I'm in the very early stages of planning a new home. The home size will be roughly 3000 sqft, 2 floors and an unfinished basement. I love the idea of a tight house that can be heated and cooled very easily, but I also want to balance the cost with the ROI. I realize there is also the fact that energy prices will almost certainly go up and having that stability is a big deal. For my initial analysis, I looked at the data for a new (~2012) well constructed home that we almost bought. The home was nearly 4000 sqft across 3 floors plus a finished basement. It wasn't "tight" by any means. It had a wood fireplace, builder grade windows, but at least to-code insulation. Obviously have no idea about the envelop overall, so a lot of this is guesswork, but it's safe to say this wouldn't be considered tight. Looking at their natural gas bills over the course of 2.5 years, I was able to determine they used only about 6.5 BTUs/sqft on average - it peaks in the winter at about 15 BTUs and goes as low as 1.3 in the summer. (Climate zone 5 / Boston area.) With the average cost / 100k btu during that time being only 72.6 cents, it's making me question the ROI on a tight home versus a "normal" new construction home. The average monthly bill during this period was only about $150 for heat. Even if you were able to reduce that by 70-75%, you would be look at a savings of just $1,350/year. As most estimates I've seen suggest that tight building may cost around 10% more than "normal" building, and our home budget for labor/materials is roughly $850k, it would take a *really* long time for that to pay off. I.e, I'll be dead long before then. I know this is just one part of a bigger picture, but what am I missing here?

I'd read this and plan on spending a lot less than +$85K to get a pretty air tight house.

Even if you don't go for extra insulation, thick walls , and triple pane windows. You should be able to get proper insulation installation and GOOD air sealing at no additional cost with a quality builder. This will go a long way.... and I don't think you should be paying extra for it . For some builder, it will be their minimum standards.

Ask the builders:
What do they think the ACH50 will be on your completed home?
What kind of insulation do they install . IF Fiberglass and (even perhaps not), I would want to know that it is installed to Grade 1 standards with 3rd party oversight.

72.6 cents per therm is really cheap. We pay about 3x that in VT for a gallon of propane that is only 92% of a therm.

Most people in MA are paying over a buck a therm, but not a buck fifty, but so what? Heating systems don't provide comfort (with the exception of radiant), high-R building envelopes do, by raising the mean radiant temperature of the rooms (no cold walls or windows.)

On a new home it's pretty cheap to upgrade the thermal performance of a home to down-grade the cost of the mechanical systems. I recently was involved in specifying a ductless heating solution for a house on Martha's Vineyard (outside design temps within a few degrees of Boston's) on a 1970s house that had just been doubled in sized to 3200' with a code-min addition. They were initially being quoted $40K for a 4 ton ducted GreenSpeed + 1 ton mini-split (gulp!) but I managed to work out a solution with a pair of 3-head multi-splits that came in at $15K ($11K after MA rebates), but had they spent another $15-25K on the thermal performance of the building they could have done the whole thing with a 1.5 ton mini-ducted Fujitsu for about $6-7K (before rebates.) Whatever, the typical cost of mechanical heating & cooling systems installed in 3000' houses in this area tend to be over $25K, and that leaves a lot of budgetary room for designing out the heating & cooling loads. And the low- load house is going to be noticeably more comfortable than a code-min house. The bulk of the "savings" will be up front if you do it right, but the annual cost savings count too.

On new construction in Boston, and ICF foundation, U0.25 windows, R65-75 cellulose in the attic and a 2x6/R20 wall with 2.5-3" of exterior polyiso, and R8 EPS under the basement slab would be enough to heat a 3000' place with a 1.5 ton mini-split (but unless you're really careful with window sizing & placement you might need a bit more than that for cooling.) Better still, if the roof pitches are design with site orientation & solar shading factors in mind, a house like that can hit Net Zero Energy with a PV array that fits on the roof. Even at current installed costs in MA, with the federal tax subsidy solar power is substantially cheaper than National Grid or Eversource rates. The marginal cost of heating with a mini-split is already pretty similar to heating with buck-a-therm gas, and learning curve of solar is rapid enough that heating with mini-splits at the lifecycle cost of solar will be cheaper than 50 cent gas.

Gas costs have nowhere to go but up, currently trading at historic lows, and expected to double by 2030. The cost of solar power is dropping like a rock and expected to be the cheapest source of electricity of any type by 2030. Which curve are you more interested in riding? On new construction it's pretty easy to set it up to catch the cheap solar wave, if you have a decently high-R house.

Download a copy of BA-1005, and look at the whole-assembly R-values for zone 5 found in Table 2, p 10:

http://buildingscience.com/file/5806/download?token=GouEIX9Y

Note, the price of PV has dropped by more than half since that was written, and the average efficiency increased incrementally, so you can probably go hint lower on those numbers and still have Net Zero with something that fits on the house.

BTW: Carter Scott of Transformations up in Townsend MA (a bit outside of 495) has a fair amount of Net Zero building experience, and knows how to do it without being dramatically more money than a code-min house:

http://transformations-inc.com/

I'm not crazy about the amount of spray foam he uses, and believe it could be done more greenly and cheaply with more cellulose & EPS, less spray polyurethane and XPS, but you could specify those sort of limitations in negotiation.

a house like that can hit Net Zero Energy with a PV array that fits on the roof.
Dana - is there much chance of the PV arrays getting much more efficient in the near future? More output less square feet?

Posted By FBBP on 11 Dec 2015 10:45 PM
a house like that can hit Net Zero Energy with a PV array that fits on the roof.
Dana - is there much chance of the PV arrays getting much more efficient in the near future? More output less square feet?

In 2009 commodity panels were in the 12-13% efficiency range, now most are in the 15% range. For a premium there are goods in the 20% range, but for now that's a significant upcharge. Solar City is building a production plant in NY using a proprietary process that they believe will eventually hit the mid-20s, currently expecting ~22%:

http://www.greentechmedia.com/articles/read/Is-SolarCitys-New-PV-Module-the-Worlds-Most-Efficient-Rooftop-Solar-Pane

But simply going higher efficiency on PV or heat pumps doesn't buy the same amount of comfort that a higher R house does. The interior surface temps of a PassiveHouse are several degrees warmer than a code-min house when it's near the outside design temp outdoors. That translates directly to a higher mean radiant temperature, which is the gold standard for human comfort. An R30 whole wall house at -20C outdoor temps will have a slightly lower MRT than a PassiveHouse, but it's noticeably more comfortable than a code-min house at the same indoor air temperature.

Perovskite- silcon hybrid PV cells have the potential to come in north of 30% efficiency, but predicting if/when those will be commercially available, or whether some other breakthrough will scoop them on price/performance/lifespan requires a crystal ball much clearer than mine. Holding out for higher efficiency could be a very long game compared to the rapidity at which incremental improvements in silicon PV technology is crashing through ever lower price barriers.

The installed cost of PV drops about 22-25% every time worldwide production doubles. The doubling rate in recent years has dropped below 2 years, and is accelerating as PV becomes cheaper than incumbent technologies in the marketplace. Utility scale PV is beating gas-fired peakers all over the US now on price, even at the current historical low contract pricing for natural gas. Residential scale PV is beating the residential retail rates for nearly half the US population now, and will be cheaper than the standard grid-mix for nearly everyone within 10 years.

The question has more to do with roof real-estate then house comfort. Based on your reply, it would appear we still need to design with a substantial portion of a southerly roof in one plane.

Is $3.50/watt installed pre-tax rebate still pretty valid? This ridiculous balmy weather has got me thinking about solar panels too.

I'm wondering what will happen at the end of 2016 - will they just extend the tax credits? Where will the price go without the tax credit?

Depends on your climate and occupant behavior, and the thermal performance of the house. Running the air conitioning in the middle of winter so that you don't overheat while have a video gaming party with multiple plasma display TVs or taking 15 minute full flow showers daily can defeat the energy use goals of even the best designed house. But for reasonably conservative energy non- abusers at the warm edge of US climate zone 5 it doesn't take that much roof real estate at all:

http://conservtoday.com/wp-content/uploads/2012/01/Net-zero-house.jpg

In US climate zone 6 (comparable to southern Alberta: http://www.atlasroofing.com/media/images/original/1910.jpg ) it still takes more, but less now than when this house was built:

http://www.kaplanthompson.com/uploaded/IMG_5922.jpg

At some performance point on the house annual hot water energy use exceeds the heating & cooling energy use combined. Eric Haugsjaa's house had MORE than enough performance built into the building envelope, but according to his spouse (who I raced with/against in the local beer-league skiing events) it narrowly failed to actually it Net Zero, but would have if they had installed a drainwater heat exchanger.

https://ehaugsjaa.wordpress.com/house/

All really excellent info gang, thanks. A few questions.

First, a Net-Zero house - i.e, the current gold standard - has an energy profile that uses 90%+ less energy than a "normal" house. Now, that "normal" house appears to be based on current code. Right?

This would suggest there is a very rapid diminishing ROI between "normal" -> "tight" -> "net zero". If a normal house is 1x, a tight house is .3x, and a passive house is .1x, there is an ROI curve we can plot.

Most data I've seen suggest that getting to a net-zero involves more than just building the envelope carefully. High end windows, more insulation, different wall types, etc. In the end, the low end appears to be 10% over "normal" construction. So how much of this applies to a "tight" house? If it's no additional cost (which, of course, means same/similar materials just used differently), what would the energy usage look like? 70% less than normal? 50% less?

A house 90% better than "code minimum" would be a Certified Passive House. "Net Zero" would generally assume 50-75% better than minimum, but that will vary with the details. Likewise, there is always a cost for building a better house, at least for the additional labor for the extra air sealing, and that will depend on the builder's experience and the individual details of the house. For starters, it's a LOT less expensive to design for the actual construction, rather than starting with an online plan and trying to "paste on" energy efficiency. Energy efficiency at this level isn't really an add-on like granite counters; it's a different mind set during design and construction.

I also question ROI: how does one determine ROI, for instance, on a car? Yes a house is different, but the comfort factor, like heated leather seats, may not have a direct ROI relationship. I always assume someone focused on ROI must drive a Honda Fit or Yugo - anything with 4 wheels which gets you from here to there, so get really confused when they turn out to drive a Lexus.

Posted By Bob I on 14 Dec 2015 12:48 PM
I also question ROI: how does one determine ROI, for instance, on a car? Yes a house is different, but the comfort factor, like heated leather seats, may not have a direct ROI relationship. I always assume someone focused on ROI must drive a Honda Fit or Yugo - anything with 4 wheels which gets you from here to there, so get really confused when they turn out to drive a Lexus.

Very good point - although in this case, the more apt analogy would be the ROI of a hybrid or electric vehicle versus gas.

In the end, if I'm spending $100k more to build a house specifically to reduce energy consumption, and the best I can hope for is savings of $3k-4k a year, the ROI just isn't there. Yes, there are other factors - increase in resale value, for instance, but those are a lot harder to figure out reliably.

Another way to look at this is, if it costs roughly 4% to borrow money (i.e, the mortgage), whatever money is dedicated to energy savings should have an ROI that beats 4%. If it does, you're effectively making money. For instance, that $100k might cost $600/month to finance. (Yes, I'm ignoring tax deductions.) If that $100k in build costs ends up saving $600/month - you're at least even. Or, at the very least, if it's likely to get to a positive ROI as energy costs increase near time, it's worth it.

In reality, a good ROI isn't compared against borrowing costs, but against market return. I.e, how much can you make with that $100k elsewhere? That 4% number isn't actually too bad. But as best as I can tell, it's not really 4%. It's less than that.

Solar panels, conversely, have (with tax credits, SRECs, net metering, etc.) proven to have awesome ROI. A breakeven of 5 years is usually doable if you have good southern exposure, and after that (in MA at least) you can expect overall yearly ROI of double digits. That's a big deal.

If you look at Carter Scott's Net Zero houses, referenced by Dana and also in MA, they are pretty close to "code" houses in terms of sales prices. The difference will vary, but should be in the area of 5-15% for the overall cost of a well designed NZ house, not including any certification costs. This may not be true, if as I mentioned, you are taking a "code" plan and pasting on the efficiency factor, as costs will go up trying to make poorly designed plans work better.

You really have to work at (or be terminally stubbornly stupid when it comes to arithmetic) to actually spend $100K more than code min to take a 3000' house to Net Zero.

But I'm sure there are folks out there willing to spend that much (or more!) for you!

A few things that will drive up the cost are:

* An inefficient shape, with lots of bump-outs and ells. Every corner increases the thermal bridging, and increases the ratio of exterior surface to conditioned floor area, which puts higher demands on the thermal performance of the walls. Most of Carter Scott's houses are a simple classic New England-y 2-story shoe-box with simple gable, but you can get there with a T or L topology without driving costs stratospheric. Once you get into more than 6 corners or more complex roof lines you're fighting against yourself. You don't need Jr.Architects 3-layered step-backs to the curb-view walls and a fistful of cute dormers other complexities to the roof design to come up with something of visual interest, which only add cost and lower the thermal performance of the building.

* Excessive window area. Windows are net energy gainers, but they're also lossy at night, driving up the size of both the cooling and heating peak loads, even if it reduces the total amount of heating energy use. One real cost driver of most PassiveHouses is the need for solar gain to clear the total energy hurdle, but with high thermal performance to keep the peak load within spec. This usually ends up with large VERY expensive super-performance U0.10-0.15-ish windows on south side, which ends up creating cooling loads at mid day even in the mid winter from all the snow-reflected solar gain. If you limit the glazing/floor area ratios to conventional levels you can get to Net Zero Energy with ~ U0.25 windows, at a more modest price point. If you're thinking a huge "sunset view" west facing windows are a "must have", know that it could easily double the size of the cooling load of a high R house, and decide if it's worth the upcharge.

* Overdesigning the mechanical systems. A micro-zoned radiant floor system running off a ground source heat pump with ducted or wall-coil cooling can easily eat up the lion's share of that $100K in Boston's market. A high-R house that maybe cost $25-35 "extra" up front in better than code insulation & windows can usually be heated/cooled with a couple of mini-splits for under $10K.

So sure, if you don't plan ahead and spend like a drunken sailor on leave you can easily spend $100K or more to hit Net Zero with a predictably lousy ROI. But if you plan the house and mechanical systems thinking of it as a combined system, it's pretty easy to hit high performance at a modest uptick in up-front cost (and if mortgaged, a lower net cash flow even before taxes.) There are plenty of ways to design a house to make it impossibly expensive or impossible to hit Net Zero or some other performance benchmark but that's really up to you.

The design phase is when it's easiest to design the cost out, so you're asking the question at the right time, rather than waiting until the house is already framed and sheathed, wondering what foamed magic mouse-milk insulation is going to turn a crappy shape with impossible window area & placement and no roof pitches suitable for PV into a decently performing house that costs next to nothing to heat & cool.

So, in summary, I'm almost certainly way off base in saying that I need to spend 10% more to get a "tight" home. You might "trade" $20k in HVAC for $20k in insulation/windows, but it's not $20k *extra*. Etc.

If we can get the number down to perhaps less than 5% / $40-50k, then the numbers start to work out pretty nicely. At that price point, the "break even" would be brining a normal home down from $360/month in energy costs to $120/month - i.e, a 70%-75% savings. That seems doable, and given that energy is very cheap right now, it turns net positive fairly quickly with a payback period probably around 10 years.

That said, it seems to me that you'll get *much* better bang for you buck by simply designing a solid to-code home (like my benchmark home that I previously referenced) and ensuring you have very good southern roof area for solar panels. If I spend that same $50k on solar panels, I'm like to have a break even of only 4-5 years, and will have MUCH higher ROI over the course of that 10 years. This is largely possible because of SRECs during that 10 year payback window in MA.

I'd use software such as BEopt or hire someone to look at all the different options. A big part of the calculation is how long you will live in the house.

You get a much lousier payback on comfort out of that PV with a code-min wall, due to the lower mean radiant temperature of the rooms. A home is where you live, not a simply a financial investment. A "...solid to-code home..." happens to be the crappiest house that's legal to build. That may be a lot better than the crappiest house that was legal to build in 1990, but it's hardly an optimal house.

Don't assume you'll be able to cash in on SRECs unless you're building right now. (In fact, plan on the availability of SREC income post-2020 to be near-zero.) It's a crap shoot at best, dependent upon the amount of other policy support for distributed solar. It's not clear where the MA legislature is going on the net metering caps or community solar, etc, but the raw LCOE of PV is sufficiently below the residential retail price that the solar companies can still make money on a PPA with the home-owner. Solar will still be growing in New England, it's only a matter of how fast. The policy goal under SREC-II was 1600 MW by 2020, but it'll probably come in before the end of 2017. As of May 2015 the installed base of PV in MA had already topped 840 MW. With the exponential growth rates that continue to double in under 2 years it won't be very long at all before SREC-II is done- maybe even before the 30% tax subsidy disappears at the end of 2016. When are you planning to build?

Stop thinking about a decent-performance house and PV as an either/or proposition- it isn't. But a decent performance house + PV can be net zero energy, and it's really not a big upcharge when baked in the cake from the very beginning as opposed to trying to hack it in later.

The price of solar will continue to fall, and building the house such that it'll be net-zero capable when the un-subsidized price is below the subsidized cost today might still be the better investment.

You're right. Code-min isn't necessarily what I meant. My "benchmark" house likely was better than that - but it certainly wasn't a tight house, and was far from net-zero or passive. It had a fireplace, big vent hood for the range, and builder grade windows for instance. But it was well built (as far as I could tell, heh). If that home can achieve the BTUs/sqft that it appears to based on my energy usage analysis, then that's really what I'm comparing against. That home was far from "uncomfortable". My current home - a 1800 sqft colonial built in the 1840s with nearly zero insulation in the walls - can definitely be drafty and actually uses more energy than the nearly 4000 sqft new construction.

I'm also certainly not saying it's PV vs tight. Hardly. I'm simply stating the fact that, at least right now, given a limited budget, it makes way more sense from an ROI point of view to put the money into PV. Now, if what you're saying is correct about changes to net metering and the SREC program in MA being phased out, that changes things quite a bit. The break-even period for PV would more than double or even triple. Going from a 4-5 year payback to a 15 year payback makes it far harder to justify in the north east. The growth of solar, in MA, has been driven by the SREC program. If that goes away, solar will likely survive thanks to the efficiency gains, but it will suffer for years.

Do you have any references that cite reasons to think the SREC program won't be renewed?

I did find this: http://cleantechnica.com/2015/02/25/preserve-the-massachusetts-srecii-solar-incentive-program/

It suggests the program, as long as legislation isn't explicitly pasted to change it, will remain until 2030. The SRECs themselves will reduce gradually in value (from ~$300 now to $199 in 2030), but the reduction is gradual enough as to still dramatically favor investment in PV in terms of ROI.

SREC-II is/was specific to the 1600 MW goal, just as SREC-I was tied to 400MW. There is no SREC-III, and given how expensive (albeit successful in driving the goal) SREC-II is, it's unlikely that this type of subsidy will persist.

http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/solar/rps-solar-carve-out/

http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/solar/rps-solar-carve-out-2/current-statis-solar-carve-out-ii.html

http://www.srectrade.com/srec_markets/massachusetts

http://www.mass.gov/eea/docs/doer/renewables/installed-solar.pdf

If the 30% Federal Tax Credit get's re-upped for another 5 years in election year horse-trading (as seems likely, given actions this week) the rationale for another SREC supported carve out evaporates, since the tax credit alone is more than sufficient for keeping slolar growing at a fast pace in MA.

http://www.greentechmedia.com/articles/read/congress-is-on-the-verge-of-passing-a-5-year-extension-of-solars-investment

The net metering caps have already been met in some areas and need to be raised to keep growth strong. The current caps are based on the historical absolute peak power draws on each utility, and is capped at a total of 9% of that peak- 4% privately owned & 5% public (governments, schools). At only 9% the value of the next MW of distributed solar going onto the grid is still worth quite a bit more than the residential retail rate.

When the caps were initially implemented there was fear that too much distributed PV would be difficult for the grid operators to manage & control without additional infrastructure investment, and 10% was widely being kicked around as the threshold of problems. Real world experience in many locations has shown that number to be ridiculously conservative. Rather than de-stabilizing the grid, distribute PV makes the grid more stable and resilient, even on feeders where the mid-day output is 120% of the mid-day load on that line, as determined by the NREL's analysis of highly granular data sets provided by Enphase inverters on those feeders. Even raising the cap to 25% of historical peak load would not impart a cost to non-solar ratepayers, but issuing a third round of SRECs would. The primary losers by doubling the cap would be investors/owners of low capacity factor peaking generators. It would still be at least break-even for the ratepayers.

https://sites.google.com/site/massdgic/home/net-metering

http://www.telegram.com/article/20151018/NEWS/151019335

http://www.greentechmedia.com/articles/read/will-massachusetts-net-metering-caps-spoil-the-community-solar-party

http://www.greentechmedia.com/articles/read/Hawaiis-Utility-is-Approving-a-Backlog-of-More-Than-3000-Solar-Installati

http://www.greentechmedia.com/articles/read/how-heco-is-using-enphase-data-to-open-its-grid-to-more-solar

https://emp.lbl.gov/sites/all/files/LBNL%20PV%20Business%20Models%20Report_no%20report%20number%20(Sept%2025%20revision).pdf