By Dina ElBoghdady
Washington Post Staff Writer
Thursday, August 31, 2006 - Two real estate firms announced yesterday that they had committed to purchasing credits for power generated from wind farms to cover the energy needs of their joint headquarters in Bethesda and an office building in downtown Washington.
Lerner Enterprises and the Tower Cos. said the decision to buy green energy should help them and their tenants save money as well as set an example for other companies seeking an environmentally friendly alternative to electricity from plants powered by nuclear or fossil fuels.
Under the terms of a four-year contract, Pepco Energy Services, an unregulated subsidiary of Pepco Holdings Inc., will supply more than 64 million kilowatt-hours of renewable energy credits to both firms as well as the Washington Square office building that Lerner and Tower jointly developed at 1050 Connecticut Ave. NW. Pepco did not disclose the contract's value.
The wind-energy credits, which count toward the companies' power bills, are intended to offset carbon dioxide emissions from plants that burn coal, oil or natural gas. Many scientists and environmental groups say increasing levels of carbon dioxide are causing global warming.
The credits purchased by Lerner and Tower will remove from the atmosphere an amount of carbon dioxide comparable to the annual emissions of 1,851 cars, said Marnie Abramson, a principal at Tower.
Even though the firms purchased wind-farm credits, that does not mean their buildings will necessarily be using wind energy, officials at Pepco and Tower said. Electricity is typically mingled on public transmission lines, Abramson said. Green energy producers are like tributaries feeding into a larger stream of energy available for sale, she said.
"While we're buying our energy through Pepco, we're not sure what kind of energy is powering our buildings," Abramson said. "But we're committed to the fact that enough energy is generated through wind to compensate for the amount of energy we're using in our buildings. We purchased wind to meet 100 percent of our energy needs."
Pepco is acquiring the wind-energy credits from Sterling Planet Inc., a renewable energy provider in Atlanta. Sterling Planet has contracts to buy credits from the wind farms and ensures that each kilowatt hour is sold one time to one entity, said Mel Jones, president and chief executive of Sterling Planet.
Mark Kumm, president of Pepco Energy Services' asset management group, said the credits the two firms purchased will help encourage the construction of renewable energy facilities. Those in turn will displace more conventional sources of energy, which continue to produce about 95 percent of electricity used in this region, he said.
"So it's newsworthy when someone purchases power produced by other means," Kumm said.
Greg Kats, managing principal of Capital E, a national clean-technology firm, said wind-generated energy has been growing 35 percent a year for the past eight years because it is clean, creates U.S. jobs and makes for a sound financial investment for utility companies.
"Shifting to wind makes a lot of sense economically," Kats said. "It costs quite a lot to build a wind plant, but then the wind energy is free. A coal or gas plant costs less to construct, but then [utility companies] pay more for coal and gas, and coal and gas prices rise" and are vulnerable to price fluctuations.
Lerner and Tower have been doing business together for about 40 years, and their joint developments include White Flint Mall. The companies will move their combined headquarters to a green building in Rockville in 2008.
Pepco Energy reached a similar agreement this year to supply renewable energy to the Statue of Liberty and the Ellis Island Immigration Museum. It supplies conventional electricity and gas as well as green energy to commercial, government and industrial customers and provides services to help customers use energy more efficiently.
Tower, Pepco Energy's largest commercial purchaser of energy from renewable resources, said it is the 23rd-largest buyer of green energy in the country. Abramson said using green energy helps Tower lure potential tenants now that many leases are structured so that tenants pay a base rent and assume other expenses, such as energy costs, which have been rising.
"That's happening more and more," Abramson said. "So the tenant can reap the benefits of energy efficiency."