California has moved one step closer to making one of its "big, bold energy-efficiency strategies" outlined seven years ago a reality.

The California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) have launched a residential Zero Net Energy Action Plan to build a self-sustaining market for all new homes to be net-zero energy by 2020.

“Zero Net Energy has been a vision for California for nearly 10 years, and with this industry-supported Action Plan, we are now ready to make that vision a reality with feasible, market-driven concepts to transform the new residential housing market,” CPUC Commissioner Carla J. Peterman said in a statement. 

Zero-net-energy buildings produce as much energy as they consume, usually through a mix of high efficiency and clean onsite generation. The definition requires that a home create as much energy as it uses over the course of an entire year, rather than on a real-time basis.

In California, homes consume nearly one-third of the energy used in the state. It’s not just single-family homes that California is trying to reinvent. The action plan also applies to multifamily homes of less than three stories and low-income housing.

While the prospect of being able to develop net-zero, or passive, homes is increasingly realistic due to falling prices for solar and the increased efficiency of many household appliances, it's still not easy. The U.K. had a goal for all new homes to be net-zero by 2016, but ditched that effort a few years ago due to a political shift. 

"It’s an audacious goal," said Cathy Fogel, senior analyst at the CPUC and Zero Net Energy project lead. "We’re going to give it our best shot."

California thinks it will have better luck by bringing all stakeholders to the table from the start, including utilities, homebuilders, trade associations, engineers and architects. The new action plan calls for designers and developers to have a suite of technical tools available by mid-2016 to bring zero-net-energy, or ZNE, homes to market. By the end of next year, the plan calls for a systematic way to value these homes to give guidance to underwriters and financial institutions. At this time, Fogel said they could use more underwriter and financial institutions getting involved in the process. 

In the next two years, California expects to see a 5 percent to 10 percent decrease in the cost of implementing ZNE homes. The short-term focus is around the building envelope, including better insulation and framing techniques. The goal is to educate builders and have some of these techniques become part of the building code in 2019. 

Currently, ZNE homes account for less than 1 percent of new homes built in California, according to Fogel. But beginning in 2017, California expects to see upward of 10,000 new homes that are net-zero, a figure that is expected to rise substantially between 2019 and 2020. By 2020, the hope is that the state’s Codes and Standards board will regulate ZNE homes.

As with any ambitious project, the devil is in the details. The action plan states that homes can be ZNE-ready, rather than actually being energy-neutral. That could mean they are solar-ready, for instance, but perhaps don't have solar panels already installed. In California, however, at least one city, Lancaster, has already mandated that homes of a certain size must come with solar panels.

The most complex issue will be valuing the homes, which will cost more upfront. Currently, the CPUC is quoting an extra $2 to $8 per square foot after incentives. There will likely need to be incentives or creative utility billing, especially if the homes are providing demand-side services as the CPUC envisions. The CPUC says that the utilities are on board and will have to evaluate locational benefits of having net-zero homes on the system. 

There is another question of what the homes would require in order to be beneficial to the utility, such as smart inverters, or two-way thermostats for demand response. The CPUC has also called energy storage a critical component of ZNE, but the specifics of sizing energy storage to help meet a home’s energy demand, while also not oversizing it to keep costs down, will be crucial.

Beyond power generation, there is also an issue of energy use. The homes can have high-efficiency heating and cooling, which is the biggest energy user in the home, but the fastest-growing segment of energy use is plug loads. For high-efficiency homes, plug load may represent up to 60 percent of a home's energy use, says Fogel. The CPUC is working with OEMs and chip manufacturers to try to reduce the energy needs of individual devices, and the state could strengthen efficiency mandates further for certain items, such as set-top boxes. 

Ideally, net-zero homes would also have energy management systems to dynamically control energy loads such as lights and thermostats, but also potentially to shut off plug loads when they’re not in use.

While the net-zero concept focuses on energy in this action plan, many stakeholders have also brought up the question of other sustainability issues, such as water efficiency and land-use impacts. Despite the ongoing drought in California, water efficiency measures are only mentioned in the action plan with the word “eventually” beforehand. Fogel said that since the plan was originally filed in 2014, water efficiency has become more of a focus, and it will be increasingly addressed through building codes. 

The CPUC held a public workshop on Wednesday and encourages any interested stakeholders to get involved. One of the biggest challenges, however, will be educating the public until they clamor for more efficient homes. "We hear from builders that they need to see more demand," said Fogel. "But the [California] Energy Commission is committed to carrying it as far as it can."