a fossil fuel system merely attenuate the correlation of energy pricing with building values, and is a mild support in the short-term and useless in the long-term, because there is no follow-on investment strategy after the first few rounds of energy efficiency improvements, and particularly if the focus on energy efficiency prevents renewable energy alternatives.

Leveraging NYC Clean Heat for Renewable Energy Retrofits

The NYC Clean Heat program is one of the many examples of good intentions gone wrong, for by and large it misses the opportunity to push the city towards renewable energy. Instead, it is diverting capital to a temporary fix, leading to NYC boiler conversions to natural gas, when far better options might be available, better for the city, for the tenants and for building owners. Large numbers of C- and D-class apartment buildings, particularly in the outer boroughs, such as the Bronx, which typically are burning #6 or #4 oil would have an easy time shifting towards renewable energy instead of to natural gas (or even biodiesel).

It is true enough that natural gas is less polluting than #6 residual oil, or even #4, but from the standpoint of building preservation. However, these buildings would be generally more viable economically in the long-term by switching to renewable solutions.because renewables offer a permanent energy price hedge, and lower maintenance costs. The only way to get buildings out of the economic trap of energy price hikes is renewable energy. Probably 50-75% of buildings in this particular class are capable of making the switch.

The right use of The NYSERDA MPP

To make the transition to gas attractive the NYSERDA MPP program offers a wraparound for overall efficiency upgrades to buildings, and which is in many cases not the best option if it leads to merely making a fossil fuel system more efficient, instead of switching to a renewable alternative. The financial methodology of that program is geared to making the existing infrastructure more efficient, not to evaluating alternative solutions.

The idea should be to make the transition to economic sustainability and increased competitiveness with renewables. Only if a renewable solution is not in the cards, is the marginal reduction of CO2 and particulates emissions helpful, but again, not if it distracts us from the major goal of switching to clean energy and becoming energy independent. If the NYSERDA MPP is used to finance a conversion to natural gas, it misses its potential, as long as an alternative is possible for a particular building. Very simply, 30 years of no energy bills will beat 30% savings any time. Owners sacrifice future value of their buildings if they make the wrong choice.

Obviously, if we can make it to a renewable energy infrastructure, we are going to outperform the mere switch from oil to natural gas. Thirty years of no energy bills will always beat out a 30% energy savings, if you can do it economically. The thing to do would be to pursue an exemption from the Clean Heat conversion, and do a 30 year energy plan for the building, such that the first phase qualifies you for the NYSERDA MPP program.

MAJORING IN A MINOR

Both NYC Clean Heat and the NYSERDA MPP focus on a secondary objective first and thereby falsify capital decisions, and cause capital destruction. Naturally, in some buildings there is no renewable option, so that's bad luck. Anyone who has done any financial modeling or operations research work can tell of how bad it can be if you major in a minor, if you optimize a system for a secondary objective, not the primary one. For a building, the primary function should be the long-term Capital Asset Value of the building. The renewable energy building will be worth some 10-20% more, hands down, in 5 or 10 years, than its fossil fuel (or even biodiesel) burning twin. The exact spread will depend on energy prices, of course.

Energy Efficiency is the secondary variable that can either make a fossil fuel system more efficient (not green!) or make a renewable energy system more economical (very green). The confusion in the public dialog is that energy efficiency is misrepresented as green, which is merely a way of greenwashing fossil fuels. Energy efficiency is only green if it helps you make a renewable system economical, and in that case there is a direct compound return, because e.g. better insulation will reduce the installed capacity needed.

An alternative conversion program

Here is the outline of the renewable energy strategy:

• Make sure that phase one of your plan meets or exceeds the criteria for NYSERDA's MPP.
• Get an exemption from the Clean Heat conversion program because you are going renewable.
• Typically, the first step is to take Domestic Hot Water (DHW) off the boiler, and implement either a geothermal or a solar thermal solution, which will typically achieve a 25-50% reduction of your BTUs for heat and hot water. (Because heat is seasonal, but hot water is year-round).
• With your exemption you should get a clear agreement that for economic reasons your are doing the next step (heat) when you need a boiler replacement.
• By doing this, you have bought another 5 or 10 years of economic life for your boiler, because it'll be off-line in summer.
• At the end of the economic life of the boiler, you then can go to either a renewable or use the best fossil fuel solution available then.
• For details, see www.dabxdemandsidesolutions.com

It should be noted that the City has recently begun studying geothermal energy, which is important for this program and has already provided a powerful solution to many buildings. Also wind energy should move to the top of the agenda as more suitable designs are appearing on the market which are geared for installation on buildings.

 A long term renewable energy plan

The trap of all programs that focus on marginal efficiency improvements, such as the NYSERDA MPP, is that they focus on only ONE point in time, and ignore the long term plan for a building. The truth is that the path of energy efficiency, which is prioritized in the NYSERDA MPP, in most cases shows the quickest returns from some effiiciency gains, but if you did a 30 year CAPM analysis of your building, you would see that subsequent investments in energy efficiency face strongly diminishing returns. By comparison the renewable energy plan is more capital intensive up-front, but usually superior, because you get 30 years of (nearly) no energy bills, not merely a 30% reduction in consumption.

We should also note that if subsidized finance is used to switch buildings to natural gas, that would have otherwise been capable of switching to renewable energy, that is really an indirect subsidy of some energy company, and of the fossil fuel industry in particular.

Conclusion

The need to switch away from #6 and #4 heating oil, should be leveraged for converting to renwable energy, not natural gas, whenever it is feasible. Owners who do will see at least a 10-20% increase in building values over the next 10 years, if they follow through.

If you do a proper 30-year energy plan for your building, with a good understanding of the engineering interdependencies, two things will become clear:

• if your building is suitable, a good renewable energy solution will beat out mere "efficiency" of a fossil fuel solution.
• And, number two, you can use some of the programs that now exist to help secure financing for your conversion.

NYC Clean Heat provides the motivation, and the NYSERDA MPP can be used on behalf of a conversion to renewable energy.

Energy Efficiency: The Cart Before the Horse

Energy Efficiency is almost universally being mistaken for a primary objective, but it is not. It is purely a secondary issue, a secondary objective. You first have to know what it is you are making more efficient, so the first question is: Do I make my energy or buy from the grid? Anyone who has operated complex systems knows that if you optimize for a secondary objective function first, you can get really disastrous financial outcomes. Yet, this is what we are doing as a society by focusing on energy efficiency first. We are not asking the first question first: Make or  buy? - do I want to make my energy, or do I want to buy from the grid? Energy efficiency does not beget sustainability.

If you started with a fossil fuel system, and you make it more efficient, you will simply get a more efficient fossil fuel system, and you will continue sinking in the endless energy bills that will remind you regularly of the joys of fossil fuels. Sooner or later the energy price hikes will wipe out the so-called "energy efficiency" which you paid a lot of money for. Once you have started down the path of energy efficiency, you have really invested yourself into a corner, and you'll be looking for a sequel, but diminishing returns will be facing you every way you turn. Energy efficiency does not beget Business Sustainability.

If you are making an investment today in fossil fuels, or even biodiesel, you are investing more money in a dead-end technology, for you are committing to paying energy bills forever. Moreover, with current developments, if you are investing in e.g. 15 year equipment, during its lifetime you are sure to have to deal with carbon taxation as well. Besides which, for both electricity and gas, the cost of the delivery and transportation is liable to rise faster than inflation, if you follow the track record of price hikes by your local utility. Make it as energy-efficient as you like, it does not add up to sustainability, even Energy Star is fool's gold.

Energy efficiency: how the trap is sprung

Here is how the energy efficiency trap works. Day one your energy bills were 100%, and we found some investments which enabled us for reasonable money to reduce our consumption by 28%, and therefore our base is now reduced to 72% of what it was. The projects we evaluated looked as follows:

1. For $25K we gained 20%, and that was reasonable, if our bills were $100,000/year to begin with, for this investment obviously had a one year payback.
2. Unfortunately, we then ran out of easy solutions, so the next phase was an $50,000 investment to get us the next 10%, but it works out to only 8% in reality, because our base has now come down. In short, this next project phase really has a 6.25 year payback ($8,000 in annual savings, vs. $50,000). Fortunately there was some incentive in the form of low-cost financing from our friendly gas company, that made it all a little better so we did it anyway.
3. However by year 5 the energy price hikes have wiped out the efficiency gains, and monetarily we're back in the same boat, we're consuming less, but the bills are back to the old level, so we start looking for another project.
4. Lo and behold we are lucky, and we find another $75,000 project, which saves us another 8%. 8% of $100,000 is $8,000, so our payback on this one is just shy of 10 years. We decide to forge ahead, for evidently energy prices will keep rising.
5. The next best project after that would cost us $100,000 and give another 8% improvement. Examples of this type of project are the notorious window replacements and the like, with 20 year paybacks.
6. The diminishing returns become more visible if you work on the basis of consumption, so you start with 100, and a 20% reduction leaves you 80%, the next 10% reduction is 8% off the original, and you're down to 72%. the next 8% reduction is 5.76% off the original, so you're down to 66.24% from the original, and the next 8% works out to 5.3%, leaving you at 60.94% of the original. So you are dealing with ever larger "investments" for ever decreasing returns.

In short, every next energy efficiency project gets worse in terms of financial results, and I continue to do just enough to keep the pain tolerable, and my friendly drug dealer... (oh sorry, utility company) is always there with financial incentives to make it just worth my while, and obviously retain my custom for another number of years. Customer retention is good for utilities, but not for property owners. This is not sustainability, but a dead-end. The point is this: in an older building you can always find one or two energy efficiency projects that will get you a reasonable financial result, or so you think. If you do not think ahead to the mounting cost of the follow-on steps, you will go along with it.

The renewable alternative, sustainability in practice

The renewable energy alternative starts with a MUCH larger initial investment, perhaps $150,000 or $200,000, and a long "payback," however, if I analyze it over a 30 year period, I begin to see that my remaining energy bills are immediately lower, let's say 65% versus of 100%, so I picked up 35% compared to 28% in the energy efficiency model.

However, if I do my 30 year plan properly, I will know in advance what my next options will be, and it might well be that there is a follow-on strategy, which because of renewable energy synergies that could pay off in spades. So in year 5, when energy prices wiped out the efficiency savings of the first model, with 39% cumulative price hikes, with our lower base of 65% of the original level, we are now at a $90K annual bill, compared to the efficiency alternative, which is back up to $100K already. But, now I can find an incremental $300K investment which wipes out my remaining energy bills to 20% of what they were, in short, I am picking up $72K in savings per year to pay for it. We are starting to have compounding returns, and again if we do a proper 30 year plan, we'll see that this next investment hugely adds to the NPV of our building. And I'm avoiding the risk of carbon taxation.

Renewable Adds Up

• Sustainability wins.
• Renewable energy does add up to sustainability, it's just a matter of finding the proverbial "low hanging fruit."
• By prioritizing energy efficiency, we face diminishing returns, and we never achieve sustainability.
• If we prioritize renewable energy and energy independence, every investment in efficiency (e.g. the building envelope etc.) pays of in reducing the capital expenditure for installed capacity. We enjoy compounding returns.
• Make a 30 year plan to establish the proper sequence of projects, for there will be engineering interdependencies.

ENERGY EFFICIENCY VERSUS RENEWABLE ENERGY: APPLES AND ORANGES

The identical building across the street which invested in energy efficiency is starting to experience exponentially longer "payback" periods due to diminishing returns, whereas our building with the renewable energy infrastructure is starting to realize synergies, and compounding of returns, all of which is going to come back in building value, for in year six the renewable building will have remaining energy bills of $18,000/year, whereas the efficiency building after its latest "upgrade" in year five, has bills of $92,000/year.

Again, if these buildings were identical, the "energy efficiency" building will now be worth at least $500,000 less than the renewable energy building. Now, the owner of the renewable building is starting to get excited, and he invests another $300,000 in Wind Energy, wiping out 75% of his common area bills, and supplying electricity at a profit to his tenants, which makes him net profitable on energy, and by year 8 of his renewable energy project, his building is now worth $1,000,000 more than the "efficiency" building. Again, compounding does work if you can integrate these various phases into a coherent plan.

Mutually exclusive alternatives

Because of engineering interdependencies, switching tracks once you have committed to the energy efficiency track, likely means you wasted at least 50% of your investment, in other words the hurdle that prevents you from switching tracks gets progressively bigger with every generation of upgrades to the renewable energy building, for the gap in operating results now grows explosively. This is again why you decide first if you want to make your own energy or buy from the grid. If your building is suitable, you should perhaps let the energy companies keep their financial incentives to themselves.

Conclusion:

Equipment vendors and energy companies will focus on energy efficiency and payback periods, which is good for their shareholders, but not a decision criteria for the value of your building. With renewable energy, greater energy efficiency of my building pays off by reducing installed generating capacity, and therefore reduced capital investment. Renewable energy produces compounding returns with successive projects over time.

NYSERDA MPP is a financial trap for property owners

Energy efficiency on a carbon spewing pig is like Green Paint

The venerable NYSERDA MPP, the Multi Family Performance Program is an investment trap for building owners, and the reasons are simple. It is designed for the benefit of energy providers, not building owners. To put it differently, it is a customer retention program for your energy companies. It is designed to incentivize owners to do what's good for their energy providers, instead of what's good for their buildings. Apparently by and large building owners are happily walking into the trap for all of energy punditry applauds energy efficiency without realizing that it is creating the next energy crisis, not preventing it. Everyone seems to assume that saving resources is always a virtue, and more savings adds up to better economic performance. But nobody checks the math, apparently.

Historically, never mind the good intentions, the NYSERDA MPP program, and all of NYSERDA has been born from the "accepted" macro-economic obfuscation, which passes for "policy advice" or even wisdom, that on the margin the investment in energy efficiency offers the highest returns for incremental energy investment for our society. This seems to be true, even obvious, but it's a case of figures lie and liars figure. The simple fact is that if you make a system more efficient, you prolong its life, and you extend its usefulness. So if the system was a fossil-fuel-based energy system to begin with, what better idea than to get your customers to invest in making themselves more efficient customers, using their money, not yours. One of the incentives will be subsidized financing. Subsidized by who? By the utilities through a levy on their customers.

NYSERDA MPP serves utilities not building owners

In short, it should be no surprise that the NYSERDA MPP program, good intentions aside, operates chiefly for the benefit of the shareholders in energy companies, and is to the detriment of buildings and building values. The reason this is so, is that its primary focus again is on energy efficiency, not on green energy at the building level. And the methodologies of the MPP program are focusing on getting owners to do what is marginally beneficial to the grid with an incentive system of subsidies and cheap financing.

Nyserda MPP negotiates owners into a corner

The unstated, but implicit, assumption is that energy efficiency is additive, and somehow will result in energy independence, and better economic performance. It is not, in fact it is an investment sinkhole for any building that would have been capable of switching to renewable energy. And in the multifamily sector in NYC 50-80% of buildings are. The reason this is so is that INITIALLY energy savings always offers good payback, but there is no effective follow-on investment, so the owners of buildings are painting themselves in a corner from an investment point of view, because of diminishing returns. Any subsequent investment in efficiency is facing an increasing hurdle of diminishing returns, because the basis for the savings is constantly reducing, and ultimately hits a limit, which may be say 35%, and even if it's 40 to 50%, eventually there's no place to go. In short, like with any investment, you have to wonder about the exit strategy. There is none. The next energy price hike will simply wipe out the savings of 15-25% that are typical of these programs, and the owners of the buildings are back to square one.

NYSERDA MPP can be Useful be useful in conjunction with green energy

The smart way of using the NYSERDA MPP program, or other incentive programs, are to do your own economic analysis first, and then figure out how to leverage the incentives. Do not let the utility company or their agents drive your program! The only sane way to approach these decisions are to take a comprehensive look at energy in your building and to set up a 30-year analytical model on a CAPM basis with the base case being your existing fossil fuel driven energy model, with incremental spending on energy efficiency, and the alternative case or cases being to switch to green energy, generated IN your building.

What you are likely to find is that if you achieve the same say 25% improvement in energy by self-generating it, and using energy efficiency secondarily to beef up your investment, you will have superior returns. For, on a 30 year basis, you will see that the 25% efficiency investment is likely to be wiped out within five years by energy price hikes, whereas the green energy investment has permanently eliminated the energy cost of 25% of your BTU load, and you have a follow-on strategy to add more renewable energy generation at the building level. Wind turbines for buildings are now becoming a serious option. Solar PV is improving all the time, but Solar Thermal is usually the best option. On a larger, utility level, there was just a study that PJM stands to save $7bn/year with windpower, all the while people are complaining that we have no grid parity???

Time shows green energy superior to energy efficiency

The fundamental, if unintentional, deception of the NYSERDA MPP lies in the fact that it focuses on a single point in time: now. It sets people up to evaluate technologies on the basis of marginal contribution to the cause of efficiency, which digs you deeper and deeper into the hole of dependence on energy by subscription. Once you do a 30 year model, the payoff of green energy becomes obvious, because you are permanently wiping out a portion of your energy bill, and it's value goes up with every energy price hike. This is why you should do the 30 year model first, and figure out later how you can leverage incentives. NYC's Clean Heat program leverages building owners into the NYSERDA MPP program, in order to get financing for switching to natural gas. In the vast majority of cases, making that switch simply lops 10% or more from the future value of the building compared to the green energy alternative, if there was one.

Conclusion

Energy efficiency is NOT additive, but shows diminishing returns. Green energy produces compound returns, the NYSERDA MPP tool can be used right, but most often it suffers from focusing on the wrong objectives, and impairs building values.

NYC Clean Heat Destroys Property Values

PlaNYC Heating Oil Regulations are pushing buildings from #6 and #4 oil to #2 oil, natural gas, or biodiesel. Conversions are in full swing. Sadly, many of the buildings are suitable for renewable energy conversions which would produce far better results for the environment and for occupants, as well as better long-term financial results for owners. It says on the website that owners can apply for compliance waivers through NYC DEP. Owners should do this if their buildings are suitable and if they have the financial wherewithal to make that transition to a renewable solution. As long as a credible renewable solution can be found, owners are in fact placing a long-term hedge on their energy costs, and will do far better than they would going along with the conversions which the City is pushing. The typical 30% gains in efficiency are too easily wiped out by the next energy price hike.

Compound investment returns from energy independence through renewables

Not only are these conversions counterproductive as long as there is a renewable energy alternative, owners are being offered subsidized financing to make it easier to make the wrong decision, and destroy the asset value of their buildings. Having said that, there may be some buildings that realistically could not make a transition to renewable energy economically, but in many cases it is well within reach to do in buildings that are 40 units and up. (Size matters because of economies of scale). In the long run, this will produce a steady path to asset appreciation.

Presently we are in PlaNYC 2013, but it started in 2007 as Plan NYC 2030, and since then evolved to PlaNYC 2.0. Clearly this is an extraordinarily important plan, and it puts NYC in a very proactive stance with respect to climate change issues, but in this area of renewable energy, not nearly enough is being done. Most of that shortfall rests on the general confusion in our society that energy efficiency somehow is an additive phenomenon and would result in energy independence. In that context renewable energy is then relegated to a marginal role. If you were to actually do a long-term energy plan for a building, you would see this is not so, unless the building is not capable of a renewable conversion. Most of the buildings that burn #6 could do it.

The first issue is a choice of what energy system do I want? Do I make my energy (renewables) or buy my energy (subscription-based, gas, electric, oil). The two paths are to a large degree mutually exclusive, because of engineering interdependencies. One clear example, if I can go the renewable route and perhaps eventually eliminate gas for cooking, and most heating/cooling, I may be able to eventually do centralized HVAC, and choose very different replacement windows, etc.

Most importantly, the path to energy efficiency of my existing fossil fuel system is an investment in becoming a long-term consumer of gas or oil, or even biodiesel, so it is a customer retention program for the energy industry. In this case it is driven by the well intended reduction of CO2 and particulates emissions of gas versus oil, but as long as a renewable alternative exists, the latter would produce greater benefits in the long run. Successive investments in energy efficiency produce strongly diminishing returns, so a property owner paints himself into a corner financially. Once the transition to a renewable infrastructure can be made, the financial future of that building is assured, because subsequent investments will produce compounding results. The transition to renewable energy practically ensures building preservation, because of superior economic performance over time.

Underwriters risk collateral values by underwriting energy efficiency

If you check the website for NYC's Clean Heat program you will see energy efficiency as the sole qualification for subsidized financing. All the usual culprits are there, CPC, NYSERDA et al, many of whom have energy credentials, for this conversion effort is a subsidy to the energy industry to the detriment of building values. Underwriters should learn to test for the difference between energy independence (renewables) vs. energy efficiency of carbon-based energy systems, simply because of the issue of diminishing returns with the former, and compounding returns with the latter. Energy Efficiency loans are riskier than Energy Independence loans, by far. To lump them all into one category is bad for owners and bad for underwriters. Building values for buildings that are 50% or better energy independent would rise strongly over the life of the mortgage, compared to buildings that invested in energy efficiency alone.

DaBx PlaNYC 2020: the Energy independence plan

Windspeeds over NYC are higher than Chicago

With my consulting company DaBx Demand Side Solutions, we offered an alternative model to Mayor Bloomberg on July 4th 2011, which would achieve better results, and faster than the mere conversion from #6 to natural gas, and, as noted above, better financial outcomes for building owners. The plan is within reach for probably at least 50% of the building stock that is now converting to natural gas. It is more capital-intensive at first, but not much so once you evaluate it against the alternative of the forced gas conversion. The outcomes for air quality and building preservation would be far superior, not to mention public safety and national security. The conversion to gas only seems easier and cheaper in the short run, it is not if you do a 30 year energy plan for a building.

The basic model is based on understanding that in C and D class apartment buildings that are usually only 6 stories high, the old steam boilers usually provide Domestic Hot Water (DHW) through a coil in the boiler, and 30-50% of BTU output of those boilers goes to DHW. In those cases, economically feasible solutions can start from providing DHW with renewable energy, either geothermal or solar thermal. This eliminates 25-50% of CO2 and particulates emissions right away, it also gives the boilers the summer off, so it extends their useful life, and then at the time when the boiler dies from natural causes, the conversion to renewable HVAC can be completed. And yes, the famous split incentive between landlords and tenants needs to be cured.

Energy independence, wind and geothermal energy

Energy independence of buildings means the building stays lit during an outage, even if only partially. The two technologies that have been underappreciated so far are geothermal and wind power. In 2008 the press practically ridiculed Mayor Bloomberg about his advocacy for wind power on buildings, but they did not understand that specific wind turbines for buildings where just starting to come to market, and the Mayor was right on target, perhaps without knowing it. Average wind speeds around NYC are higher than in Chicago, supposedly the windy city. Moreover, around buildings, wind speeds pick up dramatically, offering excellent opportunities for wind power especially in the city.

Geothermal is the most strategic technology of them all, and City Hall is only just now starting to research it. Basically a geothermal system gives you a 400% gain in BTUs, and most importantly it can act as energy storage, besides providing domestic hot water. Here is one place where compounding returns come in, for energy storage is the single biggest problem in renewable energy, but DHW ends up acting as energy storage for your building. Unfortunately most existing geothermal systems in apartment buildings were wrongly designed, as DHW only, and not for energy harvesting. Buildings need 30 year energy plans, not point solutions.

Conclusion:

PlaNYC can be much more successful if the confusion between energy efficiency and energy independence through renewables is eliminated. Better outcomes for building preservation, air quality, and economic competitiveness of the city would result. Energy efficiency of a building with a carbon-based energy system is financially inferior and prolongs the period of CO2 emissions, energy independence through renewables reduces CO2 faster.

The Irrelevance of Grid Parity

Green energy remains more talk than action, where is the green economy? We already know we do not have an energy policy, really, and for sure no green energy policy. We do have a patchwork of rules, regulations and incentives, but many of them can be counterproductive, regardless of the best intentions. If it were possible to map a cohesive and sensible energy strategy, there is an endless array of loopholes and internal contradictions that would have to be eliminated. Grid parity is being misused in a number of ways, perhaps unintentionally, but it is a concept that is widely misused if it is relevant at all. Green energy would have to be looked at as what it is, an absolute winner, and an alternative to perennial energy bills in the form of FREE renewable energy.

This blog is devoted to green energy on the grid, but even that is in a state of flux, for not everybody agrees on what is green, or renewable energy. Large hydro is taboo in lots of places, like the list of green energy for the state of Connecticut. Interestingly methane from landfills made the list. Clearly the damage to fish populations is causing big hydro to be disqualified in more and more places. There are still folks who think nuclear fission energy is green, and while they may be nominally right, because it does not produce CO2 emissions, it is hard to believe that people could be oblivious to Three Mile Island, Chernobyl, and Fukushima. Who needs that kind of green? One way or another, this blog is focused on green energy from the grid, which is at least something anyone can do immediately, and with the referral program we advocate, you can green your wallet at the same time.

Macro-economic madness: grid parity and energy efficiency

Policy makers rely on macro economists, which is as it should be. However things go wrong when the high level view of macroeconomics is used as is to drive microeconomic policy. And this is what is happening in energy on at least two fronts: grid parity and energy efficiency, which both are de facto being used, and used incorrectly, to justify the slow adoption of renewable energy. The Grid Parity Definition is simply the idea that the cost to the grid should be equal to carbon energy, but all this while CO2 emissions continue to be ignored in the equation. It will not be like that forever, and if you invest 30 year money, you might want to look ahead.

Wind Grid Parity or solar, mean that the performance numbers are evaluated in the context of powerplants, and at a wholesale, macro- level, on the grid. That may not be relevant. Both technologies however also exist on a building scale, and so do geothermal and other heat exchange technologies. Thus, if we look from the ground up, much more is possible than the macro-economists think. Also remember at the demand side of the grid, we are competing with retail prices, not wholesale!

Energy Efficiency is a secondary issue, not a primary objective, yet macro-economists are constantly telling us that energy efficiency will give us the most bang for the buck, and from their vantage point it sure seems to be so. Except it's wrong if you generalize it, and use it to drive policy. The question is: What are you making more efficient? If your point of departure is the carbon energy model, you are prolonging the tenure of carbon energy, just when even The New York Times made the catastrophic carbon levels front page news.

The fact is that energy efficiency is always an attractive investment at first, but then diminishing returns soon reveal the practical limit, and the reason why the old saying says you can't save yourself rich. Once you start on the road to energy savings in the existing model as a basis for investment, you will quickly paint yourself into a corner, for as you save, every subsequent investment has higher and higher costs, with less and less impact, and so the returns run away from you, and you are stuck unhappily paying energy bills forever. So what they were 20-30% lower when its several price hikes ago? This is a trap.

Solar Power comes with a 30 year trail without bills

Green energy investments always start with a large investment, but they produce a long tail of zero energy bills and low maintenance costs to the extent of whatever portion of your demand they can replace, and now successive investments should gradually decline. Therefore, if you pick the right opportunities, and you do a proper 30 year comparison on a net present value basis (the Capital Asset Pricing Model), you are likely to find a higher value added to your property, than by a smaller energy efficiency investment. Not only that, if you get your engineering right, subsequent investments can produce synergistic effects, and compounding returns instead of the diminishing returns of the energy efficiency case.

Grid parity amounts to obfuscation, for it looks at when is green energy competitive with carbon energy in the current system. Long before grid parity is reached there are niche opportunities where renewable is economical before it is generally the case. Anyone who can read energy price forecasts can determine when it is worth putting on a hedge, and generating your own FREE renewable energy is definitely a hedge against energy price inflation. You can invest into an environment of rising prices, even if it is touch and go today, for with every passing year that investment will look smarter.

It always happens on the margin: off the grid

Net-zero homes are happening, and homes are coming off the grid, even existing ones. The numbers may still be small, but any marginal phenomenon that shows 30+% growth for a decade or more is worth watching. Some people may have a survivalist agenda, and pursue going off the grid for ideological reasons, but the majority of cases are economically sound. So much so that it behooves everyone who owns property to seriously look into their options, and once you can find one project to start your move to energy independence, it becomes easier and easier. Only you do need to make a long-term energy plan to prevent one investment from locking out another over time. Mistakes are expensive.

Any economist should be paying attention to what happens on the margin, and net zero homes and buildings are growing fast, and even retrofits are starting to happen. Besides technology is advancing all the time and in many situations newer wind turbines optimized for building mounted installation, are making Wind Energy more powerful than solar, and at least as competitive. Any building owner should look at all Renewable Energy Sources, not just one.