Introductory Resources

“Net zero” is used to describe a system (such as a building or even an entire community) that consumes as much of a resource as it generates. This concept extends to different types of resources, including energy, water, and carbon. Setting goals to achieve net zero resource use can help local, state, and federal governments transform what has traditionally been a linear process of resource generation and loss into a closed-loop cycle that results in net zero impact and more efficient, sustainable, and resilient communities.

While there are holistic opportunities for an overall net zero impact, such as the Living Building Challenge and Living Community Challenge from the International Living Futures Institute, the focus of this Hub is specifically on net zero or zero net energy (ZNE) buildings and how local governments can expand their role in this growing domain.

Defining ZNE

A ZNE building consumes the same amount of energy that it generates over the course of a year, leading to a net difference of zero. A combination of energy efficiency measures and renewable energy generation are essential to create ZNE buildings – by retrofitting existing building design and operations, and designing and constructing new buildings.

Energy efficiency plays a critical role in achieving ZNE goals, serving as a cost-effective strategy to reduce energy demand, thereby reducing the need for more costly renewable energy infrastructure and generation. The overall energy demand can be offset by integrating passive design strategies, utilizing energy efficient technologies, and motivating occupant behavior and practices. The graph below demonstrates how the reduction of on-site electricity demand is much greater than the increase in renewable energy generation in order to achieve ZNE goals.

A visualization of energy demand vs. supply in a Zero Net Energy building.
Source: Energy Design Resources

As a general concept, ZNE is easy to understand: the amount of energy consumed must equal the amount of energy generated. But in practice, defining ZNE buildings becomes more complicated due to different scopes and requirements for what should be considered as ZNE. It is important to note that State (CEC) and Federal (DOE) definitions for ZNE differ, which may have implications for requirements and certifications.

  • California Energy Commission Definition: The societal value of energy (long-term projected costs of energy including cost of peak demand and other project costs such as the time dependent valuation of energy) consumed by the building over the course of a typical year is less than or equal to the societal value of the on-site renewable energy generated.
  • Department of Energy Definition: An energy-efficient building, campus, portfolio, or community where, on a sourge energy basis, the actual annual delivered energy is less than or equal to the on-site renewable exported energy.

In general, ZNE definitions vary based on:

Type of energy used
An important consideration when defining ZNE is the fuel mix, particularly whether or not to include natural gas. This can impact the feasibility of achieving ZNE goals in the timeline desired, as well as alignment with the concept of total energy neutrality.

Location of renewable energy generation

  • Site ZNE: The amount of energy consumed over one year equals the amount of energy generated by an on-site renewable energy source. The line of transaction is drawn at  building site boundaries, meaning no off-site energy (including renewable energy purchased from a Community Choice Aggregator) can be provided in order for the building to remain ZNE. This definition places a strong emphasis on on-site renewable generation.
    • Pros: Requires 100% renewables and sets highest targets for ZNE performance; easier to measure due to consideration of a closed energy system
    • Cons: More costly to achieve; difficult to implement due to current policy and grid impacts
  • Source ZNE: The amount of energy consumed over one year equals the amount of energy generated by the energy source. Rather than specifying an on-site generation, this definition is much broader to include any energy produced by an off-site provider, and is not limited to renewable energy. The Department of Energy uses this definition.
    • Pros: Allows for greater consistency among policies and makes it easier to achieve ZNE goals
    • Cons: Does not have consistent metrics due to varying energy data calculations across counties and utility jurisdictions; weights all energy sources the same (for example, propane and natural gas); doesn’t address peak energy demand


  • Zero Net Energy Equivalent: Also known as Societal Value or Time Dependent Valuation (TDV) – The societal value of energy consumed over one year equals the societal value of energy generated by on-site energy sources, where the “societal value” of energy is weighted by the time of energy use. Under this definition, energy consumed during peak demand has a higher societal cost than energy consumed during low peak periods. The California Energy Commission uses this definition.
    • Pros: Compatible with Title 24 and Home Energy Rating policies; accounts for different energy sources and demand
    • Cons: Very difficult calculations; requires highly accurate data and real-time energy metering
  • Embedded energy: Also known as embodied energy – The amount of energy consumed by all processes involved in the production of the project, including resource extraction, manufacturing, transportation, and construction. This definition excludes any energy used during operation and maintenance.
  • Life cycle energy: The amount of energy consumed during all stages over the course of a project’s life, from resource extraction and manufacturing through operational use and waste from building materials.

For a building to be ZNE, evaluation must go beyond design and construction to assess performance. Buildings should be evaluated for a minimum of one year to determine whether it is performing at the intended level of energy production and output, taking into account occupancy behaviors.

Additional Resources

It is important to develop your definition of ZNE in tandem with your local ZNE goals and ordinances, as the definition will determine your metrics and measurement needs and will set clear expectations for your team and the public. Jump to Set Your ZNE Definition and Scale in the Hub to determine how to set your ZNE definition and scale in a way that best suits the needs and goals of your jurisdiction.

Policy Drivers

One of the biggest drivers for ZNE has been the goals set by the California Public Utilities Commission (CPUC) in California’s Energy Efficiency Strategic Plan, which was developed in 2008 and updated in 2011. The plan sets targets for:

  • All new residential construction to be ZNE by 2020,
  • All new and 50% of existing state-owned public buildings to be ZNE by 2025, and
  • All new and 50% of existing commercial buildings to be ZNE by 2030.

Working alongside these targets, several other State measures exist to incentivize ZNE, greenhouse gas (GHG) emissions reduction, and energy efficiency within the built environment, which are summarized below:

Year Measure Highlights
2006 AB 32: California Global Warming Solutions Act Requires the state to reduce GHG emissions to 1990 levels by 2020.
2008, updated 2011 Energy Efficiency Strategic Plan
  • Requires all new residential construction ZNE by 2020
  • Requires all new and 50% existing state-owned public buildings ZNE by 2025
  • Requires all new and 50% existing commercial buildings ZNE by 2030
  • Requires 75% of existing homes have a 30% decrease in purchased energy from 2008 levels
  • Requires 25% reduction in plug loads by 2020
2007-2015 AB 1103 Required non-residential building owners to benchmark energy use in advance of sale, lease, financing, or refinancing of whole buildings. Ended December 31, 2015; a new benchmarking program is being developed through AB 802.
2009 AB 758 Requires the CEC to develop a comprehensive program to achieve greater energy efficiency in the state’s existing buildings.
2012 Executive Order B-18-12
  • Requires state agencies, departments, and other entities to reduce GHG emissions by at least 10% by 2015 and 20% by 2020, as measured against a 2010 baseline.
  • Requires all new State buildings and major renovations designed after 2025 be constructed as ZNE facilities (with an interim target for 50% of new facilities designed after 2020 to be ZNE).
  • Requires State Agencies to achieve ZNE in 50% of the square footage of existing state-owned building by 2025.
2013 Updated CA Energy Code (Title 24, Part 6) Requires new homes to be 24% more energy efficient and new commercial buildings to be more 30% more energy efficient. Also requires “solar-ready roofs” for new buildings.
2013 CA Green Building Standards Code (Title 24, Part 11) Used in conjunction with other parts of Title 24 to achieve code compliance and meet minimum standards in 5 areas: planning and design, energy efficiency (Title 24, Part 6), water conservation and efficiency, materials conservation and resource efficiency, environmental quality
2013 Integrated Energy Policy Report The CEC defines ZNE using the 2013 definition of “single project level.” Emphasizes high levels of energy efficiency as a requirement for ZNE.  Each single project seeking development entitlements and building permits would be required to install sufficient renewable energy resources on-site to reduce the TDV energy value of the project to zero.
2014 Nonresidential Building Energy Use Disclosure Program (AB 1103) Mandated benchmarking for existing nonresidential buildings and disclosure of energy use score upon financing, lease, or sale.  Ended December 31, 2015; a new benchmarking program is being developed through AB 802.
2015 Executive Order B-30-15 Establishes a GHG reduction target of 40% below 1990 levels by 2030 and 80% below 1990 levels by 2050.
2015 SB 350/Clean Energy and Pollution Reduction Act of 2015 Requires increase of electricity from renewable sources from 33 to 50% by 2050. Requires double the energy efficiency savings in electricity and natural gas through conservation and energy efficiency.
2015 AB 802
  • Requires the CEC to create a benchmarking and disclosure program for multifamily and commercial building owners to better understand their energy consumption.
  • Requires buildings owners to have access to their energy usage information. The CEC may require submission of demand forecasts, resource plans, market assessments, related outlooks, individual customer historic electric or gas service usage, or both, and individual customer historic billing data, to conduct energy assessments every two years.
2016 Updated CA Energy Code (Title 24, Part 6) Contains various energy and water efficiency requirements, as well as indoor air quality requirements, for newly constructed buildings, additions to existing buildings, and alterations to existing buildings.