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Passive House Upfront Costs & Payback

We get loads of questions about Passive House, but the two bottom line biggies are:

  • How affordable is the upgrade to design to the Passive House standard?
  • What is the typical payback period?

The question of money, and fortunately the strongest selling point of the Passive House approach!

As for affordability, the two main aspects that must be considered are the upfront construction costs and the operating costs. The upfront costs can be fairly modest ranging from 5% to 10% on average. In a Passive House there are no expensive heating and cooling systems so these savings can go directly into the effort of optimizing the building envelope, a key design component in a Passive House. Also, keep in mind that the proprietary Passive House Planning Package (PHPP) modeling software allows us to finely tune a project to optimize the materials selections as well as other design adjustments all leading to meeting the energy and cost goals. There is a wonderful graph that I like to show people to help them get the hang of how Passive House compares in the world of ‘green’ building. In the case of a non-Passive House ‘green’ project the graph shows a steeply increasing cost as more and more ‘green’ selections are made for that project. (For example, adding a geothermal heat pump, or expensive renewable energy system). So the line goes up and up, then we pop the Passive House model in there and the line plunges straight down, back to a modest 5-10%. This is because a Passive House is simple and doesn’t require expensive systems.

Operating costs of a well designed Passive House can be 25% of a typical code-built home (10-15% of the heating and cooling demand and 25-35% of the rest of the operating costs: lights, appliances, and DH, etc.) So, imagine, if the typical home offers a $250 per month average total for electric and gas bills, the similarly sized Passive House next door would have monthly bills of approximately $63. It’s hard to argue about the affordability here, and that doesn’t speak to rising energy costs down the road!

To give you an idea of payback, I plugged in some data in a spreadsheet made by the spreadsheet wizard himself, Randy Foster, President of The Artisans Group. I made conservative assumptions by not figuring in the fact that energy costs will likely rise in the future, and I assumed that total operating energy savings would be 75%. Here we go:

  • Cost of typical code built house: $350,000
  • Cost of similar-sized Passive House: $374,500
  • #/strong>
  • Average monthly energy bill for code built home: $250
  • Annual Rate of increase in energy costs: 0>#/strong###
  • Energy cost reduction of Passive House: 75>#/strong###

So, the 7% extra cost to build Passive is paid back at year 5. After year 5, energy savings become money in your pocket, in this conservative example, that’s about $187 per month! You can see how that will really add up over time…

We currently have 8 Passive House projects in some stage of development, of these only 2 came in seeking Passive House. Once the other 6 began to understand the concepts of Passive House, there was no looking back. It’s such a delight when a good product will sell itself, and such a delight when socially and environmentally conscious choices make good fiscal sense!