Paying for Zero Net Energy

The top three finishers in the zero net energy competition held recently in western Massachusetts achieved negative or near zero net energy homes. Their success got us started thinking about trying to build zero net energy rental housing in Boston. Surely if you can build a zero net single family in Townsend Massachusetts, you can build a zero net three decker in Dorchester Massachusetts. 

The more we thought about it the more daunting the idea became.  Putting enough PV on the roof to provide electricity for ten occupants of a three decker might be a little overwhelming.  Figuring out how to get to zero net energy might be the easy part.  Figuring out how to stay a zero net may be the hard part.  Can the tenants be coached and cajoled into being frugal with their energy use?  If we could get to zero net and stay at zero net, how are we going to pay for it all?

PV arrays and solar thermal collectors are expensive.  To get total energy demand within zero net range the building will have to be superinsulated.  Superinsulation sets off a cascade of changes in the way the building is built, heated and ventilated, a number of which add cost. At best, the cash stream from the units will pay for the units not including the cost of getting to zero net.  Either the project needs a subsidy to cover the cost of getting to zero net or it needs an additional cash flow that can amortize the cost of getting to zero net.

Let's assume for the moment that we could get to zero net and stay at zero net.  The logical choice then is to rent the units utilities in-cluded.  Using Boston section 8 standards as a guide, a two bedroom unit with utilities included would mean an additional $150.00 per month in income.  For a three decker it would mean an extra $450.00 per month.  A $450.00 per month cash stream will buy $60,000.00 at the bank (6-7%, 20 yr amort.).  $60 K will buy a lot of energy efficiency and renewable energy.  This idea is compelling because it makes economic sense and environmental sense.  If you can use the cash flow that would have gone to the utilities to pay for renewable energy, the path to a renewable energy future gets a little bit easier.  

There are a few practical problems with our casual assumption about getting to and staying at zero net energy.  The only evidence that we could get to zero net will be the computer program that the Energy Star people will use to evaluate the proposed building.  A computer projection is cold comfort to a banker evaluatiing an operating income statement.  As for staying at zero net, every small landlord will tell you that renting units utilites included is a one way ticket to the poor house on a  fast train.  We have been around long enough to know that we ignore conventional wisdom at our peril.  And then there is the "Banks don't do that."  problem.  Nowhere in the banker's book of rules does it say anything about counting utility income in determining borrowing capacity.  And, the banks appraiser may have a few unkind things to say about the idea as well.  

Setting aside the practical problems, the biggest impediment to doing this is the lack of examples of projects where it has been tried.  Even an unsuccessful attempt could provide very useful experience.  There is no information we can find describing attempts,successful or not.  Is anyone out there thinking about doing this?  Is anybody trying it?  Please let us know what thoughts you migh have.  We are making a serious effort to try this.  The potential benefits, small and large, make the idea irresistible.  If we manage to get a zero net three decker up, we will post information on what we built, how much it cost, how we paid for it, and how it performed.