June 12, 2018 Eleanor Johnstone


ZNE is a sexy phrase and thrilling concept, but setting the building sector’s sights on zero as the fix-all goal is raising notable concerns among critical stakeholders. This article outlines the tradeoffs of a ZNE framework for our future built environment and points to some alternative approaches to keep us on track to the ultimate goal of carbon reduction.

Zero Net Energy (ZNE or NZE, your preference) is the phrase of the year, captivating audiences across diverse industries even as it squirms in a swarm of definitions. As more states wrap energy performance into their building codes, renewable portfolio standards (RPS) and climate action plans, a wider range of stakeholders is taking a serious look at what the term means for their businesses. Dialogue on this issue has developed rapidly in the last year, and, as we gear up for the 2018 Net Zero Conference in Los Angeles, it’s important to put ZNE in context by reviewing the problem it’s suited to solve, the problems it threatens to create, and the ways in which we can continue to improve the path to a sustainable society.


Figure 1: Image Credit: Scott Webb


The ZNE option stands tall on the following claims:

GHG Reduction: A core concept of ZNE is reducing a building’s greenhouse gas (GHG) footprint by swapping dirty power for clean energy generated on site. As most readers of this blog know well, the state has an ambitious goal of reducing GHG emissions to 80% of 1990 levels by 2050. Laying a ZNE standard across 50% of existing commercial buildings and all new commercial and residential buildings by 2030 is a core part of the state’s strategy to clean up the building sector’s emissions, which accounts for nearly the 40% of statewide GHG emissions.

Resilience: As the frequency of natural disasters rises the demand for infrastructure that performs and protects human and economic health in more extreme conditions is growing. ZNE infrastructure addresses this by reducing dependence on those aging grids. Building to higher efficiency standards also improves a structure’s integrity and longevity. These features protect the time and money of building owners and occupants, and local governments. It also reduces the burden on utilities to meet daytime demand spikes.

Cost Savings: By reducing instability in the face of natural disaster and extending asset longevity, the ZNE option provides cost savings in several areas to owners, occupants and governing bodies. Self-generation reduces the monthly energy bill, and lower maintenance, repair and disaster recovery costs turn those high up-front capital costs for ZNE measures into valuable long-term investments.

Compliance: In California, ZNE performance is a requirement for most buildings. Contractors are expected to deliver 100% of their new residential and commercial sites at this performance level in less than two years, and commercial property owners have to adjust at least 50% of their existing buildings in less than 12 years. The state hasn’t specified penalties for non-compliance, but increasingly strict building codes are forcing them to adjust their status quo in that direction simply to stay in business. Whether it’s a penalty-weighted building code or a penalty-loose mandate keeping a contractor up at night, the ZNE option is unavoidable if a business wants to stay on the leading edge.


Figure 2: Time and money are two critical pieces of any conversation between real estate and the environment.


With these major value-adds associated with ZNE buildings in mind, let’s unpack some of these benefits for a closer look at their embedded tradeoffs.

GHG Reduction: California has one of cleanest electric grids from a carbon perspective in the country and is making quick work of achieving its RPS goal of 50% by 2030. Which means that trading conventional power from the grid for on-site renewable power – most likely solar – will have a diminishing impact on carbon emissions during the day. Yet when the sun goes down and the evening demand rises, peaker plants – mostly natural gas-powered – spring into action to fill the gap. As demand spikes rise over short periods of time, more fast-ramp resources are required which competes with a utility’s capital available to invest in cleaner solutions. Until storage options become accessible and affordable enough to back up individual sites and their servicing utilities, ZNE proponents should be careful to recommend this pathway as a straight line to a cleaner climate.

Resilience: Flexibility is at the heart of resilience, and on-site energy resources paired with smart energy systems can effectively respond to a variety of conditions. But like any machine they are also subject to wear and tear, system failures, and physical damage during extreme weather events. In the same way that an on-site battery may be valuable during a power outage, a grid may be valuable during an on-site generation malfunction or equipment damage in a weather event. But if the ZNE pathway constricts cash flows to maintain the grid, then a compromised ZNE facility owner will sustain those productivity losses s/he invested to avoid.


Figure 3: Image credit, Egor Kamelev.

Cost Savings
: As prices for energy and technology change dramatically in size and structure, the cost of energy and property deserve careful consideration. In energy, time-of-use rates are ushering in a new level of customer awareness of energy markets and control over their bill. This, and a growth in solar generation, will reduce the returns of selling energy to the grid. Meanwhile consumers without solar assets may suffer a rate increase to sustain utility operations – again, someone has to keep the grid running.

In property, any discussion of the cost of ZNE must address small commercial properties in a substantive, solutions-oriented manner. These properties form the majority of the existing commercial building stock, and carry some of the greatest unresolved cost burdens when it comes to energy efficiency. No scalable solutions have yet been presented although research efforts like the ZNE Small Commercial Retrofit project at Lawrence Berkeley National Laboratory are beginning to work the problem. Ignoring the real cost barriers to this building stock unfairly represents the cost benefits of the ZNE pathway.

For energy and property costs, storage is the wild card that will direct both – we just don’t know exactly when or how. Further discussion is needed in this space, and will likely continue in this blog space!

Compliance: Yes, California has a ZNE mandate for major building types but its recent ruling to put solar on all new low-rise homes suggests that there’s some wiggle room. As The Energy Gang noted, this ruling seems to ease ZNE expectations by allowing homes to meet the terms with community solar and off-site resources. It doesn’t mean that the ZNE mandate is lifted, but it does remind us that the real goal is to reduce carbon emissions and that it’s the end, not the means, that matters.



Conclusion – ZNE offers several advantages today but as energy and property markets change so will their tradeoffs. Looking at these carefully and focusing on cost effectiveness and carbon reduction to drive development choices can inform the discovery of right-sized alternatives. Engaging managers and engineers for challenging building types in public discussions can move past the high-level hype and unpack the nitty-gritty barriers. Framing the problem as one of reducing carbon footprints instead of meeting a ZNE mandate avoids putting the cart before the horse, and opens the dialogue for new solutions. Similarly, closer collaboration between the construction and utility sectors can help both stakeholders understand each other’s pain points and address their blind spots.


Figure 4: Alex Steffen delivers a keynote speech at Innovation & Impact Symposium in San Jose, CA on Thursday, May 31. Image credit: Eleanor Johnstone.


Author and futurist Alex Steffen recently advised a room full of smart city innovators in San Jose, “We need to make things that aren’t themselves sustainable, but are disruptively sustainable – that manage to make things around them sustainable.” This resonates with SCE’s position on achieving a clean power future – public-private collaboration on utility, building and transportation innovation is needed to ensure flexible, distributed, and secure options for all. As we think about ZNE in the coming months and at the September summit, let’s continue to push the envelope and approach the option from a system perspective and imagine the range of right-sized solutions needed to reduce carbon emissions in our diverse building stock.