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Will ZNE Transform Energy Efficiency?

Posted by Charley Cormany, EFCA Executive Director

There is a lot of conversation these days about making buildings Zero Net Energy (ZNE). The basic idea is that a ZNE house or building produces as much energy as it uses in a year. Early adopters have been interested in ZNE building for years, but its only recently that technology has gotten to the point where it’s possible to make ZNE a reality at a large scale. The combination of a continued reduction in the cost of solar panels along with advances in energy efficiency technology means that the potential for ZNE is growing by the day.

While many people think that getting to ZNE means stacking a bunch of solar panels on the roof of a building, the truth is that ZNE is usually not possible without adding a large dose of energy efficiency measures. This means that that the recent push to make more buildings ZNE represents a huge opportunity that home performance contractors should pay attention to.


What counts as ZNE is a matter of some debate. For example, can a ZNE home or building use fossil fuels such as natural gas? To the ZNE purists the answer is no, and the site-produced energy must be from renewable sources. It gets more complicated when you look at the difference between how different agencies define ZNE

For example, the Department of Energy defines ZNE as an energy-efficient building, campus, portfolio, or community where, on a source energy basis, the actual annual delivered energy is less than or equal to the on-site renewable exported energy.

The California Energy Commission, however, says that a building only counts as ZNE when the societal value of energy (long-term projected costs of energy including cost of peak demand and other project costs such as the time dependent valuation of energy) consumed by the building over the course of a typical year is less than or equal to the societal value of the on-site renewable energy generated.

If you factor in societal cost of energy, energy produced during peak load has more value than energy produced during off-peak periods. The CEC definition also favors renewables, as they don’t create long-term societal costs in the form of pollution. The challenge of the CECs definition is that you need to know the source of generation and time it was generated. This requires accurate data and real-time measurement.

The DOE approach is much broader. Basically, if you match the value of the energy used with your own production, you are ZNE, regardless of the societal costs. The DOE approach also doesn’t require that the non-source energy be generated from renewables. Overall, this makes the DOE definition much broader and more complicated.


Whatever your exact definition though, ZNE makes sense. Why should we burn fossil fuels or use nuclear power plants that are located miles away from the buildings they are supplying energy to?

For decades, generating electricity at big power plants has been the most cost-effective way to provide power to buildings. The problem is, using big, centralized power plants means you’re delivering energy through transmission lines over long distances and at every step in the process there are energy losses. These losses include combustion inefficiencies at generation (nothing burns 100% clean) and in transmission and delivery, as these power plants are located miles away from the buildings they supply energy to. In the end, the electricity sent to your home or business is only a fraction of what was produced. Natural gas has many of the same challenges, with the added problem of gas leaks.

When you consider that buildings are responsible for 41 percent of carbon emissions in the United States, any effort to reduce losses will have huge benefits. From this point of view, site-produced energy, made where you use it, makes a lot of sense. Fortunately, technology is making site-produced energy a viable solution today.

To get to ZNE, though, focusing on production of energy isn’t enough; you have to look at consumption, too. That’s where energy efficiency comes in.

While the fast track to ZNE might be to cover your roof with solar panels, this solution will only work in certain situations. The majority of the time making buildings ZNE requires applying building science principles and involves a combination of energy efficiency measures and renewable energy generation. In many cases, this is the only chance a building has to even come close to being ZNE.

Building performance becomes even more critical when you address multi-story buildings. A single level home might have enough roof space to meet ZNE targets with solar alone, but what happens when you have five floors under the same roof? In a multi-story home or apartment, the roof simply does not have enough footprint (square footage) to provide the energy needed via solar panels.

There are also many homes and buildings that can’t take advantage of solar due to shading and other considerations. Energy efficiency measures can reduce their loads and help them meet ZNE goals. Even if they are good candidates for solar, energy efficiency is often the lowest cost solution and should be a part of any long-term effort to achieving ZNE.

Another drawback to the “just add more solar panels” approach is the ability of the grid to store energy. The electrical grid is primarily a delivery system. Rough estimates are that the grid has a “storage capacity” of only 10 percent. In the middle of the day in summer, many solar systems send their excess production to the grid and get credit for it through a process known as “net metering”. As we add solar to rooftops, we can easily exceed the storage capacity of the grid, meaning that this clean, renewable energy will be dumped in order to not overload the system. This is already happening in California.

Given these challenges, net metering’s future isn’t certain. There are already states such as Nevada that have limited the ability of solar over production to be fed back into the grid. The underlying point is that just adding a bunch of solar panels to meet ZNE goals is not the right approach. Instead of simply stacking on the PV panels, we need to reduce the loads and only produce what we need.

All of this is great news for the home performance industry.

Many of us have spent years convincing people that making their buildings more efficient is a good idea, and it is. But one of the challenges of selling home performance upgrades and other energy efficiency measures is that the driving factors seldom make economic sense on their own. For years, we have touted the virtues of the non-energy benefits related to efficiency upgrades to help justify the cost of efficiency measures. Energy efficiency upgrades are a long-term solution and the payback, if any, is years out.

With ZNE, we finally will have the motivation and demand for the knowledge and experience we have been accumulating for years. The trend towards ZNE has the potential to bring market transformation to the energy efficiency sector and could be the driving force we have all been waiting for.


You might think this is just another overhyped program or initiative that people say going to change the industry. How many times have we gone down that path?

But the potential for ZNE to transform the energy efficiency industry is real, and it is happening now. California is counting on energy efficiency and ZNE to reduce the state’s carbon footprint. By 2020 all new construction in the state will be required to be ZNE, and by 2025, 50 percent of state-owned buildings will have to be ZNE. By 2030, 50 percent of existing commercial buildings will be ZNE.

A little while ago I asked a home performance contractor where he thought he would be in five years. His answer surprised me: he said he felt he would no longer be doing home performance upgrades. Instead, he suggested that he would be retrofitting existing houses to make them ZNE ready.

His response stuck with me. As time goes on, I think he is on the right path.

It won’t take long until contractors, architects, and consumers realize that adding more solar panels alone will not be the solution–ZNE needs energy efficiency measures to be effective. The real question is: what are you doing to position yourself or your company to take advantage of this opportunity? The ZNE wave is coming. Are you ready to hop on and ride it? Let’s hope so.

Charles Cormany
Executive Director
Efficiency First California

Image from iStock.

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