Major National Retailer Employs Energy and Water-Aligned Lease Clauses to Build in Savings and Renewable Energy

Overview

The Energy Management and Real Estate teams at a major national retailer worked together to include new clauses at lease initiation or renewal that make it easier to reduce energy and water use, and to access renewable energy in their leased stores.

The Irrigation Clause stipulates that the retailer will control and separately meter irrigation systems serving planted areas and parking strips in front of the store, and pay for metered water use. Under this arrangement, water and cost savings realized via irrigation best practices in leased stores go straight to the retailer’s bottom line, and the business case now pencils for high efficiency irrigation systems. These systems can reduce total store water use by 15-30 percent with ROIs ranging from 50-150 percent, creating a virtuous circle of savings that can fund additional efficiency projects. Additionally, shifting control and operation of the system mitigates regulatory liability for the tenant in regards to state and local landscape watering restrictions.

The Renewable Energy Clause allows the retailer to install solar panels on leased store rooftops. Historically, landlords have prohibited rooftop solar installations due to concerns about roof membrane penetrations or other damage. Improvements in installation techniques that no longer penetrate membranes can alleviate these concerns. Implementing a renewable energy clause at lease initiation can expedite tenant installation of solar panels and their associated benefits. In cases where the landlord has already installed solar on the roof, the renewable energy clause also includes an agreement to purchase the onsite-generated power if cost competitive.

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