We just checked into our hotel in Palma and one of the first things I noticed is that as soon as you open any of the windows/doors, the AC automatically turns off. A message on the thermostat then alerts you that it will come back on once you close the windows. I haven't yet figured out how this particular hotel room is sensing that things are open, but it's relatively easy to do this at home through smart thermostats and sensors like these. I make a real concerted effort to do this manually, and so it's great to see it automated in a hotel room, where people are naturally going to care less about wastage. Europe is so far ahead of North America when it comes to energy efficiency.
I have a very close friend (Peter Vogel) who is in the solar business. He runs business development for a company called Otter Energy. And by volume, I believe they are the largest in Ontario. Since 2009, they have installed over 350,000 panels.
So when Peter and I hang out, I get the benefit of learning about solar. And he is great at reminding me that installing panels on the roof of buildings in Ontario makes a ton of sense from both an environmental and financial standpoint.
Generally speaking, the amount of benefit you will see depends on the building's ratio of roof area to overall building area. Low-rise buildings with a lot of roof area (think industrial assets), are absolute no brainers. But it can also work very well on many other asset classes, including mid-rise multi-family.
Here are some high-level figures that he recently walked me through:
As a rule of thumb, solar in Ontario typically generates between 12-14 kWh's per year per square foot of roof area (usable flat roof).
The average payback period for an install is usually somewhere between 4.5 to 7 years.
However, on income producing properties, the permanent decrease in operating expenses and the corresponding increase in net operating income (NOI) will increase your asset value on day one.
Consider spending $100k on solar panels to increase your NOI -- through lower electricity costs -- by $10k. If you were to then capitalize this increase in NOI by 5%, it would mean your asset value has right away increased by $200k. If the cap rate for this asset is even lower, say 4%, the increase goes up to $250k.
These multiples can get even better with larger installs. Here are some numbers from a real-world 100,000 sf commercial building in Ontario. In this case, the solar system cost about $800k (net) and resulted in annual operating cost savings of about $140k. This means, that at a 5% cap rate, the owner spent $800k to increase the value of their asset by $2.8 million on day one.
Of course, in addition to all of this, you get long-term energy cost certainty. That's worth something too.
The business case is compelling. So I think more building owners should be looking at solar. We are certainly looking at it from a development perspective. If you're interested in learning more, feel free to reach out to my friend. There are a lot of details that help strengthen the case for solar, including depreciation allowances and tax credits.
Since the modern Olympic Games were revived in 1896, no city has ever hosted swimming events in an urban river. Too poopy. But Paris, as we talked about, hopes to be the first. Starting on July 30, the Seine is scheduled to host the swimming portion of the triathlon competitions.
Except, it will depend on water quality. Today's training sessions (scheduled for Sunday, July 28) were cancelled because water tests showed that the Seine is currently below acceptable standards. This is due to heavy rain over the last few days, which I guess overloaded the city's storm network.
So what is clear is that -- 36 years after then-Mayor Jacques Chirac first promised to clean up the river -- the city has only been able to successfully achieve this, sometimes. It's not an easy task.
According to Bloomberg, the clean-up efforts have already cost €1.4 billion. This was spent on doing things like constructing a 50,000 m3 holding basin (about the size of 12 Olympic-sized pools) under the Gare D'Austerlitz. This now holds storm overflow during heavy rain events, in lieu of it going into the Seine.
But this doesn't provide any guarantees as evidenced by today's cancelled training sessions. Presumably, it just makes it less likely for overflow stormwater to get dumped into the Seine. So a cynic might ask: Why bother with all of this?
Well, for one thing, swimming in a river in the middle of a major global city is just plain cool. Look at how the Swiss do it. But another reason could be that you want to create one of the greenest cities on the planet. And if that's the case, then seeing athletes swimming in the Seine is a pretty powerful image.
It shows progress.
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