Design of Financial Incentive Programs to Promote Net Zero Energy Buildings

Promoting net zero energy buildings (NZEB) is among the key carbon emissions reduction approaches widely adopted by policymakers in recent years in the U.S. and the EU countries (see work of Marszal ). Due to the relatively higher cost of electricity generation from renewable energy (RE), federal, state, and local governments offer various financial incentive programs to promote NZEB. This paper presents a model-based framework for the policymakers to design suitable incentive programs. The model is a mixed integer program (MIP) that is particularized for wind and solar energy sources. The MIP model finds an optimal design for a NZEB. The optimal design and the cost of NZEB is then used to design incentive programs. The incentive programs considered includes loans, production tax credit, and net metering, among others. A time-of-day pricing is assumed to be in effect. The model is implemented on commercial buildings in Tampa, Florida, U.S.A. For a given region, the framework provides policymakers two reports, 1) a set of optimal portfolios of incentives for different classes of commercial buildings (based on credit rating, expected return on investment (ROI), and building type), 2) for a specified portfolio of incentives, determines which classes of commercial buildings will be willing to invest in RE.