Jim Nostedt of Seefar Building Analytics recently joined us as a new member of Passive House Canada. Jim has been involved in energy conservation and building sustainability for most of his illustrious forty-year engineering career. Early in his career, he worked in energy performance contracting, designing energy-efficient buildings, and later as Sustainability Manager for the Royal Canadian Air Force. In 2019, he started SEEFAR Building Analytics to focus on improving the sustainability of new and existing buildings. Jim compares the Total Cost of Building Ownership (TCBO) of low first cost code buildings to High-Performance Buildings (HPB). His analysis shows that these buildings have a 30 to 40% lower total cost of building ownership. When people can see that these high-performance buildings have significantly lower costs, they are more likely to build them while reducing greenhouse gas emissions.
Jim recently presented at Passive House Canada’s Tower Retrofit Symposium, and we wanted to gain further insights into his approach to building sustainably while also achieving cost savings.
Q. How does a Total Cost of Building Ownership (TCBO) approach help Passive House projects?
A. One of the obstacles preventing clients from choosing Passive House is the perception that the additional upfront capital cost may be too high. By adding a TCBO analysis to your proposals, Passive House practitioners can offer a powerful financial argument alongside their technical description of the project that saves 30 to 40% of the life cycle cost or TCBO.
Q. What is the Total Cost of Building Ownership?
A. A TCBO analysis provides a complete description of all the costs involved in owning a building over its useful life, typically 60 years. This enables a Passive House practitioner to illustrate to prospective clients the actual financial benefits of green building design for both new builds and retrofit projects. The expense categories in a TCBO analysis include the initial construction costs, all utilities (heating, electricity, carbon tax, water), property taxes, insurance, mortgage interest, inflation, maintenance, repairs, and renewal. The TCBO analysis can be adjusted for different timelines and highlight how including or ignoring a specific green design element will impact the overall TCBO of the project.
Q. What does a typical Total Cost of Building Ownership analysis reveal?
A. While each project is unique, most buildings cost far less to build than operate over their useful lifespan. A typical TCBO analysis over 60 years shows that actual ownership costs are 8X to 10X larger than initial construction costs. We also find that while adopting Passive House techniques can increase initial costs by approximately 5%, the total ownership costs will drop by 30 to 40%. So, for example, a new building that costs $1 million to construct but only meets the minimum building code will typically have a TCBO of between $8 to $10 million. By choosing Passive House design, that same building will cost $1.05 million upfront, but the overall savings will be $2.4 to $4.0 million or between $40,000 to $66,000 per year. These savings exceed costs by five or six years from the completion of construction.
Q. Is the same true of deep retrofits?
A. Yes, deep retrofits also save 30 to 40% of the TCBO. Data consistently shows that “light” or partial retrofits do not capture the available TCBO savings when a building is ready for an upgrade. Including all opportunities to tighten the building enclosure with better walls, roofs, basements, windows, and doors and selecting more durable materials throughout will save significant dollars in the long run. Adding a geothermal heat pump or on-site energy sources such as photovoltaic solar will improve the TCBO for retrofit projects and new builds. In early case studies, the savings from deep retrofits exceed the costs by year 25. However, as we get better at performing deep retrofits, we see this being reduced to less than 15 years.
Q. Can a TCBO analysis be performed on different building types?
A. Yes. TCBO has been proven effective in multiple residential and commercial projects and can be applied to any building type.
Q. How can design teams use your approach to optimize the building?
A. The best approach is to include a TCBO analysis from the beginning of a project. This way, the client and the design team can see the actual financial impacts of design options, optimize the design based on life cycle cost instead of low first cost, and make the best choices for the project.
Q. What are the key findings from your case studies?
A. Our first-hand experience to date offers two essential findings: 1. Partial retrofits are not very economical, and 2. The steps required to create an HPB (new build or retrofit) should follow a specific order.
Most energy efficiency programs, unfortunately, prioritize making many minor improvements over a long period. This increases costs and fails to capture the available benefits. For instance, a homeowner adds an extra inch or two of wall insulation when installing new siding. Those walls need much more insulation to get the home to net-zero, so the new siding and likely the new insulation will have to be removed. Building enclosure materials should also be selected for their low life cycle cost, not the lowest first cost. Complete retrofits and durable materials will both reduce the TCBO.
For best results, use this step-by-step approach when designing an HPB (new or retrofit):
Reduce the building’s heating and cooling load as much as possible, using high insulation levels, increased air-tightness, and proper orientation of windows for solar gain in the winter and shading in the summer. This is a classic Passive House design.
Shift the heating fuel source away from fossil fuels and towards low-carbon energy. By doing Step 1 first, you will have dramatically reduced the costs of this step because not as much green energy is required. Geothermal is an excellent option because it accesses three or four times as much energy as it requires to operate.
Look for opportunities to generate renewable electricity on-site, such as through rooftop solar. The TCBO of all our projects to date have been improved by adding rooftop solar, and as the cost of solar continues to drop while the price of grid-produced energy is increasing, the benefits of this approach will only improve in the years ahead.