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


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

Asked by Charles Wen

When compared to a typical code-built home, how much more does it cost to upgrade to an ultra-energy-efficient house using the Passive House Standard? How many years will it take for that cost upgrade to pay itself back?

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Tessa Smith's picture

Ah yes, the question of money -- and, fortunately, the strongest selling point of this approach to design and construction! I get these questions a lot.

As for affordability, the two main aspects that must be considered are

  • upfront construction costs and
  • operating costs.

Upfront costs

The upfront costs can be fairly modest, ranging from 5% to 10% more 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 towards 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 an 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

Operating costs of a well-designed Passive House can be 20% of a typical code-built home (10% of the heating demand and 25-30% of the rest of the operating costs, lights, appliances, and DHW use). So, imagine, if the typical home has a $250 per month average heating or cooling bill, the similarly sized Passive House next door would have a monthly bill of approximately $25. 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 the 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. I also figured the Passive House at 75% savings per month rather than 90% (total energy use reduction, not just heating, the house still has lights, appliances, and DHW use, etc.).

Here we go:

  • Cost of typical code-built house: $350,000
  • Cost of similar-sized Passive House: $374,000
  • % Difference: 7%
  • Average monthly heating bill for code-built home: $300
  • Annual rate of increase in energy costs: 0%
  • Total Energy cost reduction of Passive House: 75%

Given these assumptions, the payback period falls right into place at year 5. After year 5, all those hard-earned greenbacks are money in your pocket. In this case, that's about $225 per month.

We currently have eight Passive House projects in some stage of development; of these, only two came in seeking Passive House. Once the other six 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!