Net Zero Energy Codes and Standards—are they the next step in the code development cycle? It appears so if you look at what the City of Tucson and its county, Pima County, have developed over the past two years in Arizona.  Recently released by both municipalities is the “Net Zero Energy Standard,” an optional compliance path for builders of new residential and commercial buildings.

In many areas of the country just getting compliance with the energy code already on the books is a challenge. But for Pima/Tucson, the next step is to help the fledgling beyond- code builders understand how to build cost-effective net-zero energy homes.

Typically the revolutionaries of highly efficient buildings come from industries of architects, visionary home builders, efficiency advocates, and efficiency product manufacturers. They wear the champion hat and move about the industry promoting the benefits of these building practices.  Radical change is not usually championed by building officials, and in many cases it’s too hard for builders in a conservative industry to create change when they must support the building and its occupants after the sale.  But also in a revolution there is often more than one person who wears the mantle of change agent. In the case of these southern Arizona municipalities official’s worked with industry, academia, and others to bring about this next level of energy efficiency code.

The southern Arizona standard incorporates four important concepts in building these highly efficient homes:

1. Develop an Energy Use Intensity (EUI) rating for each building which could be analogous to an MPG rating for vehicles.
2. Offset the energy required to deliver water to the building.
3. An energy-efficient building with adequate on-site renewable energy generation capability (typically building roof area and orientation).
4. Outcome- based compliance where the building receives a net-zero energy certificate after one year of operation demonstrates net-zero achievement.  However, meeting the requirements in either the prescriptive or performance paths shall be deemed to be in compliance with the 2012 IECC, without regard to the issuance of a net-zero certificate.

The Net-Zero Energy Building Standard was developed by the City of Tucson and Pima County Development Services, with assistance from the University of Arizona College of Architecture and Landscape Architecture and Tucson Water.  The standard is based upon the recently released and highly energy-efficient 2012 International Energy Conservation Code (IECC).

The team developed two calculators, available at the net-zero energy standard website, the Energy Budget Calculator and the NegaWatt Calculator.  The Energy Budget Calculator is for use by builders who are following the prescriptive requirements of the standard, while the NegaWatt Calculator provides cost and savings calculations to determine the “tipping point,” as Pima/Tucson describes it, to become cash flow positive.  This is the point at which construction cost increases are offset by monthly energy savings from a code built home. The tipping point helps the builder know when it’s time to shift from building efficiency improvements, which are typically less costly, and start installing photovoltaic panels.

The Nega-watt calculator will provide the cost and savings for ‘Nega-watts’ and ‘PV watts’ and assist in determining the “tipping point” and whether or not the project will be cash flow positive. Energy efficiency improvements are generally more cost-effective than installing renewable energy like photovoltaic (PV) panels and solar thermal systems—up to the point when energy production costs become more cost-effective than continued improvements to efficiency in the building. The calculator assists the builder with determining when the cost of energy saved by efficiency improvements, a nega-watt, is more than the cost of electricity produced by PV. This is the “tipping point” when it makes sense to stop making the building more efficient and install PV.

The standard helps the builder and designer by providing a prescriptive path which describes details that will assist the builder and designer in the development of the home. The net zero energy building includes increased envelope requirements, tighter building infiltration, and goes further by defining (orientation attributes, vertical window sizes, and overhangs.

For a peek at what we hope to see in upcoming houses and commercial buildings in southern Arizona visit the net-zero energy standard website.

During the webinar, Diana Lin, Program Manager at NASEO (which serves as the CBC Secretariat), provided information on why ZEBs are a topic of interest to State Energy Offices and how the “Getting to Zero” report relates to CBC research on technology and policy gaps to transforming the commercial building sector to net-zero energy.  Dave Hewitt, Executive Director at NBI, provided an overview of the report’s conclusions regarding type, location, and incremental costs of ZEBs.  Tony Hans, National Director of Sustainable Projects at CMTA Consulting Engineers, described several of CMTA’s net zero energy projects and the energy use and cost data associated with these buildings.

Download the presentation slides. Additional resources, including a webinar recording, full report, a press release, and case studies, are available on the NBI website.

The CBC will run a series over the next few months featuring a few of the winning teams from U.S. DOE’s recent Better Buildings Case Competition.  This month, we hear from the Berkeley Energy & Resources Collaborative (BERC) at the University of California, Berkeley, which won “Most Innovative Proposal” for a case study focused on the City of Houston.

Last month, a team of students from the Berkeley Energy & Resources Collaborative (BERC) at the University of California, Berkeley competed with 18 other university energy club teams at a case competition sponsored by the U.S. Department of Energy (DOE).  The competition was based on real-life scenarios from the DOE’s Better Buildings Challenge, an effort to reduce the energy consumption of commercial buildings by 20 percent by 2020.  After presenting solutions at the White House Conference Center in Washington, D.C., BERC won “Most Innovative Proposal” for a case study focused on the City of Houston, followed with the privilege of participating in a photo op with Secretary of Energy Steven Chu.

For the case competition, BERC proposed four main strategies to answer the City of Houston’s call for recommendations on building upon existing policies and programs to create an effective environment that spurs greater investment in energy efficiency in its commercial building stock.

BERC determined that the City’s current efforts needed to be more effectively leveraged in order to retain the building energy managers and tenants that the City had recruited in its Green Office Challenge and build expertise and capacity in reaching its goal to retrofit all municipal buildings.  Ultimately, BERC wanted to enable the City’s energy efficiency activities to persist long after Recovery Act money had been spent.  In order to drive private investment, BERC recognized the need to create confidence in energy efficiency as a proven concept, by proposing four strategies:
1)      Pilot and scale monitoring-based commissioning;
2)      Provide access to affordable capital;
3)      Pass a building disclosure ordinance; and
4)      Reduce transaction costs through an integrated one-stop-shop web platform.

1) Pilot and Scale Monitoring-Based Commissioning (MBCx).  MBCx is gaining traction and builds on in-state expertise in Texas A&M University and University of Texas, Austin.  BERC recommended that Houston can pilot these technologies in several municipal projects that it’s currently undertaking through its multi-year retrofit agenda before attracting volunteers from the commercial sector.  Proving MBCx methodologies will sustain savings of up to 25% for a number of years, surpassing conventional commissioning, and accurately identify opportunities for energy reduction.  The latest non-intrusive load monitoring technologies that can be implemented with MBCx are increasingly affordable and easy-to-install.  Real-time, accurate measurements will spur more confidence in energy efficiency savings.

2) Provide Access to Affordable Capital.  The City is currently using its $3M in EECBG Grant money in an Energy Efficiency Incentive Program that offers a 20% rebate on the costs of energy efficiency improvements.  One concern was that this strategy wouldn’t provide access to the affordable, upfront capital that is often cited as one of the biggest barriers to energy efficiency improvements.  From this, BERC recommended that Houston utilize its $23M allocation of Qualified Energy Conservation Bonds (QECBs) to both fast-track its municipal retrofit projects and to establish a revolving loan fund or provide credit enhancements to the private sector.  QECBS are amongst the lowest cost public financing tools, providing a net interest cost of 1-3% for the issuer.  Granted there are restrictions on interest rate arbitrage, but the City could still flip the low interest rate to the borrower and provide financing at lower-than-market rates. Because the City is short-staffed, it was recommended that partnering with a local financial institution to implement enhancements such as a loan loss reserve, debt service reserve, or subordinated co-financing would fit better with the city’s capacities to administer lending.  Making affordable financing available can encourage more MBCx and retrofit activities in the private space and make the city’s municipal energy upgrades either more expansive (reaching deeper energy savings) or payback sooner, since the financing will be cheaper than what typical ESCOs will provide.

3) Pass a Building Disclosure Ordinance.  Houston can adopt an ordinance which requires an annual benchmark report that includes an ENERGY STAR Performance Score, an energy audit every 5 years, and the filing of an audit report with the city showing all retrofit and retrocommissioning (RCx) opportunities with a simple payback of less than 3 years.  The City can lead the way for this transparency by benchmarking and disclosing the energy use of its municipal buildings publicly.  The City can showcase best practices for its office buildings, so that the commercial buildings industry can learn from past experiences.  Any successes from piloting new MBCx technologies or approaches would be revealed.

4) Reduce Transaction Costs.  Houston can enhance its current “boots-on-the-ground” outreach and marketing efforts by providing a long-term web platform that can facilitate connections between building energy managers, utility staff, and contractors.  To facilitate compliance with the proposed building disclosure ordinance, the City could collaborate with its utilities to smooth benchmark reporting and ask that utilities report data on behalf of buildings that are compatible with EPA Portfolio Manager software.  The website could also provide information on incentives, qualified contractors, and best practices; facilitate reporting on Recovery Act and Davis Bacon requirements; and do bulk purchasing on windows on a one-stop shop website.  Though the cost of such a web platform would be high, the BERC team suggested that utilities could help front the cost through the systems benefit charge fund and have a percentage of any savings reported counted toward their energy efficiency targets with the state utility commission.

In early March 2012, Secretary of Energy Steven Chu announced the winners of the Better Buildings Case Competition, which challenged collegiate students to develop and present real-world solutions to boost the energy efficiency of buildings across the country.  The team from the University of Southern California was awarded “Most Innovative” approach for the Cassidy Turley Case Study.

“We don’t care about energy efficiency. We don’t care about the environment. We’re here to save you some money!”

That was the line which began our presentation at the Better Buildings Case Competition sponsored by the Department of Energy and held at the White House Campus on March 2. Our team was tasked with presenting energy upgrades to the management team of a 12-story, 300,000 square foot office building located in the Chelsea neighborhood of Manhattan. The case, written by Cassidy Turley and judged by government and private industry leaders, presented an energy audit recently undertaken by the building owners along with a proposed list of energy-conservation measures (ECMs).  The building was built in 1963 and had a baseline EUI (energy use intensity) of 104 kBtu per square foot. The challenge was to present a package of ECMs that resulted in a strong financial return for the owner. The case gave us the opportunity to make recommendations on obtaining LEED or ENERGY STAR certification, but the decision to pursue either was left in our hands. While our opening line in no way represented personal feelings, we felt it would accurately portray the owner’s position.

We set out to model the building in eQuest (the Quick Energy Simulation Tool), allowing us to experiment with additional ECMs. Supported by data from our model, we recommended a full building LED lighting upgrade, a thermal storage system, and enhanced daylighting measures. These measures, along with nearly all of the originally proposed ECMs, would result in savings of roughly 5,204 MMBtu per year and a final EUI of 82 kBtu per square foot, resulting in $520,000 saved annually for the building owner.  The thermal storage system was the only measure proposed with a payback period longer than five years, but it was instrumental in qualifying the project for a higher rebate from the New York State Energy Research and Development Authority. We were able to move from a maximum rebate of 50% to 75% of the total project cost.

Photo: (from left to right) Elliot Weinstock, Secretary of Energy Steven Chu, William Vicent, and. Nirat Patel. On the USC team, not pictured: Sarah Dominguez, Bert Foster, Bianca Lo, Nadine Mackenzie, Abhay Nagory, Riddhi Ray, and Geman Wu.

The net project cost of our full slate of proposed ECMs was $550k, nearly 4 times as much as the net project cost of the original proposed list. However, the payback period was greatly reduced from a little over 4 years, to just over 1 year. With the technical work behind us, we focused on creating a strong financial justification to the owner.

The existing tenants all have modified gross leases, which include a base rent amount and a monthly electricity allowance that is subject to an annual 3% increase. When leases are renewed or new tenants move in, we proposed offering gross leases consisting of the current base rent and electricity inclusion rates, with no potential for an annual 3% increase. Our approach addressed the split-incentive issue with office buildings by creating a win-win for both the tenants, who would be protected from increases in utility rates, and the owner, who would see financial savings resulting from the implemented ECMs.

We were very conservative in our approach to LEED certification, which we pursued because it could be connected to a financial return for the owner. The majority of LEED credits came from our proposed measures, with other points resulting from modifications to the building’s maintenance program. We allowed for a 1% increase in the rent of the only tenant who expressed interest in staying in a green building. Luckily, this tenant leased 65% of the space in the building, and a 1% increase in rental income when their lease expired at the end of 2014 was an increase of roughly $150,000/year, more than covering a conservative estimate for the LEED application costs.

Finally, the real incentive to the owner came in the increase of the building value. Given current NYC market data, we projected an 8% jump in building value for implementing the ECMs and an additional 4% increase when the major tenant began paying the LEED-premium rental rate. With an estimated building value of over $200 million, these increases were substantial.  The cost of implementing our proposed measures was roughly 0.25% of the building value and paid for itself in 13 months without accounting for any change in rent structure or increase in the building’s value. Overall, our proposal presented a strong financial case from the owner’s point-of-view and resulted in substantial environmental benefits as well.

If you would like to contact the USC team, please email Elliot Weinstock.

Download the documents below to read more about CBECS and the survey review process, and access a copy of the draft survey questionnaire and survey summary outline.

2012 CBECS Stakeholder Input Cover Letter-CBC

CBECS survey summary and outline: a four-page summary of the 2007 CBECS buildings questionnaire

Draft CBECS survey questionnaire: 194-page paper representation of the entire 2007 CBECS buildings questionnaire

EIA Presentation on CBECS 2012

The report, “Getting to Zero 2012 Status Update: A First Look at the Cost and Features of Zero Energy Commercial Buildings,” identifies 99 buildings that are either zero energy, zero energy-capable (ZEC), or zero energy buildings (ZEBs) currently under construction or recently completed with limited performance data.  It finds that the number and diversity of commercial ZEBs and ZECs are growing and can be found in most climate zones. The technologies as well as design and construction practices used to create these buildings are readily available today.

Among the innovative buildings capturing the attention of architects and builders are the IDeAs Z2 Design Facility in San Jose, CA; Hudson Valley Clean Energy Headquarters in Rhinebeck, New York; and Richardsville Elementary School in Bowling Green, Kentucky.  Visit the NBI website for case studies and building profiles.

Report and background materials

Read the report, “Getting to Zero 2012 Status Update: A First Look at the Cost and Features of Zero Energy Commercial Buildings”

Read the press release

President Obama’s We Can’t Wait strategy is all about leveraging Executive Branch opportunities the Administration can take—without Congressional approval—to boost the economy, spur job creation, and make America more competitive.  For the sake of all Americans, this We Can’t Wait ethos is something that the U.S. Green Building Council (USGBC) strongly supports, especially since green building sits at the nexus of saving people money, saving energy, and creating jobs.

For the second time in two years, the USGBC convened a diverse group of 15 businesses and organizations to develop a series of green building policy recommendations that could be achieved now, without federal legislation.  These recommendations were recently released in a report, Better Buildings through Executive Action, and highlight a number of near-term opportunities for the buildings sector.

In the first version of the report that came out in April 2010, USGBC identified nearly 80 potential actions in over 30 federal programs totaling $72 billion to enhance green building in the commercial, residential, and multifamily sectors leveraging existing laws and programs.  Over the past two years, there has been significant progress in implementing several proposals from that report, including the Administration’s Better Buildings Initiative, which improved the Energy Efficiency Commercial Building Tax Deduction and utilized Department of Energy loan guarantees and Small Business Administration financing programs to support energy efficiency retrofits at commercial buildings.

This most recent 2012 report not only catalogs the many green building actions that have already been taken, but also articulates new opportunities.  In the commercial buildings sector, these include:

• Releasing updated guidance on the use of Section 179D, the deduction for investment in energy efficient commercial buildings.
• Overcoming obstacles for building owners to capture aggregated data of tenant energy consumption in multi-tenant structures, including large commercial buildings.
• Continuing to make progress on the Commercial Building Asset Rating Program and set a timeline for completion.

As a founding Steering Committee member of the CBC, USGBC encourages CBC members and stakeholders to review the opportunities and recommendations detailed in the Better Buildings through Executive Action report and consider sending letters of support for these priorities.  Last year, following USGBC’s first report, several organizations joined together to send such a letter to the Obama Administration that helped define the Better Buildings Initiative.

For more information on the report or to coordinate with other organizations on a letter-writing campaign, please contact Lane Burt, USGBC Director of Technology Policy, at lburt@usgbc.org.

WHAT TO KNOW ABOUT EE GLOBAL 2012

• This will be the fifth EE Global, and the first to be held in Orlando, Florida. The international forum has been held twice in Washington, D.C., and also in Paris, France and Brussels, Belgium.
• Over 70% of attendeees at EE Global identify as Director-level or above, making it the most concentrated gathering of influential energy efficiency professionals worldwide.
• The Peabody Resort, one of Orlando’s most luxurious hotels, is the location of this year’s event, and just happens to be minutes away from famed amusement parks, Disney World, Universal Studios Orlando, and Sea World.

Please visit www.eeglobalforum.org to find out more and register.