Retail landlord WS Development has signed a power purchase agreement that essentially ensures the electricity for its New England real estate portfolio will come from renewable sources.
The developer announced the seven-year agreement with NRG Energy subsidiary Direct Energy on Tuesday, though it has been rolling into effect property by property over the past month or so. Yanni Tsipis, senior vice president at WS, said his company is buying this power — an estimated 14 million kilowatt-hours of electricity — from hydroelectric dams in northern New England. The deal is the latest example of how the development industry is rethinking its environmental impact amid regulatory pressure from state and municipal officials.
The WS properties that will run on 100 percent renewable power include three entire buildings and retail space it owns in five other buildings in Boston’s Seaport area and 35 other developments around New England, including Legacy Place in Dedham and The Street in Chestnut Hill where WS is headquartered. Many, Tsipis said, are heated with electricity, allowing those to be considered net-zero in terms of carbon emissions from their energy use. While the agreement doesn’t change the heating source for properties that currently use natural gas, it would significantly reduce their overall carbon footprints.
One structure, a 700,000-square-foot office building to be occupied by Amazon after it opens next year, will be all electric and the largest net-zero office building in Boston.
“This is absolutely on the leading edge,” said Mindy Lubber, president of Ceres, a Boston environmental advocacy organization. “It’s a big contract compared to anything I’ve seen.”
Universities and hospitals have purchased large quantities of renewable power for years, but now a growing number of for-profit property owners such as WS are entering the market. Boston Properties signed an agreement in 2018 to buy renewable electricity credits associated with a Texas wind farm for the power used in its Massachusetts buildings, for example, and lab developer Alexandria Real Estate Equities has signed a solar power purchase agreement for its buildings in Greater Boston that takes effect starting in 2024.
These shifts come as Boston officials push large and midsized buildings to reach “net zero” status by 2050, with increasingly stringent carbon emissions caps starting in 2025. Tsipis cited those rules (known as “BERDO 2.0″) as well as other emissions standards at the municipal and state level — those that have already taken effect, and others that are coming or are under discussion — as a big factor in the decision.
“We’re long-term owners,” Tsipis said. “We care deeply about the communities in which our places are located and also about a greener future for our planet. This was an opportunity to get ahead of what we know the regulatory context is going to be in many of our host communities, especially Boston.”
In WS Development’s case, the power purchase agreement cost was relatively comparable to retail grid rates, Tsipis said. The agreement took about 18 months to hammer out, partly because of the number of hydroelectric plants that needed to be aggregated to meet WS Development’s needs.
The WS portfolio spans 14 million square feet and includes several residential and research buildings in the Seaport that haven’t gone up yet, though it does not include Fenway Corners, a 2-million-square-foot project around Fenway Park that WS is proposing with partners including WS and Fenway Sports Group, which is currently under city review. (FSG’s principal owner John Henry also owns The Boston Globe.)
Meredith Elbaum, executive director of green-building nonprofit Built Environment Plus, said it’s one thing to reduce the carbon footprint of buildings that are in the planning stage, before a shovel goes in the ground. It’s another thing entirely to do it with existing buildings.
“For them to look across their entire portfolio and not all of the buildings being new buildings, that’s pretty exciting,” Elbaum said of the WS deal. “I do think this is a sign of things to come.”
Jon Chesto can be reached at email@example.com. Follow him on Twitter @jonchesto.