"Net Zero Emission" Energy Retrofits: A Critical Policy Issue to Solve Posted on Sep 24, 2021

One thing most experts in the cleantech industry agree on is that it is cheaper to build “net zero emission” buildings from scratch than to retrofit existing buildings to become net zero emitters. Although perhaps not invariably true across the U.S., those industry experts with “boots on the ground” knowledge amongst our network all agree that the retrofit market has yet to crack the code on aligning climate policy goals, existing retrofit technologies, building codes and consumer pocketbooks.

This is not stopping homeowners and businesses from retrofitting aging buildings; but, it is slowing down the cleantech retrofit market and pushing a large section of it into the “shadows” – meaning, people are cobbling together systems that work uniquely for their situation, but are not necessarily optimized or up to the newest and best practices or codes. The recent availability of technologies for islandable, distributed “mini solar microgrids” (e.g., small solar-storage microgrids capable of operating independent of the grid), electric appliances and EVs when combined is the holy grail for people and businesses seeking energy resilience and economic independence.

However, the high cost of retrofitting buildings to become “net zero emission” is driving a hidden cleantech retrofit market. These high retrofit costs are a result of the much higher prices of low-emission technologies compared to high emission ones and the significant costs to upgrade electrical panels and infrastructure of existing properties. The prevalence of unpermitted structures on existing properties that provide ideal mounting places for solar helps offset some of these costs and pursuing “unpermitted” onsite solar and storage installations decreases installation costs. As a result, property owners and contractors are working in the “shadows” in unknown, but by many accounts significant, numbers. The reason for the willingness of otherwise reputable, law-abiding citizens to take on this type of legal risk is evident when considering their underlying motivations. For instance, who can fault property owners motivated by instinctual drives to protect their families, homes and businesses from fires, climate-related catastrophes, utility power shutoffs, negligence and grid outages while saving hundreds of thousands of dollars they would otherwise pay a local utility or CCA? And, at the same time, these properties are becoming net zero emission helping to address climate change. All honorable goals that anyone would support.

Daily news headlines are fueling the cleantech retrofit market. One merely has to open the news section on any particular day to read about another recurring utility outage, a PSPS event or a story about an increasingly severe and frequent climate catastrophe.

The challenge of regulatory and legislative bodies to serve the needs of the retrofit market in lock step with its demand is no easy task. Impressive new laws, such as California’s SB 100 mandating solar on all new commercial buildings by 2023, are helping to move the new construction markets to net zero building standards; however, the retrofit market remains an unsolved policy area. The bulk of new policy efforts at the local, state and federal levels are focused on large, utility based infrastructure projects and policy goals. In some cases, such as in the NEM-3 rulemaking proceeding occurring at the CPUC, there even appears a policy desire to stop the growth of the distributed solar retrofit market. Long-term utility contracts and regulatory safeguards for protecting energy companies and customer rates provide important policy goals but do not solve the needs of the retrofit market. Taking the long view, one cannot simply compare watts of energy installed when assessing which approach to solving climate change is the most meaningful; the issues are too complex now and public safety is increasingly at the forefront.

An interesting retrofit issue for policymakers to consider is that utilities, and unfortunately CCAs, have no financial incentive to create energy efficiency. Utilities might have an incentive to sell green energy, but the more energy they sell the more money they make. Whereas property owners have opposite incentive. They are equally motivated to become renewable and energy efficient because the less energy they need, the less infrastructure they have to pay for. Becoming more energy efficient as a country is one of the cheapest ways to address climate change. So, property owners that focus on energy independence drive the market for energy efficient electrical appliances that then will also help save energy when installed in situations where the power comes from the grid.

Today’s solar contractors are being required to become wholistic experts on all electric technologies and storage installations. Yet, government policies and programs that simply provide rebates for EVs and electric appliances only force consumers to buy even more power from their utilities if the consumers do not own onsite solar and storage. An analysis of a whole property, including its onsite solar potential, is integral to considering how to resolve the retrofit policy challenge. By one estimate, in California alone, local solar and storage is estimated to save consumers $473 billion.(1) Unfortunately, the competition for this market is resulting in distracting and counterproductive efforts at regulatory and legislative levels as policymakers seek to address our common goal of solving the climate crisis.

A frequently noted justification for focusing on utility scale solutions to climate change is the notion that utilities are the only way that we can stop climate change in time. This is as antiquated as the thinking that workers cannot work remotely. This old way of thinking must make way for currently known facts. Meeting greenhouse gas reduction goals through utility-scale renewables alone is not a realistic scenario. We need an all hands on deck approach and not a narrowly minded focus on just one scale.

Consumer demand for cleantech retrofits will not go away. In fact, it will only grow as more and more consumers realize “mini solar-storage microgrids” are a solution to protect them from wildfires, public safety power shutoffs, utility malfeasance, economic justice and energy resilience problems. Government policies to bring the cleantech retrofit market “out of the shadows” and support what consumers need must get creative, include 100% support of onsite customer-owned solar and storage systems, and happen fast.

Stay tuned with us next time as we explore potential policy solutions with leading experts in industry and government about how to serve the cleantech retrofit market.

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(1) See Business Wire (December 14, 2020) “Expanding Local Solar and Storage Could Save Ratepayers Nearly a Half a Trillion Dollars.” https://www.businesswire.com/news/home/20201214005720/en/Expanding-Local-Solar-and-Storage-Could-Save-Ratepayers-Nearly-a-Half-a-Trillion-Dollars.