Net Zero Energy
Cost Building

“The amount of money the utility pays the building owner for the energy the building exports to the grid is at least equal to the amount the owner pays the utility for the energy services and energy used over the year.”

Cost of renewable energy exported from site must match utility bills of energy imported to the site. Essentially, a building is net zero cost energy if it recovers expenses on utility bills by selling electricity generated by renewable sources.

Utility tariff structure is crucial to cost NZEBs. Ideally, tariffs must credit both lower energy use and lower peak demands. Utility tariff structures for commercial and industrial buildings in India vary by both – energy use and peak demand. Residential utility tariff structures usually vary only by energy use.

Net zero energy cost buildings must have low peak demands and higher energy savings so that they have lower price tariffs and in turn, lower utility bills. Demand response controls are thus crucial to achieving energy cost neutrality. Cost NZEBs are also not feasible without policies like feed-in-tariff and net metering, which facilitate buying back of electricity by utilities.

Compared to site or source NZEBs, this definition will require greater installed capacity of renewable energy systems for the same building, considering buy-back rates offered by utilities are typically lower than supply tariffs. More electricity needs to be produced from a larger renewable energy system to make up for this deficit.

Solar PV is the most commonly used technology to generate electricity on site. Quantity of electricity generated through biogas plants may not be enough on its own to offset the cost of imported energy.  Electricity generated in waste heat or co-generation using biofuels can also be stacked in the supply side options.

Dependent on frequently varying price structure of utilities, cost NZEBs might be easier to achieve than to maintain over the lifecycle of a building. Cost NZEBs can lose their status due to revised utility rates despite energy savings remaining unchanged. On the other hand, the building may actually be able to enhance its cost net zero status because of a favourable change in feed-in tariffs.

Cost NZEBs are exposed to certain uncertainties in the long term. Utilities will only be interested in buying back electricity if they can sell electricity generated at their power plants profitably and be able to avoid added generation costs (for adding to existing generation capacity to be able to meet demand from their service areas). Robust grid infrastructure is also needed for the grid to have stable capacity for absorbing surplus energy produced during peak and non-peak hours. With expected proliferation of energy efficient buildings and NZEBs, utilities will be able to reduce buy-back rates of on-site generated electricity to maintain their profitability and to support the required expansion of grid infrastructure, while continuing to provide dependable service to customers.

Disclaimer: This website is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this website are the sole responsibility of Environmental Design Solutions and do not necessarily reflect the views of USAID or the United States Government.