Camden Property Trust (Camden) has made commendable strides in the realm of sustainability, but the journey toward a fully sustainable future is far from over. As they continue their quest to reduce their environmental footprint, Camden might find a valuable ally in a new way to buy Renewable Energy Certificates (RECs).
Camden, led by Chairman & CEO Richard (Ric) J. Campo is a prominent residential real estate company with a commitment to environmental stewardship. With an extensive portfolio of apartment communities across the United States, Camden ranks among the largest multifamily REITs in the nation. Their sustainability commitment and progress is outlined in their Corporate Responsibility Report.
Sourcing 15% Renewable Electricity: A Noteworthy Milestone
In the report, Camden acknowledges that sourcing renewable energy is a lesser priority for their team - likely due to the challenges that companies currently face when sourcing renewable energy. Instead, Camden prioritizes efficiency efforts such as lowering energy costs and reducing overall consumption. The result is a heavy focus on initiatives like LED lighting upgrades, Energy Star appliance installations, and the use of occupancy sensors as a primary way of greening their assets. Nonetheless, Camden set a 2030 goal to source renewable electricity equivalent to 15% of their electricity consumption used in its common areas. They achieved this target in 2022 by procuring enough unbundled RECs to mitigate that consumption.
The Current Hurdles In Sourcing Clean Energy
Renewable energy customers, for various reasons, are looking for a way to mitigate Scope 2 emissions by decarbonizing the grid. The only way to decarbonize the grid is to bring new carbon-free generation online.
The known renewable energy solutions for corporations are fourfold: 1) PPAs / VPPAs, 2) community solar, 3) onsite solar panels, and 4) RECs. PPAs and VPPAs are an excellent tool to decarbonize the grid if the buyer is willing to 1) take on project-level risk in a bilateral agreement, 2) take on the volatility of the power market in a swap agreement, 3) engage with a trading hedge to reduce the power market volatility, 4) deal with the accounting and financial reporting of a mark-to-market swap agreement, and 5) have the expertise to deal with all of the above. Community solar is another viable option if the customer can find a large enough project to cover the electricity they consume, which is rare. Onsite solar panels work well, but only for very large physical footprints like warehouse or data center roofs. RECs are therefore the easiest to access and most accommodating across large, diverse portfolios. But RECs that don’t come from new projects can undercut the customer’s actual and intended climate impact.
A Potential Solution: Additionality RECs from the Zettawatts Marketplace
While Camden has only dipped its toe into the renewable energy procurement space, they clearly have an appetite for more. According to their 2022 ESG report, they’ve contracted for onsite generation at two communities totaling 1,074 MWh of generation. They’re also working with a renewable energy consultant to devise a strategy that will help them increase their procurement. Camden has also embraced new technology working with a company that helps their residents subsidize community solar projects in return for credits to their individual utility bills. While the residents don’t receive any actual renewable energy through this program, they help increase the distribution of renewable energy to the grid. Lastly, Camden is looking forward by partnering with Fifth Wall in their inaugural $500 million climate fund. According to Kristy Simonette, Camden’s SVP of Strategic Services and CIO, it’s a relationship designed to help them address the problem that a lack of access to clean energy presents to their future. Most importantly, their leadership on this issue comes from the top. Campo recently acknowledged on a 2022 earnings call that in relation to accessing clean energy “ESG is important and climate change, I think, is critical for us to focus on and think about it.”
With VP of Sustainability, Elizabeth Lutz at the helm of the program for the last 11 months, all of these efforts are clearly thoughtful and commendable. However, each is fraught with challenges. Camden instead could benefit from a solution that provides access to RECs from new renewable energy projects via a market. These RECs would come only from projects that have yet to reach their commercial operation date, therefore directly subsidizing the growth of new renewable energy to the grid. These would be RECs with Additionality or Additionality RECs (ARECs).
The Benefits of RECs with Additionality - Stronger Marketing Claim and Scalability
Purchasing ARECs would enhance Camden's marketing claims and business objectives. Camden could easily scale beyond 15% clean energy by buying ARECs from only new projects. Camden would also be actively contributing to a cleaner and more sustainable future. This narrative could resonate strongly with environmentally conscious consumers and businesses, further bolstering Camden's reputation as a sustainability leader.
Conclusion: Camden's Sustainability Journey with ARECs
In conclusion, while Camden has achieved significant milestones in sustainability, there's still much work to be done. Procuring ARECs could be the catalyst that propels them to new heights in their sustainability mission. By leveraging ARECs, Camden can simplify the complexities while accelerating their transition to renewable energy, reducing costs, strengthening their marketing claim, and ensuring scalability as they continue to grow. The result would allow Camden to lead the way as they guide the multifamily real estate industry toward a truly sustainable future.
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