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Zero Energy Buildings: What are They?

Victor Garcia via Unsplash


Zero Energy Buildings, or ZEBs, have increasingly gained traction in the past decade. In Europe, there’s also a type of building called a NZEB (nearly zero-energy building), which describes a building that is in the works toward a zero-energy footprint but has yet to achieve it. The latest revision of the MuKEn (Mustervorschriften der Kantone im Energiebereich), written in 2014, has a goal that new buildings in Switzerland need to be NZEBs. Clearly this market is not stopping anything soon, especially as countries transition to more sustainable practices. Every type of green real estate can contribute to carbon reduction initiatives, however ZEBs can easily make the most impact, both on environment and cost-savings.

How do Zero Energy Buildings work?

A ZEB is an energy-efficient building that produces an amount of onsite energy that is equivalent or greater than the energy it requires for utilities, as well as the energy losses from the respective generation and transmission. For example, rather than using carbon-based energy from the regional utility grid, a zero-energy building would produce its own energy using renewable systems, for example, solar, wind, or geothermal. These buildings are gaining momentum due to the increased corporate commitments to sustainability along with the increase in environmental impact regulatory mandates. The three institutions that certify ZEBs are the U.S. Green Building Council’s LEED Zero, the International Living Future Institute: Zero Energy, and the New Buildings Institute.

Environmental Impact

Reducing carbon footprints, especially in real estate, is important for the future of climate change mitigation. Not only are ZEBs environmentally responsible, but they also can have a net positive impact on the environment. Many ZEBs have energy storage capabilities, which means that the renewable energy source used to operate the ZEB not only reduces the carbon footprint of its primary building, but can also help to power nearby buildings with its surplus energy. Although ZEBs are quite a small sector in the market as a whole, as they increase in popularity and applications, their impact will be exponential. ZEBs have the potential to dramatically shift a city’s energy use and their subsequent carbon footprint.

Cost Savings

The cost savings for owners of zero energy buildings are a large incentive for taking on the upfront cost of implementing the required features for zero energy buildings. ZEBs often incur slightly more building costs than conventional homes and buildings. A recent Rocky Mountain Institute study found that a standard zero energy home costs, on average, 7.3% more to build. However as time passes, costs tend to go down. A study by the U.S. Green Building Council uncovered that zero-energy designs could not only reduce building energy use by 44–56%, but also discount total building costs, mortgage, energy, and other costs, by 0.3–9.8% over 30 years.

Vivint Solar via Unsplash

Cost of Capital

On top of the cost savings incurred by the energy production, ZEBs often qualify for financial incentives issued by the government such as tax reductions or subsidies. ZEBs often qualify for better refinancing and loan opportunities. There are various energy-efficient financing programs available to infrastructure like ZEBs, many of them including energy-efficient mortgages. This is usually based off of a home energy rating, which can be conducted by an energy audit. ZEBs tend to score relatively high to their retrofitted counterparts.


ZEBs are here to stay and will continue to gain popularity due to their ability to impose little to no impact on the environment while also saving building and homeowners substantial sums on their operating costs. These buildings are great investments for individuals, pension funds, and family offices looking to be more environmentally responsible while running profitable operations. When thinking about the future of the sustainability movement, ZEBs are a critical part of this transition, especially towards a more sustainable real estate market which accounts for 40% of the carbon emissions. As more countries put out initiatives to require the integration of ZEB into real estate, the market for these cost-saving, environmentally-friendly buildings will only continue to grow.



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