Renewable Energy Adoption in Leased Buildings: Part 2

This blog series is authored by Vivienne Zhang and Illina Frankiv who manage the energy program at WeWork, a global co-working company and REBA member. The insights shared by Vivienne and Illina are based on their experiences supporting the sustainability goals of WeWork members. This three-part series will be split into blogs on Accountability, Transparency, and Market Solutions.


Transparency – How much to buy?

After answering who should buy renewable energy, the question that follows is how much to buy? Many good corporate citizens do not care whether their emissions are Scope 2 or Scope 3; they just want to reduce their carbon footprint. In other words, it doesn’t matter whether their energy footprint is the landlord’s or tenant’s, as long as it is clean. This is a laudable stance and could lead to faster action. For example, Stripe, a technology company, in trying to reach its carbon-neutral goal, estimated the carbon footprint of its office based on the typical energy intensity of similar commercial spaces and bought carbon offsets separately.[1] However, this approach, apart from the inevitable inaccuracies associated with estimation, also doesn’t address our goal of decarbonizing energy supply. [2]

The ideal way is to obtain actual energy use data and procure an equivalent amount of renewable sources so as to replace traditional energy supply with the clean option. Effective purchases can increase renewable energy penetration in the energy system. Data visibility is, however, easier said than done, because commercial lease agreements typically do not contain standardized clauses for the provision of energy data. The lease negotiation process is arduous in itself, centering on an array of issues from cost to term length. Considerations about utility management often fall by the wayside. As a consequence, the landlord usually decides whether they are going to provide the tenant with energy consumption data, how frequently, and in what format. The scattered reporting approaches (if any) make it difficult to develop scalable data management systems. 

Additionally, because buildings, meters, and appliances range widely in age and technical capabilities, energy data collection can be anything from manually reading an analog meter and writing it down on a piece of paper to automatically pulling numbers from a smart meter into a database. For institutional landlords and tenants with hundreds of locations that require monthly updates (up to the granularity of 15-min interval), this process can get very labor- and cost-intensive. For coworking spaces with thousands of tenants, the difficulty increases by an order of magnitude. 

The result is that most tenants and subtenants don’t know their energy use. Those with sustainability aspirations can stop short from buying clean energy because the first step, knowing how much to buy, simply creates too much friction. Having an established leasing clause to mandate data collection and transparency, either through voluntary cooperation to develop industry standards or by mandate, such as Law 88 in NY,[3] can solve this problem. After all, the technology exists; we have done it for residential customers. Ultimately, popularizing energy data transparency depends on how committed landlords and tenants are in resolving this issue systematically, which, so far, has not ranked top of the list when it comes to lease negotiations.


[1] https://increment.com/energy-environment/stripes-carbon-neutral-journey/

[2] https://www.epa.gov/sites/production/files/2018-03/documents/gpp_guide_recs_offsets.pdf 

[3] https://www1.nyc.gov/assets/buildings/local_laws/ll88of2009.pdf


Stayed tuned for the next blog in this series on Market Solutions.

Interested in learning how to navigate sustainability as a tenant or landlord? Check out REBA’s LESsor Sustainable Energy Network (LESSEN) for additional resources.


Authors:

Illina Frankiv
Global Energy Program Manager
WeWork

Vivienne Zhang
Global Energy Program Manager
WeWork

Mark Porter
Supply Chain and International Collaboration, Director
Renewable Energy Buyers Alliance