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Integrating Energy Efficiency Strategies and Distributed Energy Resources into Industrialized Construction

NREL is leveraging the benefits of industrialized construction—higher-quality buildings, faster construction timelines, improved productivity, increased technology integration, and labor cost savings—to enable cost-effective strategies for energy efficiency, integrated grid-interactive controls, and renewables.

Inside a large factory with several modular building units being built.
NREL is partnering with startups like Blokable Inc. bring more affordable, energy-efficient housing to market by optimizing off-site industrialized construction techniques. Photo by Ankur Podder, NREL

The goal of this research is to achieve optimal integration of energy efficiency strategies and control systems through advanced manufacturing with little or no additional cost. To accomplish this, NREL is engaging with building manufacturers, developers, and permanent modular construction factories to overcome barriers of cost, construction speed, and limited labor expertise. Considering the constant changes and evolution happening in the industry, sharing research and knowledge is important for improving industry best practices.

Project Scope

NREL is focusing on a three-year project aimed at achieving zero energy ready buildings through cost-effective advanced manufacturing. Building manufacturers, developers, and prefabrication factory operators are encouraged to participate across all three years.

  • Year 1: Assess factory-standard processes and baseline measurements
  • Year 2: Develop prototype(s) that will be validated with partners
  • Year 3: Evaluate new product(s) at complete building/production scale to ensure success

As part of this work, NREL is addressing barriers to system integration, such as:

  • Problematic on-site installation, commissioning, and configuration of controls
  • Poor installation quality of thermal and air barriers
  • Lack of integrated, modularized plug-in solutions for heating, ventilating, and air-conditioning (HVAC) systems and domestic hot water
  • Lack of cost-effective integration for grid-friendly design and emerging technologies.

A related key effort is developing automated processes for factory construction and on-site module assembly. NREL is also exploring automated quality-check and quality-assurance methods and processes by using building information models, building energy models, and factory information models.

The benefits of advanced manufacturing are well suited for technology integration and mixed-use urban/suburban environments. The integration and process-improvement outcomes of this project can be applied to:

  • Multifamily apartments/condos (e.g., affordable housing, senior care, and market-rate apartments.)
  • Hotels
  • Student housing
  • Barracks
  • Retrofit packages (e.g., envelope panels and integrated HVAC solutions).


Advanced automated construction is growing, given its potential for higher quality, lower costs, and increased productivity. By tapping into proven advanced manufacturing control system successes in other industries (e.g., automotive and aviation), the building industry can collectively:

  • Reduce financial risks, decrease costs, fast-track occupancy rates, and accelerate overall return on investment
  • Reduce building energy consumption considerably
  • Take advantage of full, seamless technology integration
  • Be less susceptible to labor shortages
  • Fulfill building needs, such as the need for multifamily and affordable housing.


Factory-built modular apartments are often much higher quality because construction materials never see the outdoor environment. Factory quality controls also mean efficiency strategies are installed per specifications—insulation is quality installed, and advanced strategies that require additional expertise can be installed with higher confidence than at site-built projects. Additional efficiency costs can also be managed by factory assembly line mass production.

Industrialized construction is 40%–50% faster than building from the ground up. Developers and contractors can assemble permanent, volumetric modular, fully furnished units in factories around the United States and ship them to the site ready to install. In fact, up to 95% of construction is possible in off-site factory-built environments. Shorter project completion time reduces costs and fast-tracks occupancy rates, accelerating overall return on investment.

Energy Efficiency

Roughly 38 million people live in multifamily buildings in the United States, and according to the Institute for Market Transformation, efficiency efforts in these buildings could save $3.4 billion annually. The energy savings opportunity of this project is zero energy ready multifamily buildings, with a potential of 50% energy savings over code-minimum new construction and 45% savings in deep retrofits paired with planned renovations. Manufactures such as iUNIT and Champion Modular Commercial have proved that it is possible to build new apartments to 50% energy savings compared with typical code-compliant buildings. Considering that more than 40% of new commercial construction in 2017 was multifamily units, and with a planned renovation of 57% of the existing apartment building stock over the next 15 years, there is the potential to save about 0.057 quads annually and about 0.86 quads over the next 15 years.

Meeting Demand: Multifamily Housing, Affordable Housing

Although there are 20.4 million apartments today, the United States needs to add 4.6 million units over the next 15 years to meet growing demand. Roughly 100,000 units are eliminated every year because of aging, obsolescence, and other factors. Of the units lost, most are at the lower end of the market, disproportionately hurting the number of affordable housing units. The reduced production and assembly costs of prefabricated multifamily building manufacturing can result in lower-cost housing options, increasing the affordable housing stock.

Job Security, Growth

Urban areas most need cost-effective apartments to accommodate growth in U.S. cities. Meanwhile, many of the modular factories in the United States are in industrial and rural areas needing to revitalize their manufacturing base. There are simply not enough workers to construct the number of multifamily buildings needed as urban areas grow. In Colorado alone, it is expected that 60,000 construction jobs will be unfilled by 2025. Increased prefabricated building manufacturing can help close this gap.

Project Initiatives

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See how NREL's industrialized construction researchers are integrating energy efficiency strategies into the permanent modular construction industry.

NREL's industrialized construction experts are currently conceptualizing, actively developing, and providing technical leadership for several research projects at varying capacities:

  • A "magic box" integrated HVAC solution that performs both space conditioning (heating and cooling) and water heating for each apartment unit deployed as part of a pod at permanent modular construction factories for both multifamily and hotel buildings
    • The pod solution will be developed, prototyped, and tested as an open source shared development platform for both residential and commercial sectors, including multifamily housing and hotels.
    • A low-carbon equivalent refrigerant version of a "magic box" HVAC solution is under development.
  • Advanced Manufacturing and Construction Process Innovation projects working with select startups focused on affordable housing and building efficiency under the Wells Fargo Innovation Incubator (IN2) program
  • Energy modeling for recommendations to industry partners on benefits of integrating energy-efficient strategies off-site versus incorporating them through traditional on-site methods
  • Comparative study of primary building materials through embodied environmental impact (steel vs. wood vs. cross-laminated timber vs. concrete) and recommendations on optimized materials for industrialized construction from lens of reduced labor, time, costs, and waste
  • Building-integrated photovoltaics diffusion study and innovation in lowering installation costs for co-adoption in the building industry through industrialized construction
  • Innovative projects involving process optimization, discrete event simulation, and applied research.

A growing list of newly funded projects announced under the Advanced Building Construction effort by the U.S. Department of Energy Building Technologies Office will involve NREL's industrialized construction team:

  • A zonal heat pump project for whole-home panelized retrofits
  • Innovative technologies to overcome interface challenges for wall retrofit systems: a computerized workflow for panelized retrofits including pre-retrofit data collection, panel design, off-site manufacturing, and on-site installation
  • A state-of-the-art zero energy modular (ZEM) home construction system, including designs for a ZEM factory and a ZEM multifamily affordable housing unit
  • A national collaborative of building and construction stakeholders to accelerate the development, demonstration and standardization of innovative high-performance construction technologies, with a focus on modular, off-site, and prefabricated technologies to improve energy affordability and performance
  • A field assessment of commercial and multifamily modular buildings compared to traditional construction methods
  • A building stock analysis and validation of advanced energy technologies in Chicago single-family homes
  • Membrane dehumidification as facade-integrated building screens for latent cooling.

Partner with Us

Building manufacturers and developers that participate in this cost-share project receive subject-matter expert engagement and expertise from NREL researchers on a variety of topics—modeling, controls, and automated fault detection and diagnosis; process modeling through digital twin simulation and time-motion study; integration; and grid-interactive efficient building strategies. As NREL subject matter experts gain insights into partner manufacturing processes and systems, partners receive recommendations that can be incorporated into their operations to improve efficiencies, reduce costs, and save energy. As work progresses, incorporated recommendations are studied to further advance these improvements and savings.


For more information about participating in the project, contact Shanti Pless.