Power Partners: KB Home Teams Up On Microgrid As A New Normal

When you think about it, innovations – the real ones – share a common destiny. They blend into life. The good ones last long enough to get old.

What was new becomes tried, true and mostly taken for granted..

Medical, industrial, architectural, digital, physical, policy, capital investment, process, materials, services, productivity, you name it, the magnitude of the initial splash a so-called innovation makes – with all the pomp and acclaim each gets as a shaper of our future – almost invariably correlates inversely with its eventual role in our lives and featured place in our conscious minds. And that's for two reasons.

One reason is that it may make a false claim regarding its transformative power to improve some aspect of life or work or play or rest or nourishment. In which case, it finds itself on a high heap of discards that made a lot of noise at first, and then died away for more reasons than there's room or time to go into here.

The other reason is that if an innovation lives up to its billing as a game-changer, and stands up to the test of time, it evolves from that shiny new toy, and retreats from a state of grabbing attention to a steady state of constant value.

In this sense, homebuilding, residential real estate, design, home technology, home products manufacturing, materials distribution, and a related 20 or more other fields are no different than other sectors. Construction Physics analyst Brian Potter writes:

To sum up: construction project costs are right-skewed and fat tailed; costs can easily end up being 50 to 100% higher than projected, or more. Preventing this requires closely monitoring all the processes taking place on a project, and understanding how they influence each other. A new or innovative system that involves changes to the process thus incurs a significant risk penalty that would likely exceed the expected benefits of the innovation. Construction innovations thus tend to be incremental and evolutionary, things that don’t change the underlying processes [5].

Where does this leave us for construction innovation? I suspect it means that any new system that would involve a substantial change to the process needs to be delivered in a way that can address these issues of risk. One option is to make sure the risk doesn’t end up burdening one particular stakeholder; for instance, offering to design and stamp your system as a deferred submittal (in practice, we see a lot of this for new systems). Another is to internalize the risk yourself - instead of selling your new amazing system, use it to build buildings yourself (this obviously screens off all but the highest-impact innovations).

This is also something that might be improved by a less fragmented market - fewer, larger players that could more easily absorb the potential risk, who could capture more value from using it (either by using it in more projects or by being more vertically integrated), and who could receive a system tailored to their specific needs.

We live with and value and, yes, mostly take for granted those innovations that have brought us room comfort, lighting, air quality, responsive systems, and durable and resilient structures.

When innovation finally sheds its "new" qualifier, and becomes simply the thing itself is when it truly validates its meaning as an innovation at all.

Which brings us to the work in homebuilding innovation championed by KB Home, which this week unveiled its Energy-Smart Connected – Microgrid --Communities in California's Inland Empire city of Menifee. According to a press statement here's the high-level:

More than 200 state-of-the-art, all electric homes will be solar powered, equipped with individual battery storage and connected to a microgrid powered by a large, shared community battery. These power-outage resistant communities are the first of their kind in the state and are designed to offer a blueprint for sustainable and resilient new home development of the future.

Ranging from 2,000 to 3,000 sq ft, with prices from the $490ks to the $590ks, the innovation line-in-the-sand KB Home and its partners say they're crossing for the 219 households buying homes in the Durango and Oak Shade neighborhoods in the master plan Shadow Mountain community, is one that – if all goes as planned – may one-day be taken for granted.

The bold narrative that arches over the KB Home announcement is a first-time ever capability for homebuyers and their neighbors to tap resources that meaningfully improve their home comfort and peace of mind, in a regenerative, sustainable, and cost-reducing way at a community level.

To develop this capability and offer it to prospective homebuyers – a reported 50 or 60 of whom have already booked orders for homes in the two communities that should be ready to occupy in the first quarter of 2023 – three conditions serve as the bulwarks of transformation and spread across residential construction and real estate development.

• Both the efficiency/resiliency and the attainability requirements of the project were non-negotiable.
• Partnerships that fuse purpose that spans corporate, public sector, education and research sector in truly collaborative solutions are essential.
• True validation and evidence of the innovative impact of these efforts comes not at the moment the investment and commitment becomes reality but only looking back in hindsight, when their regenerative value proves out over time.

Two constants involved in many of KB Home's established daisychain of homebuilding industry-first step-changes in energy and water efficiency, attainability, adaptability, resiliency, and home technology are Dan Bridleman, senior VP, Sustainability, Technology and Strategic Sourcing, and Jacob Attala, VP, Sustainability Initiatives. Dan and Jacob – and their team – have made those three conditions essential drivers of the business cultural imperatives Jeffrey Mezger, chairman, president, and CEO, lays out for KB Home to remain true to its core purpose, now in its seventh decade: making homeownership accessible to working households.

Our story of partnering at an epic level like this now goes back 15 or 20 years," Bridleman says of the weaving together of stakeholders – SunPower Corp. (NASDAQ: SPWR), University of California, Irvine (UCI), Schneider Electric, and Southern California Edison (SCE) – that underpin the strategy, research, technology, and energy capability the new homes and communities offer. "Having those foundational ambitions to impact energy use at both the home and community level, and do so in a way that makes our homes more attainable at the same time can only have come from working across all of these organizations together to make it happen.

According to the press statement, here's the role each of the key players contributed to homes that will operate at up to 40% reduced energy use, achieve net zero energy, and be capable of running at critical power support even in the event of a local or regional power outage. As well, notes, Bridleman, homeowners' ability to "arbitrage" the cost of power when load demands are high, and then pull the power out of self-storage batteries if and when it becomes necessary to do so.

• KB Home one of the largest and most recognized homebuilders in the U.S., is responsible for the design and construction of the energy-smart connected new home communities.
• SunPower Corp. conceptualized the project and is the project lead. It will oversee the project partners, provide energy services and technology, and ensure the home energy systems support the microgrid operations. It will also provide solar panels, battery storage and EV charging options for each home.
• The Advanced Power and Energy Program (APEP) at the University of California, Irvine will acquire and archive data from microgrid events and conduct research to enhance the technologies deployed in similar applications in the future. It will ensure that the microgrid controller meets the national standards that evolved from prior research conducted by APEP for the DOE using the UCI Microgrid as a platform for both the development and demonstration.
• Schneider Electric will be providing home electrical technology, including the smart load panel called the Square D Energy Center and Connected Wiring Devices that integrate and control the distributed energy resources. Additionally, Schneider Electric will design and engineer the community microgrid.
• Southern California Edison is the utility partner providing new power service to the community, managing the grid, assisting in microgrid engineering, ensuring local utility equipment safely and reliably supports microgrid operations and providing cybersecurity review.

Further, notes KB's Jacob Atalla, homes will be pre-wired to be smart Electric vehicle (EV) charger ready [together with partner Kia], and some will demonstrate bidirectional charging, which enables an EV to be an additional source of energy for the home during a power outage.

We appreciate that the technologies we're bringing together here – for energy efficiency, home performance, comfort, and resiliency – are going to take some time for both our homeowner customers and all of us to fully understand and recognize value in," says Atalla. "To that end, we're setting up residential garage as a learning lab onsite, and the research teams at UCI will also simulate the connected microgrids, analyze data from the VPP [Virtual Power Plant] program, and collaborate with SCE, as we all learn from the capability in the real life of the community."

One day looking back, the work Bridleman, Atalla and the KB Home team have been doing on the energy efficiency, water conservation, and attainability front for the past 15 years or more may become the norm for new residential construction. Trying new things is in the KB Home DNA.

Innovation, as it turns out, comes clear only in hindsight.