Purpose of the project
Implementing a solar PV renewable energy project from the development phase was the next step in expanding our solar program, which consisted of solar projects developed prior to our ownership of the property. Our objectives for launching our first solar PV renewable energy project were to reduce our greenhouse gas (GHG) emissions while simultaneously reducing our electrical usage from the utility grid, as well as to realize annual cost savings with a reasonable return on investment (ROI).
We began with an assessment process of identifying one of our medical office buildings that would not only be compatible with the installation logistics of a solar PV system, but that would also meet specific criteria conducive to our objectives. First, the building should be located in an area of the country with higher than average electrical costs, to facilitate a more rapid ROI. Second, the building should be in an area in which solar rebates are available and easily obtained. Third, the selected building would feature sufficient flat roof area (unimpeded by HVAC equipment or antennae systems), or sufficient surrounding ground area (unobstructed by shading from trees or other building structures). Encino Medical Plaza, a three-story 66,114 square foot medical office building in Encino, California, met each of these requirements. We collaborated with a solar PV system installer to develop the electrical specifications and the system design.
This solar PV panel system is expected to produce 181,840 kWh annually, or approximately 15% of the building’s annual usage. In other words, 15% of the building’s usage will be taken off the utility grid, reducing the load on the grid as well as GHG emissions. The total project cost was $274,405, including a $66,675 rebate received from the Los Angeles Department of Water and Power. We estimate that the demand decrease from the utility grid, together with the reduction in usage, will provide annualized cost savings of $43,740. Additionally, we expect the simple payback for this project to be 6.27 years with an associated ROI of 15.9%. Project construction commenced in December of 2014 and was completed in January of 2015.
“HCP continually explores and evaluates alternative energy sources, and we find that solar panel systems currently represent the best alternative energy option from a performance and business perspective.”
-Tom Klaritch, Executive Vice President – Medical Office Properties, and Sustainability Committee Chair, HCP, Inc.