How to Become Net Zero and Achieve Resilience

As buildings are responsible for 30% of global energy consumption, they have a major impact on most organizations’ environmental footprint. Net zero buildings – those that produce as much energy as they consume – can both help companies achieve their sustainability goals and future-proof their buildings amidst rapid regulatory, economic, and ecological changes. For instance, some municipalities are developing policies that limit carbon emissions from buildings and preparing to levy penalties for exceeding those limits. Whereas energy and building codes have historically applied only to new construction and major renovations, adoption of building performance standards that regulate the energy performance and/or emissions of existing buildings are likely to become more widespread as the need to mitigate climate change intensifies. Net zero buildings can also insulate owners and operators from volatile energy prices.

Developing resilience as it relates to energy availability is a concern for virtually all facilities, as increasing extreme weather events and aging electrical infrastructure in many regions strain the electrical grid and lead to power outages. Net zero buildings are particularly well-suited to adopt technologies and strategies that increase resilience.

Embracing Energy Efficiency, Electrification, and Renewable Energy to Achieve Net Zero

Net zero is a function of both energy consumption and generation, so the most sensible and cost-effective approach to designing a net zero building starts by identifying opportunities to increase energy efficiency. In many cases, energy-efficient building technologies can be adopted that do not sacrifice occupant comfort or building functionality. For instance, in many climates, heat pumps can be used to cool interior spaces more efficiently than, but just as effectively as, traditional air conditioners. In some cases, technologies that reduce energy consumption can actually improve occupants’ experiences. For example, daylight-responsive lighting systems that dim electric lighting when daylight is present in a space not only decrease the energy consumed by lighting but can also reduce over-lighting and glare. Similarly, many modern energy-efficient appliances, such as dishwashers and washing machines, are more effective at cleaning dishes and laundry than older products.

Behavioral interventions can also be implemented to reduce energy consumption in commercial, institutional, and industrial facilities. For instance, establishing the practice turning off computers or industrial machinery during non-business hours can yield meaningful energy savings. When considering these types of initiatives, the full range of potential consequences, such as prolonged equipment start-up times, delayed cybersecurity update deployment, or reduced equipment lifetime due to increased on/off cycles, should be understood to evaluate the trade-offs or modify other business practices to accommodate the change. When feasible, behavioral energy saving strategies can be implemented very inexpensively.

Building electrification is also a crucial step in planning most net zero buildings, which can be implemented cost-effectively when coupled with energy-efficiency upgrades. Appliances and building systems that consume fossil fuels, such as natural gas furnaces, boilers, and water heaters, cannot take advantage of electricity generated from most on-site renewable energy sources or supplied by the grid. In 2022, approximately 40% of electricity on the grid was generated from clean energy sources in the United States, with expectations that this number will reach 80% by 2030 and 100% by 2035. Though facing legal challenges, a number of municipalities have banned natural gas hookups in new construction. Ithaca, New York aims to electrify all buildings by 2030 and other cities are considering adopting similar plans that would require electrification of existing buildings.

After a facility has been electrified and its efficiency has been optimized, the amount of energy generation needed to offset consumption can be determined. While a diesel or propane generator could technically be used to achieve net zero, the negative environmental impact of fossil fuel consumption, as well as ongoing fuel costs and noise, make the adoption of renewable sources of energy a superior choice in most instances. Solar panels and wind turbines are obvious options for most building owners, but cogeneration processes that utilize waste heat or biomass are also used to generate on-site power in limited applications. Biomass generation uses one of a number of processes (e.g., combustion, gasification) to convert biological materials, such as wood and agricultural by-products, to heat and/or power. Though wind currently generates more power than solar globally, most wind power comes from utility-scale installations. Guidehouse Insights estimates that, globally, solar currently accounts for more than 93% of total on-site renewable generation capacity for commercial, institutional, and industrial buildings, and that share is expected to grow over the next decade.

The selection of a renewable energy technology for any particular building depends on a range of factors, requiring consultation with experts. For instance, the viability of solar for a given facility depends not only on sunlight availability, accounting for location, orientation, and shading from neighboring structures, but also roof or land area, and the condition and load-bearing capacity of the roof. For wind power, land area is often a limitation, though wind availability and the tolerance for noise and vibration are also important considerations. Energy generation from waste heat or biomass not only requires a steady supply of heat or appropriate consumable material, but the ability to safely accommodate the necessary equipment, which may include a gasifier, combustor, generator, and more, on site.

Energy Storage Makes Net Zero Buildings More Resilient

An assessment of an organization’s risks, responsibilities, and priorities can identify a facility’s critical load – the amount of power needed to ensure the safety and integrity of occupants, infrastructure, and data. This critical load dictates the minimum amount of power that must be available at all times to avoid harm. In net zero buildings, on-site renewable energy sources provide valuable redundant power, but energy storage is also needed to sustain critical operations during grid outages. When the electrical grid suffers an outage, solar panels or wind turbines must automatically disconnect and cannot supply power to grid-connected buildings that do not have energy storage, such as batteries. However, solar panels connected to batteries can continue to charge them, which can supply power to buildings. As climate change intensifies, power outages are expected to become more frequent. From 2000 through 2021, 83% of outages in the U.S. were caused by weather-related events and the number of outages caused by weather increased approximately 78% 2011-2021 from the previous decade. As this trend continues, increased disruptions to facility operations pose a growing threat to an organization’s ability to fulfill its mission and the resilience afforded by on-site energy storage is likely to become more important.

The benefits of on-site energy storage extend beyond the provision of back-up power though. In most places, grid-connected buildings with on-site solar panels can send any generated power that is not immediately consumed back to the grid. When consumption outstrips production, such as at night, the building draws power from the grid. When the total amount of energy produced over a defined period of time, usually a year, is equal to the energy consumed by the facility, the building is considered net zero. However, this does not mean that zero energy costs are incurred. When utilities use net metering, a customer is credited for the energy they supply to the grid at the same rate they are charged for energy they consume from the grid. Theoretically, when net metering is used, a net zero building only incurs a rather small monthly fee that supports the development and maintenance of the transmission and distribution infrastructure that the utility provides. However, the time interval for net metering varies. In some cases, the credits for energy supplied to the grid reset every month. In this situation, because a solar-powered net zero building generates less energy in the winter, due to reduced number of hours of sunshine per day, it will likely need to pay for energy at certain times of the year. When utilities use net billing instead, customers are credited a lower rate for the energy they supply than the energy they consume, meaning that even net zero buildings can incur sizable year-round energy costs. When utilities adjust energy prices based on time of use, these charges can grow, as peak demand in regions with high renewable energy adoption occurs when renewable power availability is low (e.g., evenings in regions with high solar adoption).

The ways in which building operators are incentivized for supplying power to the grid tends to be dependent on regulations, which are subject to change. For instance, the California Public Utilities Commission reduced payments for solar power supplied to the grid by 75% for new customers beginning in April of 2023. Reductions in incentives for excess renewable generation are expected to continue and become more widespread as utilities struggle to manage a glut of energy available during solar peak times. In fact, the National Academies of Sciences, Engineering, and Medicine recently analyzed the technical, economic, equity, and regulatory issues associated with net metering and recommended substantial revisions to this practice that would likely result in reduced compensation for utility customers that supply renewable energy to the grid. Forward-looking building owners would be well-served by reducing reliance on the grid by adopting energy storage. Batteries are charged when renewable production is greater than consumption and discharged when the inverse is true. When a facility is subject to time of use charges, energy can be drawn from batteries when it is most expensive.

The Path to a Resilient, Net Zero Future

For an existing facility, the journey to net zero typically occurs in stages and the exact path taken varies depending on the needs, priorities, and limitations of each organization. A sampling of case studies can illustrate how the issues discussed apply across different building contexts, organizational strategies, and resource constraints:

• The Bergdorf Goodman flagship store underwent a major efficiency and electrification upgrade when its inefficient, natural gas absorption chillers were replaced with energy-efficient electric chillers from Trane. Located in New York City, this historic building will be subject to the building performance standards specified by Local Law 97 when it goes into effect in 2024. The project eliminated all natural gas use in this building, ensured that it will comply with Local Law 97, reduced energy costs $61,000 a year, and is a crucial step toward Neiman Marcus Group’s goal to transition to 100% renewable energy use by 2030.
• The U.S. Forestry Service (USFS) engaged Trane to equip five remote, off-grid fire and ranger stations in California national forests that had been powered by diesel or propane generators, which were plagued by maintenance and operational problems, with mobile solar and battery systems. To increase energy efficiency, LED lighting was also installed. The USFS elected to use an energy savings performance contract (ESPC) to avoid any upfront capital costs. The increased reliability of the renewable energy system, relative to the generators previously used, enhanced the resilience of these facilities and will create nearly $3.8 million in guaranteed cost savings over the life of the 14-year ESPC.
• Also using an ESPC, the state government of New Mexico was able to reduce their annual costs by $1.1 million by upgrading the energy efficiency of 32 government buildings and installing rooftop solar panels. Trane conducted extensive audits of the Santa Fe buildings to determine how to best improve energy efficiency. The upgrades included LED lighting, increased window insulation, intelligent building controls, and efficient HVAC systems, which not only reduced energy consumption, but also improved occupant comfort.
• The Dighton Rehoboth Regional School District in Massachusetts was suffering comfort issues and ventilation problems due to failing HVAC equipment when they engaged Trane to implement a comprehensive energy-efficiency and renewable energy upgrade. Among other facility improvements, the project included new HVAC equipment, a digital building automation system, a biomass (woodchip) boiler, and solar panels, yielding a simultaneous improvement in the district’s learning environment and 62% reduction in energy spending.