April 2024

6A — April 2024 — Spring Preview — M id A tlantic Real Estate Journal


S pring P review

By Thomas Loredo, Sunrock Distributed Generation Navigating operating expenses and energy reduction mandates your Net Operating Income (NOI).


ne of the biggest chal- lenges that any busi- ness faces is to control

tenants must track and report their yearly consumption of electricity. The required re- porting of this information will be tracked and recorded by submitting information on the US Environmental Protection Agency’s Energy Star Portfolio manager tool. This first year’s report is what will establish the baseline of your future energy consumption levels. As an example, in 2023, the State of New Jersey mandated that owners and tenants of buildings larger than 25,000sf must track and report (bench- mark) their yearly electric con- sumption (gas and water will also be benchmarked). This is a State requirement that cannot be avoided, and many facilities and their owners are currently working to meet this first year’s reporting requirement. However, this is only the beginning. Most insiders agree that the next step, after the benchmark year is filed, will be a mandatory reduction in a facility’s purchase of utility (grid) supplied electricity. The estimates are that these man- datory reductions will be in the order of 10-20% per year. What does this mean? As an example, if your facil- ity consumes 1,000,000kWh (kilowatt-hours) of utility electricity in your benchmark year, and a 15% reduction is then mandated, you will need to reduce your next years’ electric consumption to 850,000kWh of grid supplied electricity. Non-compliance with both the benchmarking reporting and meeting the reduction requirements are anticipated to be met with significant financial penalties. The question now is how do I meet these new require- ments, what is involved, when must I start and what will this cost me? How can I comply? These questions, and the related costs can be readily addressed as there is a silver lining here… It’s your roof! By utilizing your roof to in- stall solar, you can adopt a no money out-of-pocket solution available to address the bench- marking and energy reduc- tion mandates, and solar will reduce operating expenses, saving you significant money on a yearly basis. How do I accomplish this? continued on page 24A

Energy Consumption is now in focus for State and Locally imposed mandatory benchmarking. Based upon the amount of utility electricity (electricity from the grid) that a facility is currently consuming on a yearly basis, state and lo- cal governments across the country are beginning to and have already mandated that commercial buildings and facilities ‘benchmark’ their yearly electric use. This means that building owners and their

its yearly op- erating ex- penses. Whether it is the on- going main- tenance of infrastruc- ture or equip- ment, or the ever-rising

Thomas Loredo

costs by the public utility com- panies that service a facility, increasing yearly operating expenses are a real impact on

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