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March 29, 2018
The clean energy revolution is gathering steam with tech breakthroughs, record-breaking deployment rates, free-falling prices and a new, cautious optimism about the prospects for meaningful climate solutions.
As this revolution unfolds, what are the implications for energy efficiency in our buildings? If it becomes cheaper to slap on solar panels than to insulate and air seal, do deep-efficiency approaches like Passive House make sense?
Should we just ditch energy efficiency for clean energy?
In fact, building energy efficiency has never been more relevant to climate action than today.
The need for efficiency
While the climate crisis is wickedly complex, climate math is pretty simple. Carbon emissions are a product of four factors: population, gross domestic product (GDP) per capita, energy intensity of the economy (per unit of GDP), and carbon intensity of that energy.
We know that to limit global warming to well below 2 degrees Celsius, global carbon emissions need to peak by 2020 and then go down by 50 percent per decade every decade after.
Global population will rise to around 9 billion people in coming decades. GDP per capita will also increase as hundreds of millions of people rise out of poverty. We should celebrate that.
But the first two factors in our emissions math population and GDP per capita will increase, not decrease. That puts pressure on the latter two factors energy intensity and carbon intensity. We need to see both decrease rapidly, with deep energy efficiency and renewable energy deployed all over the place. We need Passive House buildings everywhere, with solar panels on their rooftops.
Experts at the Carbon Tracker Initiative, DNV GL, Grantham Institute at Imperial College London, and the Energy Transitions Commission all concur: clean energy can propel us toward our Paris climate goals, but we need deep energy efficiency in our buildings to make the mark.
When it comes to clean energy and Passive House, it's not either/or, it's both.
Positive cash flow
But is deep energy efficiency just too expensive? Not anymore.
According to Pembina Institute, the average construction cost premium of Passive House projects is just 6 percent. Data from Pennsylvania Housing Finance Agency suggest that this premium could be as low as 2 percent for multifamily buildings. With upfront costs as low as 2-6 percent, ongoing utility bill savings can offset the bigger mortgage or construction loan payments required to fund Passive House construction. Passive House can be cash-flow positive from day one of occupancy.
Policy mechanisms like "property assessed clean energy" financing can eliminate the split incentive problem, allowing project owners to invest in energy efficiency and assigning the debt service for that investment to the property itself. Future buyers enjoy the benefits of Passive House and take on the loan payments that fund those benefits, all cash-flow positive.
When it comes to positive cash flow and Passive House, it's not either/or, it's both.
Beware the duck curve
A common way of thinking about buildings and climate action is through a "net zero" lens. Over the course of a year, you generate as much renewable energy on site as your building consumes.
In the summer, you are a net producer, and in the winter you are a net consumer. Does this mean you can ignore building efficiency, install a bunch of solar panels on a code-built building and call it good? Well, no.
In northern cities where both space and solar access is limited, you need deep energy efficiency to reach net-zero targets. There simply is not enough roof area on a typical two-story home in Seattle to achieve net-zero energy performance without also attaining Passive House levels of efficiency. The same is true for multifamily buildings: The only route to a four-story, net-zero apartment is deep energy efficiency plus on-site solar.
If your building is in suburban California where both sunshine and space to install solar panels is plentiful, deep efficiency may not be necessary in your net-zero energy math.
You might think you can get away with a mediocre building and make up the difference with lots of solar panels. Not so fast. You would be worsening the "duck curve" problem.
The duck curve is a daily dynamic in California energy markets. Because so much solar energy is being deployed in California, demand for non-solar energy during the very sunny midday now approaches zero. (The graph of this dip in the daily demand curve delineates the belly shape of the "duck.")
The problem is that in early evening, when people arrive home and power up their houses and HVAC systems, the sun goes down and all that solar energy disappears. This simultaneous drop in solar energy and spike in home energy consumption means that demand for energy ramps up extremely rapidly in evening hours. (This is the neck of the duck.)
Carbon-intensive "peaker plants" must then fire up to supply this spike in demand, generating lots of unwanted emissions. Because Passive House buildings maintain even interior temperatures throughout day and night with very little energy input, they are virtual "thermal batteries" that mitigate this evening spike in demand.
If more buildings in California were Passive House, fewer households would be powering up their HVAC systems in early evening and that spike in dirty energy consumption would disappear. As more utility-scale battery storage facilities come online, and as behind-the-meter home battery storage becomes cheaper, the duck curve will flatten even more.
When it comes to rooftop solar and Passive House, it's not either/or, it's both.
As exciting as batteries are for daily storage, they are ill-equipped to deal with the seasonal intermittency of solar energy. One of the trickier clean energy puzzles that humanity needs to tackle is how to power northern climates in winter.
Part of the solution will be more widely interconnected energy grids, so that southern sun can provide northern supply. Part of the solution will be wind and hydro. Another part of the solution will be power-to-gas, where excess solar energy produced in summer is used to split water into hydrogen and oxygen, and that hydrogen is stored as fuel.
But a key part of the solution lies in our buildings because heat demand from our buildings makes up a huge portion of winter energy consumption, and the thermal battery of deeply energy-efficient buildings meets that demand.
When it comes to a clean winter grid and Passive House, it's not either/or, it's both.
Investing in efficiency
The core reason that deep energy efficiency will remain central to both the clean energy transition and to global climate action is that efficiency is the ultimate distributed energy resource.
You can deploy it anywhere. It performs best exactly when it is most needed: during peak demand. It flattens the peaks and valleys of demand, making it easier to fill in the gaps with renewable energy, battery storage and demand response.
Despite the remarkable cost reductions of clean energy, energy efficiency is still the cheapest energy investment around, the "first fuel."
Passive House is not only still relevant in these early days of the clean energy revolution, it will help ensure the revolution's future success.
Zack Semke is chief marketing officer at NK Architects in Seattle.