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Cost Parity and Passive House

11/28/2012

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Adam Cohen is an architect, Certified Passive House Consultant, and a principal at Structures Design/Build in Roanoke, VA. He has been quite successful at promoting the Passive House standard in both commercial and residential projects. Part of this success is likely a result of Adam's energetic personality, but I'm quite sure it also has to do with hard numbers---and economic sanity. Here are a couple of Adam's mantras:

"Do you want to pay for equity or electrons?"

"We can achieve cost parity in residential projects, and for commercial projects,
Passive House offers a really great return on investment."

Structures Design/Build has the numbers to back up these claims. Some of their Passive House projects include:

Franklin County Public School - Center for Energy Efficient Design (CEED)
Emory and Henry College - Hickory Hall Dormitory
Specht Passive House - Custom Home

If you talk to Adam, you will find he is passionate about the financial viability of Passive House. So what is cost parity? And how is energy efficient construction cost effective? Below I'll provide an example:

-------

Building A is a 2,000 sq. ft. custom home, built to code. Total cost to build is $250,000. And the monthly utility bills for this house average $225.

Building B is identical, but built to the Passive House standard. Total cost to build is $275,000 (10% or $25,000 in additional capital and labor). The monthly utility bills for this Passive House average $75.

Let's assume that both houses have a conventional 30 year loan. In both examples, the owner provides $50,000 for a downpayment, and the bank charges 4.5% interest.

Building A -  Mortgage Payment - $1,013.37
                    Average Monthly Utility Bill - $225
                    Total Monthly Cost - $1,238.37

Building B - Mortgage Payment - $1,140.04
                    Average Monthly Utility Bill - $75
                    Total Monthly Cost - $1,215.04

So, the Passive House has a higher initial cost, but the total monthly bills are equal to a code built house (actually a little lower). This is cost parity.

 And . . . can you guess which house will be more comfortable?

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    Author

    Daniel Ernst

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