The business case needs to take a holistic approach to costs, including incremental capital expenditures and cost savings during operation and sale. In today’s building industry, there is likely a cost premium for NZE-ready construction (excludes the cost of solar PV)— anywhere between 1 and 12 percent—but these costs continue to fall as NZE becomes the new normal. Solar can be viewed as a separate income-generating investment or could be third-party financed via PACE or PPAs, effectively removing the upfront premium. Other barriers preventing market penetration of NZE buildings are perceived technical barriers, lack of awareness, fear of trying something new, and increased attention from the developer and design team. An increasing number of examples show the market is learning how to build NZE buildings effectively, leaving leasing and other business model components as the next frontier to tackle to scale this market.
These barriers are also outweighed by multiple benefits that provide an attractive return on investment to a developer:
LOWER VACANCY RATES AND IMPROVED TENANT RETENTION
HIGHER MARKET VALUE
ADDITIONAL BENEFITS FOR FIRST MOVERS