The Business Case for Passive House Phase 1 Residential Small - - PowerPoint PPT Presentation

The Business Case for Passive House Phase 1 Residential Small Buildings and Stakeholder Engagement

Objectives

• Issues, Barriers and Opportunities from Stakeholder Perspective
• Compare Passive House and conventional energy use
• Compare Passive House and conventional development costs
• Evaluate Business Case
• Recommendations: Identify future communication and research needs

Presentation Outline

• Case Studies Introduction
• Pre-Building – Stakeholder Interviews
• Building – Development Costing
• Living – Energy Use and Costs
• Buying and Selling – Business Case
• Conclusions
• Limitations
• Future Research
• Acknowledgments
• Discussion

Three Case Study Buildings

Bernhardt Pa Passi ssive Ho House se: PH PH Certified

Single Family Home with Suite, Garage – 3384 sq ft

• Wood frame, double-wall construction – R41
• Cellulose and Roxul insulation
• Wall – R-41, Roof – R-55
• 16”EPS Geofoam under foundation/ slab
• HRV units with heating coil,
• No bathroom fans, exterior vented range hoods
• 1 radiant heat wall panel
• Gas hot-water
• Triple-pane windows, high solar heat gain - Euroline
• Solar shading with trees, overhang design + brise soleils
• One unit without dryer
• Medium quality finishes
• Solar ready

Three Case Study Buildings

No North Pa Park k Pa Pass ssive Ho House se: Targe geting Cert.

6-Plex, 3 storeys, 2 bedroom units – 5051 sq ft

• Wood frame, double-wall construction
• Cellulose and Roxul insulation
• Wall – R-38, Roof – R-53
• EPS foam under foundation (4”) / slab (8”)
• HRVs - silent, balanced, cascade ventilation system
• No bathroom fans, exterior vented kitchen range hoods
• Electric hot water
• 1 electric radiant heat panel per unit
• Triple-pane windows, high solar heat gain - Euroline
• Solar shading balconies and exterior blinds (two sides)
• Laundry in each units - option for no dryer
• Medium quality finishes
• Solar photovoltaics

Three Case Study Buildings

Yukon

• n Affor
• rda

dable Hou

• using

6-Plex, 3 storeys, 3 bedroom units – 4575 sq ft

• Would frame standard construction
• Fibreglass insulation
• Wall – R-13, Roof – R-30
• 2 ft of 2” SM foam under slab
• Electric hot water
• Baseboard heat
• Shared laundry
• Double pane windows – Starline
• Make-up air vents
• Programmable bathroom fan
• 4 solar hot water assist panels

Pre-Building

• Qualitative Survey of 60 Industry members and 20 Stakeholder interviews
• Both REAL and PERCEIVED barriers to PH adoption
• Barriers Include:
• Lack of education (“how to build”)
• Lack of understanding of the business case
• Lack of policies and incentives to encourage builders
• Willingness to pay for upfront design costs
• Lack of confidence that the market will pay more

Building

What is the cost difference between Passive House and code-compliant conventional construction? Bernhardt Passive House  Actual Costs North Park Passive House  Budgeted Yukon Affordable Housing  Actual Costs Bernhardt Conventional  Estimated Costs North Park Conventional  Estimated Costs

Building

Passive House  Code-Compliant Conventional Wher here C e Costs are D e Differ erent ent Architecture  - 20% No Certification fees Double Wall  Standard Single Wall Reduced Insulation volumes No Foundation insulation, less slab insulation, reduced materials Less labour, lower quality air sealing materials Electrical and Plumbing  depends Standard model HRVs Single wall mounted radiant heat panel  in-floor radiant heat system Triple pane windows  double pane windows Less costly doors Same solar shading

Building

Bernhardt North Park Architecture

• 12,500
• 10,000

Certification

• 2,500
• 5,000

Foundation & Slab

• 15,000
• 10,900

Walls & Insulation

• 14,000
• 7,500

Air Sealing & Acoustics

• 10,000

Ventilation +18,500

• 16,000

Heating +30,000 Electrical + 2000 Windows & Door

• 10,000
• 17,900

Building

Bernhardt North Park PH Con. Diff. PH Con. Diff. Construction

$160.2 ft2 155.7 ft2 2.88% $181.7 ft2 175.5 ft2 3.50%

Construction + Soft Costs

$191.6 ft2 183.2 ft2 4.64% $233.8 ft2 224.5 ft2 4.16%

Construction + Soft Costs + Land

$1.28 mil $1.25 mil 2.66% $1.58 mil $1.53 mil 3.13%

Building

Passive House  Code-Compliant Conventional Wher here C e Costs are D e Differ erent ent Architecture  - 20% No Certification fees Double Wall  Standard Single Wall Reduced Insulation volumes No Foundation insulation, less slab insulation, reduced materials Less labour, lower quality air sealing materials Electrical and Plumbing  depends Standard model HRVs Single wall mounted radiant heat panel  in-floor radiant heat system Triple pane windows  double pane windows Less costly doors Same solar shading

Building

Passive House  Code-Compliant Conventional Wher here e Ar Are e Ther here e Costs Saving ngs? Mechanical / Heating systems Simpler building form – fewer materials, easier to build Less corners – material wastage High quality with simplicity – no fireplaces, air conditioning

Building

16.0% 12.0% 5.0% 12.0% 5.0% 4.6% 4.2% 17.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Audenaert et al 2007 (Belgium) Treberspurg et al 2010 (Austria) DIN A4 Architektur 2010 (Austria) Ingham 2014 (United Kingdom) Feist 2015 (Germany) Bernhardt Passive House North Park Passive House Yukon Affordable Housing

Building

16.0% 12.0% 5.0% 12.0% 5.0% 4.6% 4.2% 17.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Audenaert et al 2007 (Belgium) Treberspurg et al 2010 (Austria) DIN A4 Architektur 2010 (Austria) Ingham 2014 (United Kingdom) Feist 2015 (Germany) Bernhardt Passive House North Park Passive House Yukon Affordable Housing

?

What is the energy use and cost difference between Passive House and code- compliant conventional construction? Missing – Thermal comfort, Air Quality, Noise Bernhardt 1 Year Actual PHPP Model North Park PHPP Model Yukon 1 Year Actual    Bernhardt Normalised Actual Adjusted PHPP Model North Park PHPP Model Yukon Normalised Actual

Living

53.0 74.1 17.9 24.9 34.9 46.5

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

PHPP Modelled Actual - Electricty + Gas

kWh / m2 / yr

Total Energy Use Electricity Gas

Living

39% 39% 33%

Living

43.0 53.0 74.1 68.0 98.3 164.0 115.0 10.1 12.1 17.0 63.0 104.0 43.0

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 North Park PH Model Bernhardt PH Model Bernhardt PH Actual Bernhardt PH

• Adj. Model

NP Conventional Model Bernhardt Conventional Model Yukon Affordable Actual kWh / m2 / yr

Total Energy Use Heating Demand

Living

$1,951 $1,370 $3,287 $2,740 $3,933

$- $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00 $3,000.00 $3,500.00 $4,000.00 $4,500.00 North Park PH Model Bernhardt PH Model NP Conventional Model Bernhardt Conventional Model Yukon Affordable Actual

Total Building Energy Costs Per Unit Energy Costs

Living

Buying and Selling

What is the business case? Developer Perspective  Can the extra costs be justified? Buyer Perspective  Can the extra costs be justified? = Price Premium = Costs Savings

Buying and Selling

What is the business case? Developer Perspective  Can the extra costs be justified? Buyer Perspective  Can the extra costs be justified?

= = Price ce Prem emium um = = Costs Saving ngs

Cost Savings Comfort Air Quality Noise Risk Mitigation Values 

Buying and Selling

Study Findings Sensitivity Analysis Cost Increase – Soft & Construction 4.64% ($8.5 ft2) 4.16% ($9.3 ft2) 8.19% ($15 ft2) 8.02% ($18 ft2) Price Premium Bernhardt Passive House North Park Passive House Bernhardt Passive House North Park Passive House 2%

• 25%
• 21%
• 57%
• 59%

5% 87% 96% 6% 2% 8% 190% 205% 64% 58%

Developer Perspective - ROI

Buying and Selling

Study Findings Sensitivity Analysis Cost Increase 4.64% ($8.5 ft2) 4.16% ($9.3 ft2) 8.19% ($15 ft2) 8.02% ($18 ft2) Price Premium Bernhardt Passive House North Park Passive House Bernhardt Passive House North Park Passive House 2%

• 25%
• 21%
• 57%
• 59%

5% 87% 96% 6% 2% 8% 190% 205% 64% 58%

Developer Perspective

2.49% 2.62% Break even ROI

Buying and Selling

Bernhardt Passive House North Park Passive House Price Premium NPV Payback Period NPV Payback Period 2% 2% $12,804 2 $2,168 5 3% % $10,511 4 $28 18 5% %

• $1,710

22

• $2,343

>30 yrs 8% 8%

• $15,419

>30 yrs

• $6,603

>30 yrs

Buyer Perspective

Buying and Selling

Bernhardt Passive House North Park Passive House Price Premium NPV Payback Period NPV Payback Period 2% 2% $12,804 2 $2,168 5 3% % $9,754 5 $635 14 5% %

• $1,710

22

• $2,343

>30 yrs 8% 8%

• $15,419

>30 yrs

• $6,603

>30 yrs

Buyer Perspective

2.49% 2.62% Break even ROI

Buying and Selling

Bernhardt Passive House North Park Passive House Price Premium NPV Payback Period NPV Payback Period 2% $13,062 2 $2,501 4 5%

• $1,066

21

• $1,922

>30 yrs 8%

• $14,417

>30 yrs

• $6,100

>30 yrs

Buyer Perspective

2.49% 2.62%

Buying and Selling

Strata fees - $50 per month difference Strata fees - $100 per month difference Price Premium NPV Payback Period NPV Payback Period 3% $8,080 2 $15,526 1 5% $5,523 4 $12,969 2 8% $1,346 12 $8,791 4

Buyer Perspective

Buying and Selling

Consumer Builder Other Low Interest - Total Sample (10%) 83.3% 16.7% 0.0% Low Interest - Construction (5%) 100.0% 0.0% 0.0% Moderate Interest - Total Sample (23%) 42.9% 42.9% 14.2% Moderate Interest - Construction (17%) 50.0% 40.0% 10.0% High Interest - Total Sample (67%) 22.5% 55.0% 22.5% High Interest - Construction (59%) 22.9% 60.0% 17.1%

Responses to which Segment Must Create Demand

Buying and Selling

Consumer Builder Other Low Interest - Total Sample (10%) 83.3% 16.7% 0.0% Low Interest - Construction (5%) 100.0% 0.0% 0.0% Moderate Interest - Total Sample (23%) 42.9% 42.9% 14.2% Moderate Interest - Construction (17%) 50.0% 40.0% 10.0% High Interest - Total Sample (67%) 22.5% 55.0% 22.5% High Interest - Construction (59%) 22.9% 60.0% 17.1%

Responses to which Segment Must Create Demand

Conclusions

Barriers

Banks 2

"The biggest barrier was the banks"

Cost 11

"A lot of people don't want to pay the extra 10%"

Climate 1

"It's a very mild climate here [in Victoria]... it's a little bit harder to make the case to save… we don't use as much hear to heat our homes"

Cheap Energy 3

"We have cheap energy, so people don't really complain about it on the island."

Economy 4

"we've been on an incremental increase I'd say since [the 2008 crash], real estate-wise - I don't think we're back to the numbers that we were then, both in sales and in dollar volume, or pricing."

Short Term Thinking 2

"most people don't plan that long. You know, or even over the next 30 years or even 10 years - most people don't plan that long."

Unknown Payoff 8

"I think that if you tell the people, 'OK so listen, so right now you’re paying a Hydro bill that might be – X numbers of dollars, but it’s normally huge – and it could be half that, or a lot less than that, so you might consider…' … I think you have to be able to show very direct data to the public."

No Brand Name 1

"LEED Gold and LEED Platnium… it sounded good. Builders can really resonate with that."

No Market 10

"It became very apparent to me at the time that if I wanted to make money in real estate I needed to expand my focus [laughs]. Because there wasn't enough people wanting green and healthy homes."

No Materials 1

"Materials such certified drywall, non-toxic vapour barriers—these are hard to find here."

Business Case

Conclusions

Barriers

forcing them to.

Education No Knowledge 19

"The other problem is, people just aren't educated enough, they don't know. They don't know what a thermal bridge is."

No Materials

Materials such certified drywall, non toxic vapour barriers these are hard to find here.

Building Code 3

"our building code doesn't really make it easy to import products that aren't listed in the code, so Passive House is asking builders to do something that the code really, without explicitly saying it, would prefer people didn't do"

LEED 4

"LEED is good enough [for government]"

No Gov't Leadership 2

"it really has to come from a want and a desire from management level [of municipal government] to make that change."

No inforcement 1

"you can’t oblige the developer let’s say, to do a Passive House if, after the cost analysis, can’t afford it – so you can’t, you can’t put a covenant. So at the development permit stage or the rezoning stage, there is no way to enforce and guarantee that this is going to happen."

No regulation 3

"we're encouraging people to use as many sustainable technologies as possible, but we're not forcing them to." "Th th bl i l j t 't d t d h th d 't k Th d 't k

Government

Conclusions

Barriers

g

Age 3

"because of the age demographic of our industry, there aren't enough people that are willing to change their mindset. And so, for them it's all about dollars and cents, and they don’t believe that the house is worth more. It doesn't matter whether it's sustainable."

Buyer Mentality 9

"So when you look at a Passive House, they're basically airtight. So you're giving up a fireplace, it doesn't have a heat pump system, it doesn't have a furnace, so there are some amenities in the home, or some features, that are different"

Builder Mentality 2

"The building industry is very very conservative "

Complacency 5

"People are just like 'well my energy bills are $120 a month, why do I care about paying that?'"

Culture 1

"I think unfortunately we live in an age of a throw-away culture where you can throw anything up as cheaply as possible to try and maximize profit in the short term"

Incumbents 2

" I think if we were to try and push that to the next level to try and mandate these things, we would get push-back from the development community."

Inertia 5

"I think the word 'conservative' sums up Victoria.... the building policy is risk averse... change happens at a snails pace."

No Ethics 1

"they don't have an environmental ethic built in, and it’s only about dollars."

Physical Orientation 1

"people don't want to orientate their house in the correct direction, they want to face a view bang on or they want to face the road, because that's what every other house does."

Precived Risks 1

"if it’s been done a thousand times before, they at least know what to expect – whether or not it works well, they know what to expect. And if something’s only been done a dozen times before, they’re a little bit more leery of it."

Realtor Mentality 1

"When we talk to realtors, most realtors - it is like we're on a different planet. It's difficult to have them understand how it is you actually sell something like [PH], where you're not talking about the granite countertops. Because that's what they're trained to talk about."

Social Structure 1

"...how things always happen in Victoria, people hear things through word of mouth. I think everything kind of happens on a grapevine"

Socio-Cultural

Conclusions

• Cost increase not necessarily as high as assumed
• % Cost Increase  depends on market / starting point
• Cost per square foot within industry norms  Is there really a price increase

in medium / high end market?

• Significant reductions in energy use
• Price Premium  Unknown
• Not a very large price premium required to make Passive House profitable

(medium / high end market) – 2.5–3%

• North Park Passive House sales  All sold before finished

Recommendations

• Shared-risk approach, between financiers, builders,

buyers, architects, policy-makers etc.

• Disseminate business case findings to industry and

policy-makers, continue to build and refine the business case for different building archetypes

• Implement communications plan to improve

stakeholder knowledge and overcome barriers and misconceptions

Limitations

• Comparing build costs an art not science
• Not all costs actual
• Not all energy results actual
• Energy use dependent on occupant behaviour
• Limited building types in one jurisdiction
• Did not consider other benefits of PH

Future Research Needs

• Performance verification
• Study other building types, in other places
• Short and long-term maintenance / asset

management

• Rental, affordable housing and commercial sectors
• Cost optimization
• Market comparisons
• Policy changes
• Prefabrication

Acknowledgments

• BC Housing
• Vancity
• RDH Engineering
• Christy Love, Andrew Pape-Salmon, Robert LePage, Britanny Hanam
• Bernhardt Contracting
• Rob Bernhardt, Mark Bernhardt
• Linhar Projects
• Garde Collins
• Fernwood Neighbourhood Resource Group
• Beacon Construction Consultants Inc.
• Ian Scott Planning Services

Questions / Discussion