No money down, and 7 other reasons why green-roofs-as-services is the future of (green) roofs
Taking green roofs to a whole new level
The most spectacular green roofs are gardens on top of buildings where you can picnic under the trees. However, more often green roofs are a system with a thin layer of specially selected vegetation on the top of roofs people don’t have access to. Green roofs are cool and beautiful. But for the building owner they also reduce energy bills, multiply by two (or more) the longevity of waterproofing, provide sound insulation, and enhance the attractiveness of the building. Green roofs also provide many benefits to the community, including less stormwater runoff to manage, reducing flood risk; more biodiversity and less pollution; and a reduction of the urban heat island effect in summer. In short, green roofs makes city more pleasurable, and help to tackle some of the key challenges of urbanization.
The green roof industry has achieved a lot in the past few decades. The systems keep improving and are becoming more available and more sought-after, while at the same time costs have gone down significantly. Still, any green roof enthusiast can be frustrated by slow pace of adoption of this green solution, especially on those large flat roofs we can see everywhere in urban areas, and that would be perfect for cost-effective systems that would not add significant weight to the building.
To get more clients adopting green roofs (and green walls as well), and to encourage local authorities to provide incentives for businesses and homeowners to adopt these systems, we think the solution is to sell green roofs in a different way. We should offer them as services. With a service, as opposed to a purchase, the client does not have to write a huge check to get the green roof installed. Instead of making a big start-up investment, the client pays a regular fee (monthly, quarterly, or annually) for the green roof and its maintenance.
We think green-roofs-as-services will be attractive to municipalities wanting to enhance the urban experience in a high-visibility, low-cost way; and to agencies and companies responsible for managing storm-water runoff.
We will now detail eight reasons why green-roofs-as-services is the future of (green) roofs as they help to make our cities greener, healthier, and definitely cooler.
1) No money down
While extending waterproofing longevity by a factor of (at least) two and allowing significant savings on the energy bill, green roofs still require a bigger initial investment than their traditional counterpart. As with many “green investments”, this relatively high upfront cost is one of the major barriers preventing clients from going green.
Not everyone has money available, or access to affordable credit, for projects where the benefits come in over a long period; and a green roof, being a very new option for which there may be no examples in the potential buyer’s neighborhood, is rarely a top investment priority.
A no-money-down solution can therefore help remove a major barrier to green-roof adoption.
2) No more worries about green roof maintenance or lifespan
How much pain, time and money does roof maintenance cost? How long will waterproofing last? How long will the plants stay alive? Will the green roof be green again after an exceptionally cold winter?
These questions and doubts are important barriers preventing people from buying green roofs. Just having to research the answers can be a painful, time-consuming process that in itself discourages many potential clients. And the client’s research may result in cautious answers, as companies often err on the safe side by overestimating risks, and underestimating gains.
With green-roofs-as-services, clients pay on a regular basis for their roof and don’t have to worry about anything else. Anything related to maintenance or waterproofing is taken care of. It is easy and risk free.
3) A painless, all-in-one solution
As we’ve seen, just having to research green roofs is an effort that can push people to stick with the solution they know. There can seem like a lot of uncertainties — maintenance equipment and schedule, the effect on building insurance, applying for and managing grants, whether a bank or other lender would be willing to provide financing for such a project.
In a society where time and attention are rare commodities, green-roof-as-services, a painless, all-in-one solution with a clear price structure and no risk, would make it easier to choose a green roof than to do or redo a traditional flat (energy inefficient, unaesthetic) roof.
4) Enjoy the monetary benefits of increased roof longevity from day one
People can enjoy the aesthetic of their green roof and its impact on their energy bill from day one. But when it comes to increasing roof waterproofing longevity by a factor of at least two, which is clearly the biggest financial benefit of a green roof, right now people have to wait 15 or even 20 years, when they would have to re-do traditional waterproofing, to feel this financial benefit.
A flat, regular fee over a long period of time would factor in increased roof longevity. The buyer would then feel the main economic benefits of a green roof from day one, making it clearly more attractive.
5) Monetizing new services = increased return on investment
More often than not, the person or company investing in a green roof does not get any monetary compensation for the positive impact on stormwater management, reduction of pollution or other “public benefits” of green roofs.
A program of green-roofs-as-services for a specific urban area would allow “bundling” the green roofs under a common management entity, and make it very easy to sell specific and quantifiable services to municipalities and water management entities, while decreasing the cost of the transaction.
The idea is to set up a win-win situation. For example, buying a storm-water management service involving a network of green roofs would let the stormwater company save some money, while supporting the spread of the technology by decreasing end-user costs and increasing its attractiveness for building owners.
6) Easier for municipalities and storm-water-management services to support green roofs
While not a panacea, subsidies help. But even if an increasing number of cities are really interested in green roofs, granting subsidies for their installation tends to be a sensitive subject. Budgets for public agencies and municipalities are generally tight, and investing money now can be challenging, even if future benefits more than compensate the initial costs over time. Furthermore green roofs benefits are not always well known, and this technology is still perceived as “eco-tofu-eater hobby” by many.
Politically, it is much easier to buy “quantifiable” services — decreasing cost and risk, increasing quality of life — from a network of green roofs, than to give grants (with high administrative management costs). It’s also easier to spread over time the money directed to green roofs, with no “painful” initial investment that might become a political liability. A city-wide program of green-roofs-as-services would be a good way to boost the adoption of this technology, while keeping to a minimum the political risk of decision-makers, while the regular monthly municipal fees would provide reliable cash flow for those engaged in installing and maintaining green roofs.
City-wide programs of green-roofs-as-services would also make stricter rules, or even binding regulations, more acceptable. It is “difficult” to force the people who can vote you out of office to buy a specific type of roof, one with significant upfront costs and high perceived risk. But with a program making the costs of green roofs lower at any given moment, with no initial investment, and providing benefits that are easier to maintain than a normal roof is, it would be much easier to enact regulations that, for example, would make green roofs compulsory in specific cases. A green-roofs-as-a-service program would raise awareness about the multiple benefits of green roofs for the city and its inhabitants, increasing the acceptability of regulations supporting green roofs. This could pave the way to greener, healthier, cooler cities.
7) Lower costs
Selling green roofs as services in urban, area-wide programs seems particularly promising. This would establish a number of green roofs in the same geographical area or neighborhood under one management, reducing management and maintenance costs while enhancing storm-water control and improved air quality for that district.
An area-wide program would make it easier to plan maintenance in the neighborhood, to optimize the usage of crane, allow use of standardized parts and getting materials in larger quantities at lower per-unit costs, and so on. Having the maintenance managed and conducted by professionals would also avoid problems like a building owner forgetting to do the basic maintenance to keep the roof healthy, or overspending on maintenance because of not really understanding what the roof requires.
We can also imagine waves of installations, neighborhood by neighborhood, to optimize installation costs in a particular geographical area. Aside from having an aesthetic coherence in the neighborhood, this would also facilitate maintenance afterward, as roofs installed at the same moment will tend to need the same maintenance around the same time.
Concentration in a single urban area would help the project reach a critical mass of roof surface deployment, allowing the use of specific tools that could boost productivity and reduce costs. The could include specific cranes for installation, and even drones to monitor the green roofs for issues that require attention. The economy of scale permits setting up processes to boost efficiency, for example when dealing with municipal licensing or permitting requirements. Having a large portfolio of clients would help the project secure funding or future expansion at a lower borrowing cost and reduced risk.
Finally, reducing barriers and risks to installation and improving return on investment (ROI), would make sales easier. Having a number of potential clients in a defined area would allow optimizing marketing costs and would take advantage of word-of-mouth advertising and local endorsements.
8) A proven business model for innovation in similar industries
A number of scientific studies have looked into the barriers preventing adoption of energy-efficient investment. Two findings seem particularly interesting:
- The challenges these kind of project face are similar to the barriers slowing down the spread of green roofs.
- The researchs tend to suggest that no-money-down, “no risk” solutions would help to lift many of these barriers, allowing energy efficiency to move to a new level.
Large companies like GE, Siemens and Schneider Electric already offer Energy Savings Performance Contracts, and Energy Service Companies (ESCOs) are booming worldwide. The all-in-one, “no risk”, no-money-down solutions have helped the market to overcome social inertia and conservative attitudes among stakeholders, so it is developing and reaching new clients.
Recognizing that no-money-down, all-in-one solutions are key to boosting adoption of energy-efficiency investment, a variety of interesting public and semi-public programs had been set up. For example, in some areas, the client makes zero initial investment, and the energy efficiency solution is repaid bit by bit as part of the utility bill. Such programs have a very low default rate. In the USA, the Property Assessed Clean Energy (PACE) program has the loan covering installation of the energy-saving equipment attached to the building (and not to a person) and the investment is repaid via property taxes. The building owner can manage the tax payment more easily because of savings on energy costs made possible by the new equipment.
Some programs have failed — UK’s Green Deal is an example — but all these experiences give useful insights and have proven that this kind of business model innovation can take a market to the next level.
Of the 1.2 gigawatts of residential solar capacity installed in the U.S. in 2014, 72% was third-party owned, meaning that for the building owner there is almost no risk, no effort and no money down. With decreasing module price, this innovative business model has been the second pillar of the residential solar take-off in USA, so the program has reached people who could not have afforded the financial costs or the perceived risks of such a project on their own.
More generally, this model has educated and grown the market of individual clients, municipalities, and financial institutions. Solar City, a pioneer in the solar-as-a-service market, now has 34% of the residential solar market (more than two and half times its closest competitor) and would probably be a source of insight for more than the no-money-down idea: for example, it managed to lower its overall costs by 20% in 2014 despite an unchanged module price.
Obviously green roofs represent a different market with its own characteristics, including a longer-term investment with a lower return and different public and private benefits. But rooftop solar and energy efficiency have a lot in common with the green roof industry, especially when it comes to barriers to adoption. These industries have validated that selling green products as a service, with all-in-one solutions and no money down, remove or significantly reduce many of those barriers, develop the market, and at a higher level help to make our world more sustainable.
So what’s next?
On paper, selling green-roofs-as-services, with a no-money-down, all-in-one solution, seems a good way to lift many of the barriers preventing client to adopt green roofs. This would also allow making green roofs cheaper — monetization of new services, economies of scale — and let the client feel the main financial benefit — much longer waterproofing lifetime — from day one, and not from year 20. Finally, this concept would allow much more efficient support of green roofs by cities.
We can imagine many different possibilities based on this general concept. These range from limited solution involving leasing individual green roofs, to a city-wide program where the municipality, lenders, builders, stormwater management bodies and green roof companies work together on an ambitious plan. There are many different possibilities for which services to monetize and how to do so, and on how this could be financed.
This is a challenge. Making clients’ lives much easier is much more difficult than pursuing a traditional business model. But the potential to take green roofs to a whole new level is present, and very real.
The goal of the green-roofs-as-services project is to spread awareness about this very promising business model innovation and start discussions on the concept, on the challenges — and there are plenty of them — and on how to help position the green roofs industry so it can help make our cities greener, healthier and cooler.
Please provide your feedback, share your experience and thoughts, and share the idea with your friends and colleagues. Contribute to the conversation with new solutions and shiny new ideas.
antoine (at) greenroofs .io
Thanks to Baptiste for his help on this post.
