The Institutional Real Estate Inc Sponsorship brochure, Connected-Investor Focused, We connect people, data and insights, sponsorship, events, IREI Products
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NAREIM DIALOGUES SPRING 2017 9 Serving in Iraq as part of Operation Iraqi Freedom, we both had life changing experiences that have led to careers focused on continuing our service to our country. It was those experiences that led us to personally understand the high price that our country pays in blood and resources to secure oil supplies, from protecting desert fuel convoys to keeping international shipping lanes open for oil tankers. It was also these experiences that led former Commander of the 1st Marine Division, and the new Secretary of Defense, General James Mattis to famously comment on the need to "Unleash us from the tether of fuel." Like many veterans, we both left the service to enter the clean energy sector with a commitment to secure our nation's energy future and combat the impacts of climate change. Prior to co-founding CleanCapital, we continued our service in different ways. Jon was appointed by President Obama to join the White House as the Chief Sustainability Officer of the Federal Government. This is a role many in the real estate sector and private sector would recognize immediately. Kevin, a West Point graduate, left the military and lead M&A and business development for several of the world's leading renewable energy companies. We both realized that we could continue to serve our country by making the case for clean energy innovations here at home. But, it also became apparent that many in the private sector like WalMart, Apple, and Google were recognizing the global trends and beginning to take action in this sector. We will explore the changing landscape of energy and look at how leaders in the real estate sector can take action. Landscape of Changing Energy Markets The world is at a transformative moment in terms of how we produce and use electricity. Global powers are experiencing a major shift in how their electricity is being produced. The traditionally fossil fuel dominated electricity marketplace is being replaced by new low carbon sources, and many developing countries are also capitalizing on these innovations. Development of distributed clean energy solutions are allowing nations to leapfrog generations of outdated technologies. Clean, distributed energy now allows solar panels to sit on a residential or commercial rooftop that powers storage batteries in the basements no matter how remote a community may be. The development and policy implications of these types of advancements are truly significant. Market demands are clearly the driving force accelerating the rapid deployment and adoption of clean energy in both developed and emerging markets across the world. American leadership and engagement has been instrumental in demonstrating the transformative market potential that clean energy technologies offer to create local jobs and mitigate the impacts of climate change. For instance, the solar market continues to grow and prove that solar is economically successful and a force that has value across markets, from the Department of Defence to commercial real estate. For the first time ever, in 2016, solar ranked as the number one source of new electric generating capacity additions on an annual basis. This growth in solar has been led by falling prices. The cost to install solar has dropped by more than 60% over the last 10 years, leading the industry to expand into new markets and deploy thousands of systems nationwide. As the solar industry has matured, the decline in costs has been fueled by a number of factors. For example, the supply chain trimming costs helps cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance. Better technology, the economies of scale, and better manufacturing have been key in boosting the industry as each generation of more efficient solar panels provide more cost effective systems. Five years ago, a solar panel cost over $5 per watt with 15% efficiency. Today, you can buy the same panel for $0.45 cents per watt with 20% efficiency. The trends are clear, solar is getting cheaper at an accelerating rate. Lastly, stable and predictable policies have also been driving down costs. President George W. Bush signed the Energy Policy Act of 2005 with tremendous bipartisan support and ushered in solar, along with other renewables. It established the Section 48 Investment Tax Credit (ITC), providing a lucrative 30% tax credit for solar projects. Over the course of the next few years, other policies aligned at the state level, and then a combination of the ITC and appropriate technology advancements mentioned above bolstered the solar industry, while driving down costs. ©iStock.com/Spantomoda