PALO ALTO, CA-Let's start with the premise that according to the U.S. Department of Energy, commercial buildings account for 35% of US (and 40% of Global) electricity consumption. Then, add on a regulatory structure in which the President is calling for a 20% reduction in energy consumption and a state (California for example) challenging (or possibly mandating) that all new commercial buildings be “zero net energy” by 2030 as a means to curb the adverse impacts of climate change. Finally, (and assuming I have not lost everyone), take a deep breath and consider the relatively benign question of how do we possibly get there?

“Zero net energy,” “net-zero buildings,” “zero net energy buildings” and a few other technical classifications all have a common foundation in designing, constructing and operating commercial buildings with substantial efficiencies that use no more energy over the course of a year than they produce from on-site renewable sources. Without disputing the veracity of the climate change debate (or the political issues associated therewith), few would argue (credibly at least) that energy reduction is not a lofty goal. Achieving this goal on any measureable scale, however, is not an easy task.

A few of the more substantive obstacles include:

--Many sustainability experts have suggested that, in most instances, current efficiencies with rooftop photovoltaic technology limit the feasibility of net-zero buildings for California's climate and solar exposure, to two stories if your building is air conditioned and to four stories if it is not air conditioned. While there are other potential options to supplement and/or replace the PV panels (i.e., distributed cogeneration), they are often economically impracticable for a single site, single building project.

--The available rooftop area (and to a lesser extent carport areas) is limited for the installation of photovoltaics, which continues to be the leading on-site generator for renewable energy; thereby, making a single-story building much more likely to achieve a net-zero basis than a high-rise.

--Site constraints, land use entitlements, phasing requirements and preexisting street grids may make it impossible to orient the building for optimal daylighting and passive solar heating or cooling. By way of example, solar panels cannot be shaded or blocked by trees or adjacent structures, which often precludes development in urban settings.

--The success of any zero net energy building is heavily dependent upon the users and/or operators of the building, and the tension between tenants and landlords can often derail a project at inception. In other words, a net-zero-energy project depends on the full participation of its occupants and certain energy-intensive uses (i.e., data centers) directly inhibit the strategy of offsetting consumption with generation.

--The capital costs on the front end of a project are often insurmountable (whether in reality or perception), and owners remain reluctant to finance development and construction of a net-zero building on a speculative basis.

Critics suggest that the limited number of zero net energy buildings (only 21 in 2012 according to the New Buildings Institute) foreshadow the impossibility of achieving any significant measure of success; however, the foregoing challenges should not be viewed as the death knell to zero net energy for high rise commercial buildings. The 21 buildings from 2012 are only the beginning. Regulatory frameworks at the federal, state and local levels continue to push owners, developers, designers, operators and users in the same direction toward a complete offset for consumption and generation. Technological advances in energy efficiency create new opportunities on a daily basis, integrated design methodologies, where owners, designers, contractors, operators and users collaboratively develop a project together from the very beginning, and sophisticated risk/reward arrangements between the stakeholders will soon become the norm in many commercial settings. Too much financial and intellectual capital has been invested in finding a viable and scalable solution for the zero net energy movement to fail.

And to those who continue to fight against the tide, I offer a closing thought often attributed to Thomas Paine – “lead, follow or get out of the way . . .

Michael C. Polentz is Co-Chair of the Real Estate & Land Use Practice Group at Manatt, Phelps & Phillips, LLP, located in the Palo Alto office. The views expressed in this column are the author's own.

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