The World Green Building Council (WGBC) just launched a revolutionary project calling for all buildings to reach net zero by 2050 in an action plan known as Advancing Net Zero. The announcement provides a shot in the arm to the net-zero design and construction industry at a global level, further increasing the impetus for governments, developers, and service providers to make ambitious net-zero commitments and action plans across the world. But it also requires the industry to confront a long-standing barrier—the assumption that net-zero buildings come at a significantly higher capital cost than business as usual. In fact, when approaching net-zero energy (NZE) at a district level and leveraging an integrative whole-systems design approach, the economics can change significantly, supporting the scaling necessary to reach WGBC’s ambitious targets. So, what will it take for the industry to zoom out of the net-zero-building mindset and think bigger? To understand the opportunity that districts provide, we must first consider the impact potential of the buildings sector.
The Significance of the Buildings Sector
Buildings consume over 70 percent of electricity and 40 percent of all energy produced in the U.S., making them the largest end-use energy sector and a key contributor to climate change. As the biggest end-use consumers of energy, buildings can quite literally make or break the critical transition to a low-carbon future. So far, the one-building-at-a-time approach to higher performance hasn’t scaled at a rate needed to mitigate climate change. It’s time to be ambitious and expand the scope.
Buildings don’t need to be just end-of-the-line consumers of energy at a cost to owners, occupants, and the environment. Buildings can also serve as energy assets that create new value streams and contribute to the distribution of energy in many ways. This can be amplified at larger scales, as a collection of buildings more easily balances loads and realizes improved performance and reliability.
A district can accelerate the shift toward a carbon-free future because together, buildings can be more efficient than when they operate independently of one another. Through whole-systems planning and design, a district can achieve net zero throughout the site as it incorporates district-level sustainable design techniques and best management practices, which further increase the efficiency of energy use. The benefit of efficient districts is clearly visible in two approaches—the symbiotic sharing of resources and energy, and the centralization of energy systems.
District-scale design and implementation allows for the leveraging of synergies, such as thermal load and electric supply aggregation. When considering buildings at this scale, the idea of a central heating and cooling plant can become a feasible solution to driving down costs and boosting efficiency. Not only is the infrastructure simpler and less expensive than a system with smaller, more dispersed equipment, it also allows for the opportunity to aggregate and optimize thermal loads across buildings.
Similarly, aggregating buildings in a district allows them to reach net-zero energy through on-site renewable energy generation. Loads can be shifted between buildings that are capable of over-producing energy to those that cannot meet their energy demand through solar within their own footprint. Buildings that are better suited for solar PV may produce more energy than they need, which can offset the overall district demand.
Additionally, the centralization of resources can balance load and supply to help manage energy throughout the district. An integrated energy services provider (IESP), an entity that serves as an on-site utility in many ways, can be a key enabler of net-zero energy at the district scale.
The IESP ultimately serves as a “gate-keeper” of net-zero energy, managing the energy systems on-site. It also allows for a smaller energy system because it only needs to meet the district’s collective peak load, which is considerably lower due to non-coincident peaks across the diverse building stock. This likely leads to tenants enjoying efficient, modern equipment, and the IESP benefiting from financial returns. This gives parcel developers and tenants the opportunity to invest in a carbon-free future without breaking the bank.
Managing Costs in the Real World
RMI recently developed a model for a net-zero development project in the United States, and in doing so uncovered that district-scale developments are uniquely positioned to be a major driver of the next generation of high-performance buildings and an intelligent electric grid. One feasible solution to making net zero affordable at this scale is to implement an IESP. This solution makes sense financially because district heating and cooling shifts upfront capital costs from parcel developers to the IESP. This means that rather than placing the responsibility of providing sufficient capital to dig geothermal wells or install solar PV on the individual parcel owner, the accountability falls upon the entity to pay the upfront costs. The parcel developer or the tenant will then pay back the IESP over time through payments for energy consumption and on-bill financing of distributed efficiency measures, together, at no additional cost compared with business as usual.
This solution can be a financially attractive investment, as large capital investments in solar PV, district heating and cooling, and energy efficiency are repaid over time on utility bills, generating a steady return. As seen in Figure 1, investor returns are met through the billing of tenants; however, tenants may still find they are being charged less than they would in a traditional system. Clustering net-zero buildings together in a district is also likely to yield higher sale prices and rents. In addition to making great strides in the transition to clean energy, this method should improve the economics of net-zero energy for tenants, building owners, and developers.
Figure 1: Net-Zero Energy is Financially Attractive to Tenants
With the right level of performance and instrumentation, buildings will not only take from the grid but also create, harvest, store, and share energy. They can become value producers and assets that developers, owners, and tenants can rely on to increase resiliency and the long-term sustainability of communities. This value can be increased by clustering resources and construction together in the form of campuses, communities, and districts.
NZE district development has an economic advantage in that it can motivate and mobilize a local building industry, driving down incremental costs. Through smart grid management, costs to the utility can also be avoided by bringing new generation on line to satisfy peak load requirements. In addition to consumer-regulated demand response, smart grids are also being implemented all over the country in order to sense and perceive potential load issues. This increases the site’s resiliency and reduces the chance of blackouts.
More efficient energy consumption and greater instrumentation in buildings can heighten grid resiliency—one of the most valuable resources for an energy provider. With so many businesses and individuals dependent on energy for an entire array of needs, outages during peak usage times can be anywhere from detrimental to globally devastating. A well-managed NZE site can avoid this type of setback, and operate as an island during broader regional grid outages. Additional attributes related to resiliency include immunity to volatile fossil fuel price fluctuations, and more stable financial conditions for commercial businesses.
An Irresistible Opportunity
A net-zero energy development can be cost-neutral compared with business as usual, all while creating a community that is more livable, healthy, comfortable, resilient, and environmentally sustainable. The net-zero district is a canvas upon which we can demonstrate integrated design and buildings that are more informed and better equipped to play a role as a resource rather than strictly a consumer, in a push toward net-zero cities and a carbon-free future. This scalable technique integrates necessary grid services with buildings that add value to the community in the form of a safe, comfortable, and productive environment. This can be accomplished at a reasonable cost to developers and tenants alike, and will be a solution to implementing smart design and technology at a rate that can make a difference in reducing emissions.
This topic will be discussed more deeply at our annual conference in October, the Getting to Zero National Forum 2016. The forum is geared toward policy makers, designers, those in the utility and building sectors, and other leaders in related fields, as well as to students and young professionals bringing a new perspective to the discussion. Attendees will share perspectives on the growth of NZE, discuss the policies driving new projects, engage in best practices for successful outcomes, and collaborate on opportunities for NZE to transform the built environment.
Image courtesy of iStock.