Six Steps to Achieve Net-Zero Energy Buildings Over Time

1. Six Steps to Achieve Net-Zero Energy Buildings Over Time

2. Zero Over Time OverviewSix Steps to Achieve Net-Zero Energy Buildings Over Time Matt Jungclaus | Rocky Mountain Institute June 23, 2019

3. RMI TRANSFORMS GLOBAL ENERGY USE TO CREATE A CLEAN, PROSPEROUS, AND SECURE LOW-CARBON FUTURE.

4. You’ve heard this story before – Buildings are a leading source of GHG emissions! 39% 72% 90% 29% GHG emissions Electricity use Time spent NPV+ savings

5. Building owners are beginning to increase their investments in energy efficiency Source: Johnson Controls 2018 Energy Efficiency Indicator Survey

6. Many are seeking low-carbon or net-zero energy buildings Net-zero energy (NZE) buildings are highly efficient and consume only as much energy as they produce or procure from clean, renewable resources on an annual basis. Most NZE definitions call for fully electrified buildings. Cities, universities, private portfolio owners, and others are committed to net-zero energy or zero carbon goals. Image source: iStock

7. But we need solutions to achieve net-zero energy for existing buildings Deep energy retrofits are perceived to be: • Costly • Complex • Difficult to procure • Too sophisticated when pursuing net-zero energy According to a recent survey by the U.S. Energy Information Agency, 72 percent of gross square footage in the U.S. belongs to buildings over twenty years old. Existing globally are receiving energy retrofits at a rate of around 1% per year, while a rate of around 3.2% per year is required to avoid a 2 degree rise in global temperatures. 

8. Because some of us feel this way “This would have been a great green building if it wasn’t for the bad decisions made at the design team meeting held on July 9th, 2011.” 8

9. Now, we’re paying for it - Building lifecycle costs far outweigh first costs Cost of long-term ownership Includes energy, O&M, and other long-term costs 95% Cost of construction (first cost) 5%

10. A solution for existing buildings: Zero Over Time Zero Over Time (ZOT) is an approach that sets existing commercial building portfolios on a financially viable path to achieve net zero energy. • The ZOT approach helps portfolio owners and managers perform upgrades at the right time to achieve the best lifecycle economics. • If you align deep energy efficiency, renewable energy, and energy storage projects with life-cycle event triggers, investments will go further.

11. ZOT can be achieved by following 6 simple steps:

12. ZOT can be achieved by following 6 simple steps:

13. Key concept: Trigger calendar

14. Key Concept: Right-Timing Investments and Incremental Costs Portfolios often plan for like-for-like replacements at the end of useful life Investing in higher-efficiency units only requires investing in the incremental cost of the high-efficiency unit A change in investment framework results in a project with favorable economics

15. Key Concept: Right-Timing Investments and Incremental Costs

16. Key Concept: Driving Value through Multiple Owners Zero Over Time can carry value through multiple ownership transitions including short-term holding periodsEach subsequent owner will benefit from the increased value of high-performing buildings, which retain value better than conventional buildings. Developing proper leasing structures is key for portfolio owners to leverage the value of ZOT https://rmi.org/insight/best_practices_for_leased_nze/

17. Owner #1: Short-term hold with efficiency upgrade

18. Owner #2: Bought efficient building, no upgrades

19. Owner #3: Longer hold with efficiency upgrades

20. Benefits to building owners include • Market differentiation • Faster lease-up, better retention • Increased property value • Better overall economics for owner and tenants (including lower operating costs) Source: The Financial Case for High Performance Buildings, stok

22. Read More and Reach Out Matt Jungclaus Rocky Mountain Institute mjungclaus@rmi.org • https://www.rmi.org/insight/zero-over-time-for-building-portfolios