Navigant Research Blog

Paving the Road to Zero Net Energy Buildings

— June 18, 2015

Meritage Homes is currently constructing one of the first zero net energy (ZNE) communities in Fontana, California, with completion of six of the 20 homes expected this July. This accomplishment signifies that California is moving toward the California Energy Commission’s goal of achieving ZNE buildings for all new residential and commercial construction by 2020 and 2030, respectively. As discussed in previous blogs, state policy is really important in driving ZNE, and California’s ambitious goal aligns with the U.S. Department of Energy (DOE) Net-Zero Energy Commercial Building Initiative.

Commercial ZNE Buildings in California

According to the New Building Institute’s (NBI) Getting to Zero database, over 60 ZNE commercial projects have been completed in California to date, and California has produced almost one-third of the nation’s ZNE buildings. Last month, NBI announced the California ZNE Watchlist, the first state list for tracking ZNE commercial buildings.

By 2025, Navigant Research estimates that California’s commercial square footage of new ZNE projects will reach 23,704,000 SF, or 7% of the commercial building stock, representing a compound annual growth rate (CAGR) of 49% from 2014. Based on Navigant Research’s Zero Energy Buildings report, the number of ZNE buildings is expected to grow, while square footage of individual ZNE projects is anticipated to decrease between 2014 and 2025, due to the increasing relative ease of reaching ZNE status in smaller buildings in the next decade.

Commercial Zero Energy Buildings, California: 2014-2025

ZEB chart

(Source: Navigant Research)

California Market Perception of ZNE and Integrated Design Concepts

On behalf of the California Public Utilities Commission (CPUC) and California investor-owned utilities (IOUs), Navigant Consulting recently conducted the Measure, Application, Segment, Industry: Integrated Design for New Construction Buildings study. It reports on the results of a survey of California Architecture, Engineering, and Construction (AEC) firms in order to understand how the current market perceives and understands ZNE and integrated design (ID) concepts. The survey revealed the following:

  • Although defined at the national and state levels, no market consensus exists as to what constitutes a ZNE building or the implementation of ID.
  • AEC firms are aware of energy efficiency and renewable energy IOU programs, but their depth of understanding regarding options for offsetting consumption via renewable power is limited.
  • AEC firms that operate in California may not be well-informed as to ZNE and ID resources provided by IOU programs.
  • Rebates are very well-known by AEC firms, but the degree to which they drive ZNE adoption is not clear.

From previous studies, California knows that ZNE is technically feasible, but a big effort is still needed to advance the market toward 2020 and 2030 goals. California’s aggressive ZNE target requires equipment engineering, building design, construction, and building operation vigilance. The market is in the innovator stage of adoption, so IOUs must continue to pursue ZNE pilot projects with incentives and offer ZNE design assistance and concept training to AEC firms. Building developers  need to continue to explore pathways to ZNE buildings beyond code energy efficiency levels, emphasizing measures expected for inclusion in Title 24 2016 and Title 24 2019. These things are already beginning to happen; California must keep pushing ahead.


In Profit Crunch, Oil Firms Look to Big Data

— June 5, 2015

New_Picture_webAs the price of crude continues to fall and the availability of places for oil companies to store oil shrinks, oil and gas companies are looking for ways to reduce costs and preserve profits. Operational efficiency is a familiar path—one that leads to layoffs, up to 75,000 coming at companies big and small as reported by Continental Resources. At the same time, some companies are looking inward to big data as a way to make operations and exploration more efficient. We’ve written about the large potential for big data to make buildings, for example, more efficient. And it’s clear that the value of big data lies in its context.

In the case of oil and gas, it is important to keep in mind how diverse this industry is. The use of data in oil exploration and production is wholly different from its employment in oil refining, distribution, and marketing.

Down the Stream

According to the panel members of a recent Cleantech Forum panel on the digitization of the Oil and Gas industry, there’s scant consensus on data models and formats in single business units, let alone across an entire company or the industry. The spread of digitization is not universal, either. This presents a clear challenge to the industry–data analytics are only useful when the data is consistently collected and, well, analyzed. But it also presents an opportunity. Any company that can figure out how to collect, integrate, and analyze data across the oil and gas stream—from wellhead to gas pump—will be able to unlock the potential of both operational efficiency and optimization. Those gains in efficiency will save money and help the companies achieve their sustainability goals.

A few companies are already testing that promise. WellAware is looking to bring IoT Oil and Gas by providing customers a view into production, conveyance, and processing of petroleum products. The Texas-based firm deploys sensors and gathers data from existing monitors to provide visualizations and analytics on system performance. To compete with OSISoft, an incumbent in oil and gas data collection and historian services, WellAware will provide hardware and advanced analytics—two offerings that OSISoft either does not offer or outsources.

Human Input

A different approach, one based on large time series data analysis, is offered by Mtelligence Corporation and MapR, a provider of the powerful open-source Hadoop solution. Called Mtell Reservoir, the solution will focus on real-time and historical sensor data analysis to provide system managers operational insight. Given the large volume of data gathered in a drilling operation and the time it takes to load and analyze data, an in-stream solution will have great value.

These big data solutions are poised to give oil and gas operators greater intelligence and insight into operations. However, they don’t close the loop on operations, removing the need for people making decisions. This is due in part to the complex nature of drilling through multifaceted substrates and processing materials of varying quality. Production technologies like directional drilling and fracking have changed the oil and gas business and are in part responsible for the current low oil prices. Data analytics may help to stem the profit losses in the near term.


Greek Construction Booming … In the United States

— May 19, 2015

Today’s outlook for construction in Greece is bleak. A standoff between the country’s Syriza government and its European creditors could spark a default of government debt and potentially lead to an exit from the European Union, and the Greek economy is in shambles after 6 years of recession. Furthermore, the head of one of Greece’s largest construction companies was arrested on charges of tax evasion.

Greek construction activity has fallen more than 95% from its pre-crisis peak and, in all likelihood, has little chance of rebounding any time soon. Across the Atlantic, though, Congress is considering a bill that could have a profound effect on a different type of Greek construction—the Greek-letter fraternity and sorority houses across the country.

Currently, a donation to a college or university Greek organization for housing provides a tax deduction of 30% of the donation amount (and, perhaps, a feeling of giving back). However, the Collegiate Housing and Infrastructure Act would allow donations to Greek groups to be fully tax deductible. The Fraternal Government Relations Coalition, a group representing 100 fraternities and sororities, is urging Congress to pass the bill. The group says that $1 billion in construction and renovation projects could begin if the bill is passed. Some of the buildings date to the 1930s, and some have seen few if any upgrades in the past several decades. The impact of $1 billion toward renovations on aging housing could have huge ramifications on energy consumption.

From Frat House to Green House

Improvements to the building envelope, more efficient HVAC equipment, better lighting, and, importantly, smarter controls could not only reduce operating costs but also improve the comfort of building occupants. Navigant Research’s Energy Efficiency Retrofits for Commercial and Public Buildings provides insight into the major technical and market trends related to these types of projects. Indeed at some universities, fraternities and sororities are already leading on energy improvements. The Kappa Alpha Order chapter house at the University of Maryland installed ceramic film on their windows as part of a sustainability initiative. Also, the Beta Theta Pi fraternity of University of Florida installed solar panels on the roof of its campus fraternity house. Broader Greek construction may have an impact positive enough to counteract all of that other stuff fraternities do.


What the Shaheen-Portman Bill Signals for Building Efficiency

— May 15, 2015

On April 21, the U.S. House of Representatives passed S.535, otherwise known as the Energy Efficiency Improvement Act of 2015, sponsored by the bipartisan Shaheen-Portman team. In light of the congressional standstill on climate change and comprehensive energy policy as my colleague Ben Freas has previously blogged about, does this action suggestion a sea change in energy policy? Likely not. This bill is primarily about studies and voluntary initiatives, with one important distinction: embedded in Title 3, there is an amendment to the 2007 Energy Independence and Security Act (EISA) that requires investment in energy efficiency building upgrades for all non-ENERGY STAR-rated federally leased spaces. This single element of the law holds the potential to incentivize energy efficiency investments in a large portion of the commercial building stock.

This amendment updates the High-Performance Federal Buildings section of EISA and establishes a lease contingency tied to energy efficiency. As the amendment states, “The space is renovated for all energy efficiency and conservation improvements that would be cost effective over the life of the lease, including improvements in lighting, windows, and heating, ventilation, and air conditioning systems.” In addition, the buildings must be benchmarked through the U.S. Environmental Protection Agency’s (EPA’s) ENERGY STAR Portfolio Manager.

Navigant Research published the report Energy Efficient Buildings: Global Outlook in late 2014 and presented the following snapshot on average payback periods for selected energy efficiency measures.

Payback Periods for Select Energy Efficiency Measures: 2014

Casey Blog Chart

 (Source: Navigant Research, Deutsche Bank)

Looking at that menu of retrofit options, this EISA amendment has the potential to drive substantial investment in the commercial building stock. According to the U.S. General Services Administration (GSA), the largest public real estate manager, of the 195,578,680 SF under lease in 2015, the average lease term is 11.5 years. This term suggests the efficiency retrofit clause can enable investment in a broad array of measures, including all of the examples in the figure above.

Window of Opportunity

Despite the contention of climate change and the congressional reluctance for private sector mandates, energy efficiency has proven to generate bipartisan support with the potential to influence the real estate industry. As building owners vie for federal leases, this amendment will force the issue of energy efficiency, and in the longer term, this may be an important policy driver for greater investment across the commercial building stock. If efficiency can become a competitive differentiator in real estate, there will be significant underlying climate change benefits without the hurdles that have faced congressional action.


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