California seeks to achieve zero net energy, or ZNE, in all residential new construction by 2020. This is no small feat, and in 2014 Pacific Gas & Electric commissioned a market characterization of ZNE homes on behalf of the California Public Utility Commission to identify opportunities for overcoming barriers to achieving this target.
The study had three primary objectives:
- Estimate the number of ZNE and near-ZNE homes and builders, by custom and production homes.
- Characterize the residential market for ZNE construction.
- Identify market barriers and opportunities for building, marketing, financing, and purchasing ZNE homes.
What we did
As a member of the team contracted to perform this work, Research Into Action conducted in-depth interviews, led focus groups, managed surveys, and performed market characterization analyses. Target audiences included builders, code officials and planners, appraisers, lenders, and owners of ZNE-type*, energy-efficient, and code-built homes.
Diffusion of innovation relies heavily on human capital – and thus behavior change – to advance new technologies (and approaches). This necessitates proportionally large time and resource investments early in the process, as well as a great deal of strategic thinking and agility over the course of dissemination and market growth.
If we apply this theory to California’s 2020 goal and its progress to date, it’s quite clear ZNE homes hover on the bleeding edge of residential new construction. They represented only 1% of the California market in 2014 (a peak year for ZNE), while true ZNE homes – homes that produce as much energy as they consume – represented only .01%.
The individuals who develop, design, construct, and purchase ZNE-type homes are innovators, with a broad array of motivations. Builders recognize ZNE as a way to differentiate their businesses, as do lenders. For city planners, it fulfills increasingly aspirational sustainability targets. Keeping up with the market motivates appraisers and building officials. And, for their part, owners prioritize energy and cost savings, followed by improved comfort and indoor air quality; interestingly, few mentioned sustainability.
Though these findings provide valuable insights and point to opportunities within the ZNE market, significant barriers hamper its growth. Lack of consumer demand, a lack of qualified building professionals, misperceptions about ZNE, and incremental cost all present formidable challenges.
The interplay among these barriers and market actors paints a complex picture. For example, owners of energy-efficient and code built homes said they did not have the option to buy a ZNE-type home, while builders fear homebuyers won’t pay the premium. Cost-related concerns such as this are common; however, the study found the gap between incremental cost (estimated to be 5% to 15%) and willingness to pay is, in fact, relatively small.
Added to this is the simple fact that making ZNE design and construction business-as-usual hinges upon replicability. Every home cannot be a snowflake if mass production is the ultimate goal. Layer in competing definitions of ZNE among builders, homeowners, and policy makers, as well the lack of education and resources, and the 2020 goal seems like a far-off dream.
ZNE is feasible, but the market is not poised to deliver on an official mandate. To achieve its 2020 targets, California will need to substantially increase its time and resource investments to empower target audiences with the information and tools they need to change how they do business, prioritize, and make decisions. This will involve developing new incentive strategies, providing design assistance, and increasing workforce education efforts – and that’s just the start. As with all ambitious plans, the state will have to take chances on new ZNE-oriented programs and policies.
*Refers to homes that produce as much energy as they consume annually, or are designed and capable of doing so with the addition of renewable power sources.