There’s a lot of talk these days about net-zero homes and Ontario’s plan to eventually make them standard for all new residential construction. But what exactly is a “net-zero” building, and how could it change the economics of owning a home in the province?
Richard and Miriam Vince are about to find out.
In their 60s and eager to be closer to their son and his family, the couple moved out of their large and not so efficient century home in Creemore, Ont. last year and relocated to Guelph. Their goal was to downsize, and that included reducing their environmental footprint.
But the Vinces didn’t rush. They first rented an apartment to get a feel for the community. Then, last November, signs appeared promoting net-zero homes built by local builder Reid’s Heritage Homes. After a visit to the sales office, the couple was convinced.
They moved into their new home August: a 1,700-square foot, three-bedroom dwelling that ranks as one of the most efficient in the country. It has 45 per cent more insulation than other homes its size, and triple-pane windows, high-efficiency appliances and LED lighting fixtures throughout.
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On top of that, space and water heating systems use super-efficient electric heat pumps. This dramatically reduces the need for natural gas, which is still available as a backup. The rooftop is equipped with enough solar panels to supply most of the home’s power needs when the sun is shining. When it’s dark or cloudy, the home draws electricity from Ontario’s coal-free grid.
“We’re sort of like guinea pigs,” says Richard. “But taken separately, all these things are well-established and proven. What Reid's has done is put them together into a really nice package.”
Expect more homebuilders to move in this direction — though it may take them some time to get there. Buildings account for one-fifth of the province’s greenhouse gas emissions. Intent on meeting ambitious greenhouse gas-reduction targets, the Ontario government has clearly signaled that it wants net-zero construction to become the new building standard in the province. Less clear is whether the industry will be ready.
The future of homes
A net-zero home is one that generates as much energy as it uses. Importantly, what it does generate shouldn’t result in greenhouse gas emissions.
The first step to achieving this is to dramatically improve a home’s efficiency. For starters, a home must be as airtight as possible. All kitchen and laundry appliances, lighting fixtures and heating and air conditioning equipment should have the highest efficiency ratings. The electrical system must be able to accommodate rooftop solar panels.
Jennifer Weatherston, director of innovation at Reid’s Heritage Homes, says the company’s net-zero homes typically consume two-thirds less energy than a comparable home that complies with the current building code. When buildings achieve this first step of maximizing efficiency they are described as “net-zero ready,” she explains; the added cost of getting to this point is about $15,000 for an average-sized, newly built detached home in Ontario.
The next step is to become fully net-zero. This is reached when a home produces enough clean energy to offset what it consumes over the course of a year. A solar power system large enough to do the job in Ontario is expected to cost less than $20,000 by 2020, according to projections from the Canadian Solar Industries Association.
Generally speaking, new homebuyers can expect to spend at least $35,000 more for a fully net-zero home.
Reid’s has built five net-zero homes in Guelph as part of a national demonstration project launched in 2013, partially funded through Natural Resources Canada’s ecoENERGY Innovation Initiative. Minto Communities (Ottawa), Mattamy Homes (Calgary), Provident Development (Halifax) and Construction Voyer (Laval) also participated in the project; a total of 26 net-zero homes were constructed.
The aim of the project was to show that net-zero homes aren’t one-off structures based on an architect’s dream, but can be built cost-effectively in today’s construction environment.
All five Reid’s homes have sold. The homebuilder, encouraged by what it learned during the project, is now embracing the approach in all of its new builds. By late 2017 all the new single-family homes it builds will be net-zero ready, with the ability to go fully net-zero (i.e. accommodate solar panels) at the customer’s request. The company, which builds roughly 300 to 400 homes each year, is already considering sites in Guelph and Cambridge for future net-zero developments, and is looking at bringing net-zero standards to multi-family and mid-rise buildings.
Other homebuilders are getting in on the action, too. Marshall Homes, based out of Pickering, is planning its own demonstration home in Ajax that is expected to be larger and more energy-efficient than the Reid’s homes.
In addition to conventional solar panels, the demonstration home’s rooftop will be equipped with an air-heating system called a “solar wall” that captures the sun’s heat. The heat will be stored in a gravel pit located under the garage and used to pre-heat air before it’s used by the home’s heat pump system.
Founder Craig Marshall says the goal is to make the heat pump much more efficient during the coldest days of winter, potentially eliminating the need for natural gas. “Adding the solar wall and the gravel bed will take it past net-zero.”
Energy storage could also be a huge boost to efficiency, either as part of a district energy system that serves a subdivision, or within a home as a standalone option, such as Tesla’s Powerwall home battery. “There are a lot of scenarios being thrown around right now,” says Weatherston.
Unpacking the economics
But who are we kidding — it all comes down to cost, right?
Affordability is a growing problem in the real estate market, particularly in the overheated Greater Toronto Area. For this reason, some homebuyers might balk at the higher price of a net-zero home.
What they fail to consider is the total operating cost of home ownership, says Marc Bovet, founder and chief executive of BONE Structure, a small homebuilder based out of Montreal. “People are totally clueless about what they're buying.”
Despite the fact energy costs are a huge component of monthly home expenses, properties listed on the MLS real estate system are not required to disclose heating and electricity costs, nor are builders of new homes. Often, consumers have no sense of a home’s energy performance until they’ve moved in and start receiving hydro and gas bills.
This will change under the province’s new climate plan, which will establish a Home Energy Rating and Disclosure program. Scheduled to launch in 2019, it will require energy audits before all new or existing single-family homes can be listed for sale. The program will cover the cost of the audit, and the results will have to be included in all real estate listings. The goal, according to the plan, is to “improve consumer awareness by allowing homebuyers to compare homes by energy rating.”
Putting an energy-efficiency rating directly in listings will give net-zero homes an advantage in the marketplace by highlighting the potential for long-term energy savings. Simply put, it will enable homebuyers to do their own math.
For example, Ontario households spent an average of $2,358 on electricity and heating costs in 2014, according to a report in August from the Financial Accountability Office, the province’s independent budget watchdog.
In a net-zero ready home that uses two-thirds less energy, the savings would amount to $1,668 annually, or $139 a month.
These savings are important because they significantly offset the upfront additional expense of purchasing a net-zero ready home — which, based on a 20-year mortgage and a five per cent fixed interest rate, would cost homeowners an additional $99 a month.
Which is to say, once the energy savings are factored in, a net-zero ready home will save its owners $40 a month.
Energy prices are expected to rise in coming years, making the savings more pronounced as time goes on. And the premium attached to net-zero ready homes is also expected to fall, as the technologies and construction approaches become more commonplace.
As for the cost of adding solar panels, the Canadian Solar Industries Association projects that those panels will pay for themselves within five years — and that’s without government subsidies. The reason is simple: solar costs have plunged over the past several years and are expected to fall even further over the coming decade.
The trick is to get homebuilders to begin explaining the math to prospective buyers. “It's not something they've talked about before, they don't know how to talk about it, so they now have to make that part of the standard sales pitch,” says Mark Hutchinson, vice-president of green buildings at the Canadian Green Building Council. He compares the challenge to educating Canadians about the logic of taking an anticipated tax refund and putting it into an RRSP. “It's actually to their benefit.”
Another potential benefit: Once homebuyers start doing the math, net-zero homes are likely to fetch a premium on resale because of their superior energy performance.
To be sure, there will be resistance — and a few slipups — along the path to net-zero living. “I fully expect the government to be challenged on it,” says Vince.
In addition to its Home Energy Rating and Disclosure program, the government’s climate plan envisions energy-efficiency standards in the building code reaching net-zero levels by 2030, with initial changes coming as early as 2020. To stimulate consumer demand, it will offer rebates to individuals who purchase or build a “near net-zero” home that “sufficiently” exceeds what’s currently required in the building code.
“We’re a little bit cautious with some of the mandates in the climate plan,” says Weatherston, explaining that the broader industry is still adjusting to net-zero design approaches and much more workforce training and certification are needed. “We need to make sure we do it right, and take the necessary steps to evaluate home performance.”
Not that the industry has been standing still, she adds. “The way the building code has been increasing [efficiency], if we keep on the path we’re going we will be close to net-zero by 2027. So I think the industry will adjust.”
BONE Structure’s Bovet called the net-zero target “honourable” and agreed it is a worthy goal, but only if the quests for efficiency and a lower carbon footprint don’t sacrifice residents’ health. He’s heard too many stories about custom air-tight homes being abandoned and torn down after only 10 years because of mould and insect issues. “You can’t simply introduce net-zero if it’s going to introduce other problems.”
Welcome to the law of unexpected consequences. Net-zero homes, with their extra insulation and super-efficient windows, are so air tight that there’s the potential for mould to more easily develop if there isn’t sufficient air circulation. Take, for example, a plumbing leak that causes water to get behind a home’s walls. “They won’t dry out as fast because they don’t have air leakage,” Weatherston explains.
This can be avoided with new ventilation technologies (for example, energy recovery ventilators) that are properly sized and fitted, and which filter out pollen, dust and spores. But not all homebuilders have experience with such systems — at least not yet. “As soon as you deviate with standard construction practices,” Hutcinson says, “you have a problem with the trades building that to your specs and building it correctly.”
Early adopters will be looking south to California, which is requiring that all newly built residential homes have a net-zero rating by 2020. The Golden State has a larger housing market than all of Canada, so lessons learned there are expected to benefit homebuilders in Ontario.
“I can see this becoming the standard, if not (fully) net-zero, then at least net-zero ready,” says Vince, whose home in Guelph represents the frontier of a new homebuilding movement. “People will get accustomed to it, and the technology they’re using, as they produce more of these units, will probably come down in cost.”
Hutchinson says it’s a course we can’t afford not to pursue. “If we are committed as a society to addressing climate change, buildings have to be part of that solution because they account for about a third of greenhouse gas emissions.”