Sustainability And Profitability: Helping Industrial Embrace The ‘E’ In ESG

While the commercial real estate industry has expressed interest in adopting more sustainable practices, it will need some guidance if it wants to make a real difference. 

A Bisnow report from 2023 found that even among investors who had a target for decarbonizing their portfolio, the majority had no concrete plan for measuring or reducing their emissions. 

Derek Hansen, CEO of Mynt Systems, knows that the road toward decarbonization can be complex, which is why his company is dedicated to helping the CRE industry, particularly industrial investors and operators, understand the process and its benefits.

“We offer an end-to-end approach to energy efficiency and renewable energy in industrial real estate,” he said. “Ten years ago when the company was founded, we saw that there were industry professionals who wanted to take advantage of things like renewable energy, solar and things like that, but they didn’t know where to start or who to turn to. This is where we come in.”

Hansen’s company develops, engineers and constructs investment-grade solar and battery energy storage systems. He will be speaking at Bisnow’s Bay Area ESG and Sustainability Summit on April 16, where he will discuss sustainability strategies and the future of renewable energy. Register here for the event. Bisnow spoke with Hansen to learn more about how his company combines sustainability and profitability. 

Bisnow: How has your company embraced sustainability internally?

Hansen: Since our business model is focused on sustainability, specifically, how to use profitability for investors in industrial real estate as a driver to encourage owners to adopt reusable energy, we want to make sure we are walking the walk and talking the talk. 

Internally, we operate out of one of the few buildings in Santa Cruz, California, that is essentially a full-blown microgrid. We are at the end of a power distribution line that comes through the Santa Cruz Mountains and up by the University of California, Santa Cruz. This means if there are any kind of potential wildfire events, the utility will shut down that line because it runs through a forested area.

If that were to happen, we get to keep operating because our roof is covered with solar panels and we have a good battery system that allows us to arbitrage rate values — meaning we're using our saved battery during peak demand periods, saving money. It also offers us resiliency against these grid events where our team can stay up and running when the power goes out. 

We also used recycled wood throughout the building and installed a highly efficient mechanical cooling and heating system and windows throughout to minimize the need for artificial lighting. 

Bisnow: What would you say to companies that are still on the fence about whether they need to implement a sustainability strategy? 

Hansen: Companies need to want to do the right thing and see how the choice is a no-brainer from an economic standpoint. 

Take, for example, a company we worked with called Graniterock, which produces the granite aggregate that goes into the roads and infrastructure in California and beyond. They wanted to take a very energy-dense facility,  a quarry, and provide renewable energy and offset some of their electrical consumption.  

We installed around five megawatts of solar to offset some of their electrical consumption, and now we're assessing the potential of battery energy storage deployment across their sites and looking at converting their fleet to electric trucks. This plan is not only feasible for what they do and the nature of their industry but also provides a return on investment. 

We also work with investors and landlords who are not the tenants of their properties. In these cases, we design a plan that will work for both the tenant and landlord, getting all stakeholders aligned and showing how our sustainability strategy is a win-win. 

Bisnow: What role can Mynt's solutions play in a sustainability strategy? 

Hansen: We provide front-end feasibility, economic and energy modeling and we have a staff of electrical, professional and financial engineers. 

The industry is looking for that type of end-to-end solution and they want someone who can help them make sustainability decisions and collaboratively work with them. We can not only make a customized solution for a particular piece of real estate but we are also able to carry it all the way through.

We remain product and technology-agnostic so we're not necessarily aligned with any one product manufacturer. Instead, we are constantly scouring the technology landscape, looking for the newest and best application of technologies to solve problems for our clients and help decarbonize the industry. 

Bisnow: Your website states "sustainability and profitability can coexist." What are some of the financial incentives for embracing sustainable initiatives? 

Hansen: Through the Biden administration’s Inflation Reduction Act, there is a dollar-for-dollar tax credit against the money spent on a renewable energy project. This is significant and amounts to 30% to 50% of the total cost of the project that can be offset. 

Along with that, there are a tremendous amount of grants and incentive programs that our clients may qualify for, and we compile everything under the sun that's possible for any given project from an incentive standpoint. We look through grants, we look through tax credits, we look through any of the essentially free capital that's out there to incentivize this work.

We're finding that if you take the initiative and work hard on it, the money's there. So we do all that work for our clients to improve the economics of the projects and make it even more attractive. Most of our projects have close to a 20% internal rate of return and under five-year simple payback periods, so they end up being pretty compelling as an investment strategy.

Bisnow: What inspired you to attend Bisnow's Bay Area ESG & Sustainability event? 

Hansen: For me, it's incredibly exciting that the real estate industry has become so aware and interested about what can be done for sustainability. I think the big nut to crack for a lot of these folks is how to bring sustainability as an investment thesis into real estate portfolios, and that’s exactly what we do. 

We’re attending the event to hear all the great ideas coming from not only panelists but also the audience and through the networking that occurs, where people are discussing different projects and how they're approaching things.

We're not only helping to inform and educate others about this issue but also collecting new information and learning as well. 

This article was produced in collaboration between Studio B and Mynt Systems. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to [email protected].