NET ZERO BUILDINGS: Promises and Challenges

July 06, 2015

Cost effective and adaptable technologies will soon make it possible for commercial buildings to become net zero energy users (ZEBs) or nearly net zero users (nZEBs). Jurisdictions are already anticipating this possibility. For example, the EU has issued a Directive the Member States that by 31 December 2020, all new buildings will be nearly zero- energy buildings; and after 31 December 2018, new buildings occupied and owned by public authorities will be nearly zero-energy buildings. This link will provide technically minded readers with a detailed discussion of the engineering aspects of ZEBs and nZEBs.


But my interest is not technical, but policy. What are the regulatory and practical realities of these emerging, and potentially transformative, technologies?  In our eight years of work at Cleantech San Diego, we have learned that the practical challenges of incorporating new technologies into existing, complex systems are often much more challenging than initially anticipated.


Consider the following definition:


A nZEB is typically a grid connected building with very high energy performance. nZEB balances its primary energy use so that the primary energy feed-in to the grid … equals to the primary energy delivered to nZEB from energy networks. Annual balance of 0 kWh primary energy use typically leads to the situation where significant amount of the on-site energy generation will be exchanged with the grid. Therefore a nZEB produces energy when conditions are suitable, and uses delivered energy during rest of the time. (


The emphasized words from the definition highlight that over an “annual” period, the building will “exchange with the grid”, at times producing and at other times using delivered energy. Simply stated, these buildings will remain connected to and reliant upon a functioning grid.


Why is this important? Regulated utilities are required to maintain production, transmission and distribution capabilities equal to 100% of a calculated peak aggregate demand, plus a margin usually between 10 and 20%. Therefore, the utility must maintain service capacity for the peak demand needs of a nZEB, notwithstanding the fact that over the course of the measured period, the building's meter will read “net zero.” Since most of a utility bill is not for the electrons themselves, but rather for the systems to produce and deliver them when needed, a policy question becomes who pays for the capacity required to meet the periodic needs of these buildings? As the technologies improve and a higher percentage of buildings approach nZEB, the question will become increasingly important.


The traditional solution would be to charge the “demand charge”, a standard fee calculated based upon a commercial property’s peak energy use. Demand charges in effect are a charge for maintained capacity, and for many properties represent a significant, and irritating, portion of their utility bills. While a demand charge may solve the problem of cost sharing, its imposition on nZEBs may significantly and negatively alter the cost-benefit analysis when deciding whether building a nZEB makes economic sense.


There will need to be non-traditional ways to encourage nZEBs, while reducing the aggregate cost of operating utility systems. Smart grid technologies may be an answer. Instead of an individual nZEB’s energy simply being “exchanged with the grid”, let’s link multiple buildings so in the aggregate they become significant, grid supporting assets. The possible benefits are many. Aggregate peak demand could be flattened by insuring nZEBs avoiding simultaneous peak usage. With a multi-building coordinated protocol, energy might be stored on some properties when energy is abundant and cheap, and used or released back into the grid when scarce or expensive. These are just a couple of ideas.


Reducing aggregate energy production, thereby reducing GHG levels, is an important policy and political goal. It will take a great deal of creative thinking by policy makers to find an equitable way to encourage the widespread adoption of energy reducing technologies. Without a workable solution, the promise of nZEBs will not be realized. Since utility regulation is a laborious process, the time to start is now.    

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