by Brianna Crandall — October 15, 2018 — Net-zero energy (NZE) buildings are gaining interest from building owners, tenants and landlords alike due to increased rent rates, net operating income, and resale value for landlords, along with healthier, more productive, and more enticing workspace environments for tenants. Independent clean energy nonprofit Rocky Mountain Institute and real estate organization Urban Land Institute’s latest action guide, Best Practices for Achieving Zero Energy Over Time for Building Portfolios, provides a roadmap for portfolio owners and managers to achieve cost-effective deep energy retrofits that lead to zero-energy status for their entire portfolio while increasing revenues.
The zero-over-time (ZOT) approach focuses on cost-effective energy efficiency and renewable energy by prioritizing projects that pay back quickly in the short term, while aligning larger energy efficiency projects with major building life-cycle events, like equipment upgrades. Major life-cycle events can serve as trigger events for energy upgrades, as incremental costs for these upgrades will be lowest.
Cara Carmichael, principal in RMI’s buildings practice, explained:
This analysis clears the path for achieving NZE at this scale — it makes financial sense for portfolios with different holding periods and portfolio milestones. With common excuses out of the way, every portfolio should achieve NZE.
The action guide includes a case study portfolio in Denver that illustrates that taking the ZOT approach can achieve net-zero energy over a 20-year period by making only net present value positive investments and a five percent internal rate of return.
Billy Grayson, executive director, Center for Sustainability and Economic Performance at the Urban Land Institute, commented:
ULI is pleased to see such an actionable report published in the market which highlights a thoughtful and reasonable approach for the built environment to reach net-zero energy over time. It’s no longer an idea for the distant future, it’s an opportunity for the market to begin acting on now. The report presents a business case for a fiscally viable process to achieve NZE over time in commercial buildings, with case studies from real estate leaders across the country proving out best practices for success.
According to the two groups, zero over time is a straightforward and actionable plan that can drive a commercial building portfolio toward zero cost, energy, and potentially carbon over a 20-year period while also delivering revenue-positive projects for short- and long-hold property owners and net-present-value positive operation over the 20-year period it takes to get to net-zero energy. RMI says it hopes that this action guide will help portfolio managers transform their commercial portfolios while driving toward zero.