Business, Profit and Zero Net Energy Buildings

Net energy buildings growing real estate profits with zero net energy technologies- part 2

In part one Small Business, Smart Buildings we covered how “Smart buildings” will optimize a building’s energy consumption, comfort and costs using predictive software systems. In part two we’ll look at while being good for the environment, zero net energy (ZNE) buildings can be profit centers for both their developers and their client residents. In fact, they can be used to attract lessees and marketed to appeal to new generations of workers.

Real estate economics will radically change with the emergence of zero net energy (ZNE) technologies. For example, a ZNE building’s ability to produce as much onsite renewable energy on an annual basis as it consumes will challenge the industry’s standard triple net lease that assigns payment of electric bills to tenants.

The greening of corporate America’s supply chains is reshaping the criteria used by these tenants in selecting real estate. The greening of the supply chain is opening the marketing door for ZNE buildings. A ZNE building that accounts for, manages and reports its environmental impacts will have a significant marketing advantage.

Finally, ZNE technologies are the next steps in flex and open-space office designs that focus on improving worker productivity. In summary, ZNE technologies will reshape commercial building designs, marketing strategies and leases similar to how information-age technologies have reshaped our phones into ecommerce tools.

ZNE Economies of Scale and Commercialization

ZNE is now the declared goal for a major revision of California’s Title 24 building codes beginning in 2014. These code revisions target “”mprehensive building solutions” that use integrated, smarter and renewable technologies to reduce energy, material and water consumption with corresponding reductions in environmental impacts. California has a goal for all new residential construction to be ZNE by 2020 and all new commercial construction by 2030. But tellingly, existing buildings that engage in threshold-sized remodeling or building repurposing will also have to comply with Title 24 code revisions targeting ZNE results.

The size of California’s market expansion for ZNE technologies through Title 24 code revisions will create economies of scale that can deliver accelerated price competitiveness and innovation. The potential is a rapid price decline in ZNE technologies similar to what California achieved for solar panels through its pioneering Million Solar Roofs program. The implication for the rest of America is that price-competitive ZNE technologies will encourage national adoption.

How ZNE Technologies Will Impact Commercial Real-Estate Profits

ZNE buildings will increase commercial real-estate profits by reducing operating costs, increasing property values and attracting tenants. Reduced electricity and natural-gas costs are the first and most obvious profit impacts. A ZNE building will be a smart building that uses a sensor-network connected to predictive software that will operate the building to optimize occupant use, facilitate occupant comfort and minimize cost.

This smart system will manage energy costs by:

    1. Reducing energy consumption without impacting occupant comfort or use.
    2. Reducing energy demand (the kilowatt [kW> charge on electric bills) by reducing demand, shifting demand to when kW prices are lower, using onsite renewable energy to meet all or part of the building’s kW demand, and using onsite batteries that are charged through either onsite solar generation and/or grid purchases when kW prices were lower.
    3. Displacing grid purchases by operating onsite-generating systems.