Advanced Building Construction (ABC) – A Not Quite “Easy as 1-2-3”
Initiative to Scale Deep Energy Retrofits and Transform U.S. Buildings
Adam Hasz, Nicholas Ryan, and Joan Glickman -- U.S. DOE Building Technologies Office
ABSTRACT
While other industries such as manufacturing and communications have advanced
through digitization and process improvements, productivity in the U.S. construction industry
remains stalled at 1947 levels (Barbosa et al. 2017). Not just a challenge for new construction,
this lagging productivity also limits the growth of deep energy retrofits, which remain slow,
costly, and disruptive. Some energy efficiency proponents believe that the only way to scale
whole building retrofits is through advanced off-site manufacturing of building components
along with streamlined delivery and installation methods. New initiatives like the New York
State Energy Research and Development Authority’s RetrofitNY and the California Energy
Commission’s CalRetro are working to enable this vision of scaled, prefabricated retrofits.
Recognizing that modernizing U.S. buildings is both a challenge and an opportunity, the
U.S. Department of Energy (DOE) Building Technologies Office (BTO) launched the Advanced
Building Construction Initiative (ABC) in 2019 to encourage integration of energy efficiency and
low carbon solutions into broader efforts aimed at transforming the construction industry. ABC
seeks to spur new technologies and approaches that will result in buildings that are (1) designed
for high performance in a changing climate, (2) built or retrofitted quickly with minimum onsite
construction time, and (3) affordable and appealing to building owners, investors, and tenants.
This paper describes ABC’s vision and goals; outlines its core areas of work including
technology R&D, market analysis and development, and stakeholder engagement; provides an
initial prioritization for U.S. building retrofits; and offers recommendations for addressing deep
energy retrofit challenges related to workforce, financing, risk, and market acceptance.
The ABC Initiative’s Vision, Goals & Core Areas of Focus
By integrating highly-productive efficiency solutions into efforts to modernize the
building construction and renovation industries, the Advanced Building Construction Initiative
(ABC) seeks to transform the U.S. building stock into one that is (1) made up of highly
performing new and existing buildings (2) constructed or renovated with minimum onsite
assembly time and disruption, and (3) market viable through affordability and wide appeal to
building owners, investors, and tenants. To realize this vision, ABC focuses on five core areas of
activity: R&D; stakeholder engagement; analysis; market aggregation; and technology scaling.
Figure 1 shows how these areas fit together into the overall ABC Initiative strategic framework.
R&D Investments in New Technologies and Approaches
BTO officially launched its support of technologies and approaches that target ABC
challenges with its FY19 ABC Funding Opportunity Announcement (FOA) (DOE 2019c). The
FOA sought a variety of projects from whole building innovations, new envelope technologies,
and advanced manufacturing to information technology that works across the entire construction
spectrum from design to assembly. Regardless of a project’s specific area of focus, the FOA
encouraged innovations that could offer one or more targeted benefits, including reduced onsite
construction and/or renovation time, lower lifecycle carbon impacts, and greater likelihood that
technologies will be properly installed and reliably reduce building energy use for many years.
In February 2020, BTO selected ABC FOA projects to receive $26 million for R&D
intended to deliver dramatic energy savings while addressing the various needs of owners,
occupants, developers, municipalities, and other stakeholders. The largest topic for this FOA is
retrofit R&D, which is using a phased “down-select” process to initially fund fourteen projects
that offer unconventional approaches to tackling retrofits with a modest phase 1 investment
(approximately $500K). The fourteen teams selected to work on retrofit applications will
compete in a down-select process approximately 18 months after the initial awards. At that time,
the teams will need to demonstrate how their solution – either alone or in concert with other
specific complementary approaches or technologies – will result in meeting the aggressive ABC
retrofit energy target (i.e., 75% less thermal EUI than that of the median buildings of same type
and location). Retrofit projects selected to move onto the second phase will be eligible for
substantially larger financial assistance to cover an additional 3.5-year award period. Other
topics in the FY19 ABC FOA follow a more standard 3-year award term and focus on integrating
efficiency into new construction, including a topic for highly efficient manufactured housing.
ABC Collaborative and Stakeholder Engagement
A critical goal of ABC is to facilitate engagement between researchers, suppliers, and end
users to ensure DOE’s investments and other R&D in the building and construction sector lead to
solutions that resonate with the market. To support DOE with this important work, BTO selected
Rocky Mountain Institute (through the 3a topic area in the FY19 ABC FOA) to lead a project
team charged with establishing and managing a new ABC Collaborative. The Collaborative will
consist of members from a variety of different parts of the construction industry and areas of
expertise (e.g., equipment manufacturers, construction general contractors, researchers, public
and private sector entities with large real estate holdings, and financial institutions, among
others), all dedicated to transforming the U.S. building stock into low carbon, high performance
structures through highly efficient new construction and deep energy retrofits. The Collaborative
will help bridge the gap between innovators and building owners/investors by identifying
industry pain-points and end user interests, encouraging partners to develop the most effective
and efficient solutions, and addressing other barriers to market transformation such as data
consistency, testing protocols, and the need for consistent regulatory approaches.
Strategic Analysis
To help guide innovation toward the most viable market opportunities, ABC will
undertake a variety of analyses including research on building typologies, migration patterns, and
other conditions affecting prospective markets, particularly those factors that are most likely to
affect the suitability of existing buildings for deep energy retrofits. For example, a typology
study could leverage GIS and energy modeling capabilities using a variety of data sources to
provide a deeper understanding of how different types of replacement facades may fare given the
makeup of existing buildings in different potential markets. Other analyses may recommend the
“optimal” conditions (e.g., demographics, property value, state/local/utility incentives) for
focusing on whole building retrofits, HVAC only retrofits, or advanced new construction.
With a focus on reducing the impact of buildings on climate, ABC will encourage
solutions with lower lifecycle carbon impacts – that is, the total GHG emissions associated with
the technology from raw material extraction to manufacturing, distribution, operation, repair, and
disposal/reuse. To ensure that lifecycle carbon can be evaluated consistently and accurately,
BTO has begun working with Argonne National Laboratory to develop methods for calculating
lifecycle energy and carbon associated with new materials not yet included in the various
lifecycle tools already in the market. The Collaborative will be encouraged to reach consensus on
how best to evaluate the lifecycle impacts of all ABC solutions under consideration, including
those technologies developed by FOA awardees.
Market Aggregation
Evidence of sufficient and sustainable market potential is generally a prerequisite to drive
either development of a new product or significant change to an existing one. In the case of
higher risk products, the mere likelihood of market potential is not enough to stimulate
investment. Without aggregated demand and demonstrated commitment to purchase yet-to-be
developed products, innovations like new facades for existing buildings are not likely to scale.
To spur market transformation, the Collaborative will focus significant attention on
aggregating demand and clarifying building owners’ specific requirements for new products.
For example, depending on market analyses and technical solutions, the Collaborative may work
with public housing organizations to create a retrofit demand charter that outlines the prospective
end users’ expectations including specific performance, functional and cost requirements.
Technology Scaling
In addition to aggregating market demand, ABC will work to address barriers that slow
the development and use of new technologies. In coordination with the Collaborative, national
labs and/or private testing organizations will establish testing protocols for laboratory and field
validation to assess a product’s energy performance as well as other requirements such as
durability and ease of installation. The Collaborative will also serve as a sounding board for
technology developers; facilitate connections between industry leaders, technology incubators,
and investors; and assist innovators in developing technology-specific commercialization plans.
Figure 1. The ABC Initiative Framework. Image source: The paper’s authors.
ABC’s Take on Tackling U.S. Retrofit Challenges
In formulating ABC’s strategy for developing and implementing deep energy retrofits for
U.S. buildings, BTO considered five substantial challenges that have hindered retrofits for
decades. Building energy retrofits of any type – let alone ones that deliver deep energy savings –
remain few and far between for a variety of reasons. In summary, whole building retrofits are not
a standard product, lack perceived benefits, and create many hassles to the building owner.
First, as they exist today, whole building retrofits cannot be implemented by deploying a
single product or contract. Unlike most products that consumers purchase and enjoy, a building’s
energy efficiency depends on many different components sold by different entities and installed
by different contractors. Whole building energy efficiency retrofits also require multiple systems
to be taken into account. For example, replacing a building’s windows and adding appropriate
window attachments may improve the lighting of a space (i.e. improved use of daylight), but the
same window retrofit likely will also impact the HVAC system: an optimized retrofit must
consider the interaction between the windows upgrades and the HVAC system performance.
Second, energy efficiency retrofits are typically sold as just that – a “fix” to improve one
or more energy-using systems in the building. They are not bundled with other building
improvements that have value in the market (e.g., residing projects to improve curb aesthetics,
new roofs, remodeling). A holistic approach that ties energy considerations into the overall needs
of the building – resilience, maintenance, aesthetics – has the potential to provide deeper savings
and greater overall value to the building owner and occupants, but this approach requires
additional time, effort, and knowledge on the part of contractors, architects, and building owners.
Bundling energy savings with other upgrades is currently not common in the market.
Third, the benefits of retrofits are often spread among more than one beneficiary. The
primary beneficiary of energy efficiency upgrades in owner-occupied buildings is the building
owner-occupant. But about one-third of homes and an even larger share of commercial space is
renter-occupied, with the tenant often paying the utility bills. Thus the benefits that come from
even cost-effective energy efficiency improvements are spread among both owner and tenant,
while the cost is typically borne just by the owner. Even when a building is owner-occupied,
there are many corollary benefits of energy efficiency (e.g., enhanced grid reliability) which are
not sold as part of the “product.” These external benefits generally do not enter into the
investment decision, in part because the benefits are outside the purview of the building owner.
Fourth, the value proposition for whole building retrofits is not always clear to owners.
Energy-efficiency measures are frequently invisible to consumers (e.g., insulation) and in some
cases are not even in their vernacular (e.g., air sealing). Savings predictions and performance are
not sufficiently reliable, in part due to a workforce that has insufficient expertise in energy
assessments, installation, and operations and maintenance. In new construction, investors and
builders need to know that buyers will pay for efficiency upgrades before they will include them.
With existing buildings, the owner must similarly see that their efficiency investment will pay
off and that they, not ‘free-riders” such as tenants or a utility, will enjoy those benefits, whether
they are reduced energy costs, improved comfort, and/or enhanced property value.
Fifth, current installation practices for deep efficiency products and processes are
typically disruptive. Understandably, this disruption often leads to a reluctance to undergo a
whole building energy retrofit. Whole building deep efficiency retrofits require multiple steps
and invasive, messy installations. These measures can be particularly disruptive when
implemented in existing, occupied buildings, leading to inconvenience and/or loss of commercial
activity. To tap into the potential that buildings hold in terms of deep energy savings, home and
building owners need new alternatives for retrofits—options that are more affordable, much less
disruptive, and offer corollary benefits such as improved aesthetics and resilience.
Status Quo Won’t Address Climate Needs; Historic Activities Suggest Breadth is Possible
To achieve the global climate target of net-zero emissions by 2050 that is recommended
in the latest IPCC Climate Change report (Allen et al. 2018), approximately 4 million buildings
in the U.S.– or about 3.3% of the existing stock – would need net-zero carbon retrofits each year
for the next 30 years. Even under less aggressive climate goals, the current rate of retrofits would
do little to reduce the carbon associated with our nation’s 124 million homes and buildings.
Utility sponsors of Home Performance with Energy Star (HPWES), the EPA/DOE
voluntary labeling program, completed ~85,000 retrofits in 2018 (Dunn 2019). The U.S. DOE
Weatherization Assistance Program (WAP) completes ~35,000 retrofits per year for low-income
households (DOE 2019d). Taken together these two programs only reach 120,000 homes in a
typical year, less than one tenth of one percent of the existing building stock. The individual
building energy savings results are also inadequate, with HPWES sponsors reporting typical
savings of 25% and WAP yielding typical savings of 18%. As a point of contrast, ultra-low
energy buildings in line with net-zero performance require 50-90% savings (Amann 2017).
While still not sufficient, the commercial sector comes much closer than the residential
sector in terms of the amount of building space retrofitted each year – reaching about 2.2% of
total commercial floor area. (Ibid). However, the average commercial retrofit only achieves 11%
energy savings (Kawatra and Essig 2014). In fact, an ACEEE compilation effort found that less
than 100 hundred buildings nationwide (about 70) were considered “ultra-low energy” after
completing a retrofit, defined by documented energy savings greater than 50% (Amann 2017).
While current retrofit programs do not match the scale required, former retrofit programs
and recent home-improvement statistics show that it is possible to reach a far greater number of
buildings each year. During the height of the 2009 ARRA $5 billion stimulus increase for WAP,
DOE weatherized 332,000 homes per year during a 3-year period (Tonn et al. 2015). While this
is three times the current rate of retrofits, the savings realized was still far too low per building,
with an average of only 15% savings. Remodeling statistics show that millions of households
replace roofing, siding, and HVAC equipment each year (Harvard 2020), suggesting that deep
retrofits could possibly scale if efficiency measures were included part of these purchases.
Finally, the rapid growth of the solar market over the past decade led to 320,000 home solar
installations per year in 2019, with 500,000 home solar systems originally projected to be
installed in 2020 prior to the pandemic and the associated economic slowdown (SEIA 2019).
These statistics are shown for comparison with numbers for HPWES and WAP in Table 1 below.
Table 1. Summary of statistics for retrofit programs and comparable residential installations
HPWES1
WAP2
ARRA3
Roofing4
Siding4
HVAC4
Res Solar5,6
Retrofits per year
85,000
35,000
332,000
3,383,000
968,000
3,819,000
320,000
*
0.07%
0.03%
0.28%
2.87%
0.82%
3.24%
0.27%
$5,500
$4,695
$6,812
$7,674
$5,054
$5,878
$23,616
% of homes/year
Avg. $ per retrofit
25%
18%
15%
no data
no data
no data
varies
Avg. % saving
Data sources: 1 Dunn 2019; 2 DOE 2019d; 3 Tonn et al. 2015; 4 Harvard 2019; 5 SEIA 2019; 6 HomeAdvisor 2020.
* Calculated from a percentage of the total 118 million housing units included in EIA RECS 2015.
ABC Aims for 75% Less Thermal Loads in Most Residential and Commercial Buildings
ABC seeks a variety of solutions to address the aforementioned challenges and to meet
the needs of different building types across the United States. One of the most promising options
for scaling deep retrofits is prefabricated solutions with streamlined delivery and installation
methods targeted for specific building types within specific climate zones.
At least at the onset, prefabricated retrofit technologies will be best suited to buildings
with relatively simple geometries and high thermal energy loads. ABC defines “thermal loads”
as energy used to provide four key functions for buildings: space heating, space cooling, water
heating, and ventilation. The efficiency of these four thermal loads is affected by the quality and
interaction of a building’s envelope systems and HVAC mechanical equipment. With this in
mind, BTO set a goal for ABC retrofit packages to achieve a 75% reduction in thermal loads.
ABC’s approach was in part inspired by the Energiesprong Initiative from the
Netherlands, which initially developed retrofit packages for simple two story row houses, four
story flats, and six to eight story flats (Energiesprong 2016). These building types all have high
thermal loads, simple geometries, and masonry construction that can support the weight of nonstructural insulating exterior wall panels. These attributes allowed Energiesprong to design and
demonstrate net-zero energy retrofits that required less than a week of onsite construction work.
These three building types are also common within social housing portfolios, which
Energiesprong found easier to aggregate than privately-owned buildings. While prioritizing
Dutch buildings for retrofit designs, Energiesprong considered ownership structure, ease of
financing, and the availability of subsidies in addition to the building's physical features.
Figure 2. The Energiesprong Transition Zero program initially targeted three simple building types: row
houses, four story flats, and six to eight story flats. Source: Energiesprong 2016.
ABC will undertake a typology study and other analyses to help identify and prioritize
the U.S. building types that are best suited for prefabricated retrofits. As a preliminary first step,
the ABC team created a rough suitability assessment of eight common building types:
● Single-family detached – difficult geometries, hard to finance, but largest type in the U.S.
● Single-family attached – simple geometries, a primary Energiesprong retrofit target
● 2-4 unit multifamily – generally simple geometries, split-incentives can be challenging
● 5+ multifamily buildings – generally simple geometries, easier to finance because of size
● Commercial office – simple geometries, but curtain-walls can be challenging to retrofit
● Education – generally simple geometries, but finance options vary district by district
● Mercantile – strip malls and big box stores are simple, but split-incentive challenges
● Commercial lodging – simple geometries and easy ownership model, but small in number
Energy usage in existing U.S. buildings (from RECS 2015 and CBECS 2012)
Depending on building type and climate
zone, different retrofit packages will be needed to
achieve the ABC retrofit energy goal of a 75%
reduction in thermal loads. To better understand
these differences, this section explores existing
energy usage in the eight aforementioned common
building types within the five primary Building
America climate zones shown in Figure 3:
Figure 3. Building America climate zones.
Cold / Very Cold, Mixed-Humid, Hot-Humid,
Source: Baechler et al. 2010.
Hot-Dry/Mixed-Dry, and Marine.
Table 2 shows the number of buildings for each building type by climate zone. The table
shows that 65% of these buildings are found in Cold / Very Cold and Mixed-Humid climates,
with single-family detached homes making up the vast majority of buildings.
Table 2. Number of buildings for common types and by climate zone (in thousands)
Most common buildings that can likely utilize ABC retrofit technologies are found in the Cold / Very Cold
and Mixed-Humid climate zones. Data sources: EIA RECS 2015 and EIA CBECS 2012 microdata.
However, the number of buildings may not be the most important metric to consider.
Because ABC aims to dramatically reduce energy consumption and carbon emissions, a more
useful way to understand the current U.S. building stock is to analyze site energy consumption
for the four thermal energy end-uses: space heating, space cooling, water heating, and
ventilation. Figure 3 below shows the total national energy site usage by energy source for the
four key ABC thermal end uses, allocated across the eight common building types and five
climate zones. The “Other ABC Residential” category includes all energy use in single family
attached, 2-4 unit multifamily, and 5+ multifamily buildings. The “ABC Commercial” category
includes all energy use in Office, Educational, Mercantile, and Commercial Lodging buildings.
Figure 4. National site energy consumed for thermal loads (space heating, space cooling, water
heating, and ventilation). Data sources: EIA RECS 2015 and EIA CBECS 2012 microdata.
The data underlying Figure 4 shows that for these common building types, buildings in
the Cold / Very Cold climate zone consume 47% of national site energy use for ABC thermal
end uses, followed by Mixed-Humid (30%), Hot-Humid (13%), Hot-Dry/Mixed-Dry (7%), and
Marine (4%). The data also shows that direct fossil-fuel combustion (as displayed from gas in
light blue, oil in orange, and propane in grey) in the Cold /Very Cold and Mixed-Humid climate
zones makes up 55% of all ABC end use energy for these common buildings. Therefore, from a
“potential impact” perspective, these two climate zones hold promise for simultaneously tackling
the source of the majority of ABC end use energy consumption and site carbon emissions.
Targeting Older Buildings with High Carbon Fuels in Cold and Mixed Climate Zones
Data from the RECS 2015 and CBECS 2012 surveys also shows that older buildings
constructed before 1980 generally consume more energy per unit of floor area than newer
buildings. Figure 5 shows the Energy Use Intensity (EUI) for thermal loads for the eight
common building types in the Cold / Very Cold climate zone. While not displayed, the data for
other climate zones behaves similarly to the trends of EUI for thermal loads in the graph.
Figure 5. Energy use intensity for thermal loads in the Cold / Very Cold climate zone.
Data sources: EIA RECS 2015 and EIA CBECS 2012 microdata.
Based on this preliminary analysis, when considered together Table 2 and Figures 4 - 5
suggest that ABC can have the most impact by initially targeting older buildings in the Cold and
Mixed-Humid climate zones. Buildings constructed prior to 1980 are more likely to lack a wellsealed and well-insulated building envelope, as the first Model Energy Code was not created
until 1983 (DOE 2020e). Furthermore, many of the older buildings in these two climate zones
still use high carbon and inefficient heating fuels like fuel oil, propane, and electric resistance.
There are more than 30 million buildings older than 1980 in the Cold / Very and MixedHumid climate zones, or more than a quarter of all of the buildings in the United States. Table 3
below provides more details on the proportion of national buildings of a particular common type
that were constructed prior to 1980, are located in these climate zones, and use carbon-intensive
heat sources. For example, 34 percent of all U.S. single family homes were built prior to 1980,
use a carbon intensive heat source, and are located in the Cold or Mixed-Humid climate zones.
That 34% is the sum of 6% of older homes in those climate zones that use oil/propane, 4% that
use electric resistance, and 24% that use natural gas. For every common building type, older
buildings in the Cold and Mixed-Humid climates represent at least 25% of their national total.
Table 3. % national buildings in Cold and Mixed-Humid zones that are older than 1980
Fuel Oil /
Propane
Electric
(no HPs)
Natural
Gas
% of U.S.
bldg. type
Single Fam
Row Homes
2-4 unit
5+ unit
Lodging
Office
Education
Retail
6.0%
1.6%
5.7%
3.8%
0.2%
2.8%
4.2%
5.6%
3.8%
6.3%
12.5%
9.1%
12.8%
8.8%
4.0%
7.4%
24.4%
26.4%
33.1%
20.5%
12.5%
21.3%
17.3%
21.8%
34.2%
34.3%
51.3%
33.3%
25.5%
32.9%
25.5%
34.8%
Percentages are calculated by dividing the number of buildings in the Cold and Mixed-Humid zones with a
given characteristic (e.g., the 4.4 million single-family detached homes in the Cold and Mixed-Humid zones that use
fuel oil/propane heating) divided by the total number of homes in that national market segment (e.g., all of the 73.9
million single-family detached homes in the U.S.) Data sources: EIA RECS 2015 and EIA CBECS 2012 microdata.
Paying for ABC Retrofits -- Monetizing Deep Energy Savings Over 30 Years
Every year, Americans spend over $380 billion on energy used in U.S. buildings
(Nemtzow 2019). BTO often frames its energy efficiency interventions in terms of reducing this
energy bill burden. For example, the ABC FOA language references a potential for “$80 billion
in savings” if efficiency technologies could reduce national energy usage for buildings by 20%.
However, energy bill reductions can also be seen as future cash flows that can be monetized to
pay for retrofit costs. If this financing were to be applied for deep efficiency measures over 20 to
30 years, many measures not considered economic today would become financially attractive.
Financing for energy efficiency is not new, and it has been widely used in commercial
buildings via energy service performance contracts. However, such financing has rarely been
applied to deep energy retrofits because of the long periods needed for a positive return on
investment. Furthermore, the fragmented residential sector is typically overlooked in terms of
energy service performance contracts. Yet the financing potentially available from long-term
efficiency savings is substantial. Analysis from the Rocky Mountain Institute shown in Figure 6
found that for inefficient multifamily housing units in Cold / Very Cold and Mixed-Humid
climates, the net present value of 20 years of energy bills is more than $30,000. When considered
over 30 years, the net present value for these energy bills is nearly $45,000 (Vaughn 2016).
Figure 6. Net present value of energy bills for multifamily housing units over 20 and 30 years
given a 4% discount rate. Image and analysis source: Vaughn 2016.
Figure 7 shows the Energiesprong approach for financing deep energy retrofits. Each
Energiesprong retrofit includes an energy performance guarantee for 30 years or more, giving
lenders confidence in the long-term performance. Energy bills are also converted into an “energy
plan” that is bundled with rent payments to the housing association; this new combined monthly
energy and rental fee covers payments for the loan that paid for the retrofit (Jacobs 2015).
Figure 7. Energiesprong turns energy bills into an “energy plan” that is bundled with rent to
pay back the cost of building retrofits over 30 years. Image source: Jacobs 2015.
What would the value of these 30-year Energiesprong financing plans be at scale in the
United States? As an initial back-of-the-envelope estimation, based on assuming ABC’s 75%
energy savings target multiplied by RMI’s estimate of $45,000 for the net present value of 30
years of bills in inefficient multifamily units in the Cold and Mixed-Humid climate zones, a
retrofit of a single housing unit would result in roughly $30,000 in bill savings over a 30-year
period (75% x $45,000 = $33,750, rounded down to $30,000). The estimated value available for
common building types older than 1980 in Cold and Mixed-humid climates is shown in Table 4.
These numbers are conservative, as the potential bill savings for multifamily buildings, lodging,
offices, education, and retail buildings should be far greater than for a single housing unit.
Table 4. Estimated 30-year net present value of energy savings available from ABC deep
retrofits in buildings older than 1980, in Cold and Mixed Humid Climates (billions of $)
Fuel Oil/
Propane
Electric
(no HPs)
Natural
Gas
Total
Single
Family
Row
Homes
2-4 unit
5+ unit
Office
Education
Retail
$132
$3
$5
$2
$1
$0
$1
$84
$13
$12
$5
$3
$0
$1
$542
$56
$31
$10
$6
$2
$4
$758
$72
$48
$17
$10
$3
$6
Data sources: Author calculations, derived by multiplying $30,000 by the buildings in each category.
When summed, these rough calculations show that $915 billion is potentially available
for 30-year Energiesprong-type deep energy retrofit financing for the 30.5 million older
buildings in Cold and Mixed-Humid climates. At a retrofit rate of 3.3% of the building stock per
year, approximately 4 million retrofits annually could attract more than $120 billion in annual
investment -- potentially paid for through future guaranteed energy bill savings. For comparison,
utilities only spent $8 billion on energy efficiency programs in 2018 (ACEEE 2019).
ABC Strategy for Retrofits: Cost Compression Now, Scaling during the 2030s
In order to meet global climate goals, the U.S. needs to complete approximately 4 million
net zero carbon retrofits each year. Unfortunately, the U.S. does not currently have the designs,
technologies, supply chains, or skilled workforce needed to retrofit 4 million buildings in 2020.
While this is an impossibility today, it is somewhat plausible to envision a pathway where the
United States develops the necessary designs, technologies, supply chains, and workforce to
scale retrofits to 4 million per year starting in the 2030s. That is the vision of the ABC Initiative.
Rooftop solar PV installations followed a
similar (albeit slightly longer) path to scaling. In
2001, there were just 1,000 solar installations
nationwide. Yet by 2009 there were 100,000, by
2016 there were 1 million, and by 2019 there were 2
million total installations. Rapid growth is expected
to continue, with 4 million total PV systems
Figure 7. Solar PV growth. Source: SEIA 2019.
installed in the U.S. by 2023 (SEIA 2020).
The key to the rapid growth of rooftop solar PV was cost compression. According to
NREL’s Solar PV Cost Benchmark study, the installed cost of residential rooftop PV declined
from $7.34 per Watt of DC capacity in 2010 to just $2.70 per Watt in 2018, a 63% cost decline
(Fu et al. 2018). Commercial and utility scale solar PV installation costs experienced even
greater cost declines, decreasing by 66% and 77% respectively between 2010 and 2018. As costs
declined, the volume of solar PV deployed grew exponentially across all market segments.
Figure 8. Cost declines in solar PV by market segment. Image source: Fu et al. 2018.
Solar PV cost compression was an intentional strategy pursued by the U.S. Department of
Energy. In early 2011, Secretary of Energy Steven Chu announced the “SunShot Initiative,” with
a goal of reducing solar PV costs by 75% by 2020 in order to make PV cost competitive with
other forms of electricity generation (DOE 2011). SunShot developed a comprehensive strategy
with four R&D pillars for reducing costs: solar cell technologies, electronics, manufacturing
processes, and the installation, permitting, and design of solar systems. With this guiding
framework, DOE invested hundreds of millions of dollars and produced dozens of reports,
including cost benchmark studies that tracked cost declines year by year. In September 2017,
DOE announced it had achieved the original SunShot cost goals – 3 years ahead of schedule.
There are obviously many differences between solar PV systems and ABC retrofits. Our
reference of the SunShot Initiative is not meant to serve as a perfect comparison, but rather as an
inspiration. Other clean technologies like LEDs, lithium-ion batteries, and wind-turbines have
followed similar cost compression driven growth. If we methodically address the technical and
“soft cost” challenges of prefabricated retrofits, we believe that we can drive similar cost
compression achievements and eventually create exponential growth for ABC retrofits.
While there are currently few examples of ABC-type retrofit projects in North America,
those that do exist have required substantial subsidies. As one example, the RetrofitNY Initiative
from NYSERDA provided up to $40,000 in subsidy per dwelling unit in order for design teams
to achieve whole building retrofit performance that approached net zero (NYSERDA 2018). Our
goal is to systematically reduce the various components of retrofit costs, including “hard” supply
costs like equipment and labor as well as “soft” costs like financing and customer acquisition.
Figure 9 provides a simple illustration of cost compression to achieve “zero extra cost” beyond a
business as usual retrofit, along with a few examples of how to compress costs. We are hopeful
that new technologies, innovative approaches, and scaled-up demand can reduce costs to roughly
$30,000 per unit, which aligns with our rough calculation above of the present-value of thirty
years of bill savings achieved through ABC upgrades of inefficient multifamily housing units.
Figure 9. The ABC Cost Compression Goal for 2030. Image inspiration: Salzmann 2018.
Even if ABC drives the cost of improvements down substantially, consumers will still
need to be convinced of the value of such improvements. For many, simply having an ensured
payback on investment with energy savings is not enough inducement to act. Therefore, ABC is
considering other ways to demonstrate even greater value -- whether through aesthetic appeal or
increased resilience or some other desirable feature. ABC recognizes that as much as true
believers want to sell energy efficiency, it has not been a sought-after commodity. ABC aims to
create and deliver a commodity that people want -- that just so happens to be ultra-efficient.
Conclusion: The ABC Initiative Can Accelerate Progress on Deep Energy Retrofits
To achieve net-zero emissions by 2050, the U.S. needs a much more effective approach
to curtail the energy wasted by the nation’s more than 120 million homes and buildings. Current
retrofits are too complex, not deep enough, and not offered as part of an attractive, value-driven
product. Most building retrofits consist of simply replacing equipment upon failure; some go a
bit further by adding insulation or doing air sealing, but even these are often just band-aids that
do not deliver significant energy savings or improved comfort. While deep retrofits with major
overhauls are possible, they are too expensive and burdensome to appeal to most consumers.
Making superior energy performance ubiquitous in new construction is simpler than
doing so for existing buildings, but it is certainly not guaranteed. The U.S. construction sector is
still plagued by lagging productivity, which directly increases costs and contributes to the
nation’s affordable housing crisis (Barbosa et al. 2017). However, some progress is underway in
new construction as leading companies employ off-site manufacturing of building components
with streamlined delivery and installation methods. Venture capital firms and leading technology
companies have also begun to invest heavily in startups developing off-site “disruptive
innovations” that shift construction from the building site to the factory. Through advanced
building construction techniques like off-site manufacturing, robotics, and digitization of
building design and construction processes, these leading companies have demonstrated that offsite new construction can be completed up to 50% faster and at 20% lower cost (Ibid).
Unfortunately, the innovation and venture capital investment that is transforming the U.S.
construction sector has thus far done very little to transform the country’s approach to retrofits.
In large part, we think that there is a simple reason for the lack of progress in improving retrofits:
deep energy retrofits are more difficult than constructing new buildings! Without easy ways to
retrofit their buildings, owners are understandably hesitant to invest their time or money in
laborious approaches simply to realize deeper energy savings. Without a clear source of
consistent demand, retrofit equipment manufacturers and general contractors are reluctant to
invest in new advanced deep energy retrofit products or approaches. To break this impasse, we
believe the public sector needs to fund R&D and help to reduce risks for equipment providers,
installers, and owners who are early adopters for new retrofit technologies.
Ultimately, the U.S. Department of Energy’s Advanced Building Construction Initiative
seeks to ensure that ongoing innovation in the new construction industry and public-sector driven
innovation for deep energy retrofit approaches can combine to drive market transformation for
how the U.S. approaches retrofitting existing buildings. If successful, ABC will develop and
scale new retrofit technologies that can be deployed quickly with minimal onsite construction
time, are affordable and appealing to the market, and leverage related efforts to increase the
productivity of the construction industry. ABC will achieve these goals by funding R&D,
coordinating building sector stakeholders to tackle related challenges through its Collaborative,
and by supporting further strategic analysis, marking scaling, and technology scaling activities.
The U.S. Department of Energy is not alone in this public-sector endeavor. DOE is
working closely with partners at the New York State Energy Research and Development
Authority (NYSERDA) and the California Energy Commission (CEC), who are funding similar
deep energy retrofit programs called RetrofitNY and CalRetro respectively (NYSERDA 2018,
Brooks 2019). By coordinating with these state-level efforts via its Collaborative, ABC will
foster relationships between technology developers, large scale building owners, investors, and
others so that end products are valued in marketplaces throughout the country. The Collaborative
will work to aggregate demand for high value, appealing retrofits and provide the necessary
signals to investors and manufacturers to innovate, produce, and deliver solutions.
The combination of public sector investment in R&D and facilitated market aggregation
is essential to reduce risks for equipment providers, installers, and owners who want to be early
adopters for new ABC retrofit technologies and approaches. By working with stakeholders from
across the buildings industry, the ABC Initiative will ensure that greater construction and
renovation productivity also leads to retrofits that are smarter, healthier, more sustainable, more
resilient, and more responsive to the needs of their occupants, the nation, and the world.
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