Is It Payback Time for Passive House?

One of the issues that always comes up when trying to convince people about energy efficiency measures is the payback time: How long will it take for an investment take to pay for itself with energy savings? Nobody has talked about it much for years because thanks to fracking, energy has been so cheap that almost nothing ever paid for itself. This was a particularly difficult issue for the Passive House community in North America, where there can be a premium for a certified Passive House and the perennial question is always about the price per square foot.

But after a recent discussion on Twitter, I wondered if the recent spike in the price of natural gas might change the picture about payback.

As noted earlier, nobody has been talking about payback for a while—a google search comes up with posts that are often a decade old. Sheena Sharp of Coolearth Architecture wrote one in 2016, where she calculated that if the Passive House design cost 10% more–many architects say that it is lower than that now but I suspect it is still up there–then the payback period is about 30 years.

Sharp continued with the response that most Passive House designers use: there are other forms of payback, in comfort, air quality, and resilience. After all, if you invest in a solar panel or a better fridge, the only payback is in money.

"I’d like to suggest that the payback on building a Passive House is immediate because when you are in a comfortable, well designed and balanced space it can improve your families quality of life right-away. Every day this investment pay’s itself off. Being comfortable in your own home can have incalculable “trickledown” benefits on every facet of your families life, improving mood, energy levels, and long-term health."

That was written in 2016, so I asked Sharp if, in her opinion, anything was changing with the recent spike in gas prices. She was not convinced, telling Treehugger:

"Fracked gas is so cheap (by not paying for the damage it does), that it is hard to see upgrades being paid for by savings in utility costs, even if it doubles... I hate to say it, but passive house levels of efficiency, based on preliminary calculations done by Toronto 2030 District accounting for future fuel costs, show that passive house levels of efficiency will probably not pay for themselves strictly through savings. It will continue to be somewhat of a “luxury” good: Something that offers more comfort for more cost."

That could change, especially if significant carbon taxes are added to the price of natural gas, or if the fracking boom once again turns into a bust. Or, for that matter, if Passive House construction costs get closer to building code construction costs. We are coming at this from both directions, as codes get tougher and new North American supplies of Passive House quality components come onto the market.

The other thing that might change is the drive to electrify everything; electricity prices work differently than gas prices. As Sharp notes: "Electricity is based on peak; like a school bus that carries 1 - 20 kids. It's only the 21st kid that causes the cost to increase. There are opportunities to be had in peak shaving." As we saw in Texas, when electricity peaks, it can get really expensive.

Architect Elrond Burrell points to a recent study, "The role of highly energy-efficient dwellings in enabling 100% renewable electricity," that shows how building to the Passive House standard significantly reduces peak demand.

"The results show that rapid uptake of currently achievable best-practice standards could reduce the winter-summer demand variation by 3/4 from business as usual by 2050. Therefore, New Zealand, and other countries with seasonal peaks in space heating/cooling demand, should urgently adjust policy settings to mandate highly energy-efficient housing for new-builds and retrofits in order to deliver a least-cost low-carbon energy transition."

Anyone with time-of-use metering on their electrical bill might find that going Passive House and turning your home into a thermal battery makes more sense than buying a bunch of Tesla Powerwalls as a way of flattening the demand curve.

All those other forms of payback promoted by the Passive House crowd a decade ago are more relevant than ever. The increasing frequency of wildfires, and the understanding of the danger of PM2.5 pollution, make the airtightness and ventilation systems very attractive. Nobody ever thought the electrical or gas infrastructure could be so undependable. Many are saying that cities are getting noisier, and Passive House deals with that.

So the increase in gas prices might not be enough on their own to make it pencil out, but with everything else added to the ledger, it might well be payback time for Passive House.