If you’re reading this post, you probably already know that a net-zero home is a model of energy efficiency and will save you money on your utility bills. But how much does building a net zero home cost? It’s a question we get a lot, and the answer is of paramount importance to most people who are considering net zero home construction.
Does it cost more to build a net zero energy home than a standard home?
In short, yes. Zero energy homes generally cost more to build than a similarly sized conventional home that merely meets today’s building codes.
In their 2018 report “The Economics of Zero-Energy Homes,” the nonprofit Rocky Mountain Institute estimated the incremental cost to build zero energy homes is a modest 6.7% to 8.1% over code-built homes.
This is partially offset by much lower utility bills.
Zero-energy ready homes are nearly on par with the cost of code-built homes
The delta is even less (0.9% to 2.5%) when you look at construction cost of so called zero-energy-ready homes, which are essentially net zero, minus the solar panels.
What is the cost per square foot of a net zero energy home?
The cost per square foot of building a net zero home of course depends on many factors, most of which are not specific to net-zero home construction.
Region: Building costs per square foot vary depending on where you are in the country. Densely populated coastal cities tend to have higher building costs than other regions.
Topography: The presence of steep slopes, forest, bedrock, or water (rivers, creeks, lakes, the ocean) all drive up the cost of construction.
Number of stories: Above about 1,500 square feet, it’s cheaper to build a two-story house.
Materials: Metal roofs, elaborate siding, and large driveways all increase construction costs.
Finishes: Custom cabinetry, elaborate doors, and plumbing and lighting fixtures can all affect price.
Typical net zero home construction costs in the Pacific Northwest
Our sister company, TC Legend Homes, exclusively builds custom net zero homes in the Pacific Northwest, so we have accurate data for that region.
We’ve found that real-world building costs of net zero homes in our semi-rural Washington region range from $291 to $425 per square foot, not including permitting, engineering, utility connection, or design.
You can check our net zero homes Cost to Build Calculator for a rough estimate of what your building costs might be for a given square footage.
Net Zero Features That Can Add Cost
As I mentioned above, many, if not most, major factors that affect cost are not specific to zero energy homes. However, there are some important factors that are.
- Design costs: Because zero energy homes are still a bit niche, it’s not as easy to find ready-made building plans, which is one of reasons we started Powerhouse Designs. If you have to hire an architect for a custom design, this can add cost.
- Specialized construction techniques: The building techniques that help make net zero homes possible are not particularly cutting-edge or difficult, but they can sometimes be unfamiliar to a contractor who is unaccustomed to anything out of the ordinary. Some contractors may mark up their bid to protect themselves from the uncertainty of trying a new (to them) technique.
- Extra insulation: The energy usage of a net zero home is generally very low, and that requires extra insulation, which has a small cost.
- Highly efficient windows: The windows of net zero homes also must conserve energy, and this means potentially investing in high-quality triple-pane windows, which may be an upgrade from what a spec builder would install.
- Air sealing: Sealing all air leaks in a zero energy home doesn’t cost much in the way of materials, but it takes time to ensure a home is well sealed.
- Heat recovery ventilator (HRV): A tightly sealed zero energy home requires active ventilation, and an efficient HRV, which exchanges stale air for fresh, preconditioned air, is in some cases an added cost.
- Electric heating system: Most zero energy homes are heated with some sort of electric heat pump system. This can cost more than a basic, gas-fired furnace, but not always.
- On-site power generation: Solar panels are perhaps the largest added cost when building net zero homes, although costs are coming down every year, and there are government incentives for installing them.
- Net meter: A net zero home is only possible where utilities offer net metering. Some utilities charge extra to connect to the grid in this way or for the meter itself.
- Energy efficient appliances: Energy Star appliances don’t have to cost more, but they probably will be an added incremental cost over the most basic, inefficient builder-grade appliances.
- Low water usage appliances and plumbing fixtures: Heating water also takes energy, so saving water is often a big piece of the net-zero-energy puzzle. Again, these efficient appliances and fixtures don’t have to cost more, but you may have to increase your budget to get out of the bare-bones category.
How Your Net Zero Energy Home Will Save You Money
Now that we’ve taken a look at all the ways a net zero home could cost more to build, let’s explore how it can save you money at the time of construction and over the long term.
Zero out your monthly electric bill usage fees
The biggest and most obvious cost saving of a zero energy home is that your per-kilowatt-hour charges will be zeroed out over the course of a year.
You may still have a small base service charge, but you won’t face any charges for the electricity you consume. That’s because your energy efficient home design will use very little power to begin with, and you will be replenishing all of it with your solar panels!
Eliminate all natural gas fees
You’ve probably heard about energy efficient gas furnaces. How about eliminating your gas furnace altogether by replacing it with an even more energy efficient electric heat pump! Not only will you not have to pay any gas usage fees or monthly connection fees over the life of your house, you will also avoid the initial (and often hefty) hookup fee at the time of construction.
Reduce repair costs
Zero energy homes tend to be built with higher quality materials and feature lower-maintenance systems. All of this adds up to potentially large cost savings over the life of the home.
Have a more compact design
Most zero energy homes feature a smart floor plan that will maximize livability in less square footage, which of course, saves on construction costs.
Lower healthcare costs
Most zero energy homes have advanced air handling and filtration systems and use greener building materials. This can lead to improved indoor air quality and lower medical bills for those with asthma, chemical sensitivities, and other conditions.
Incentives and other rebates will also save you money
The world finally seems to be waking up to the fact that we need to reduce our energy usage and that promoting renewable energy, efficiency and electrification through incentive programs is an effective way to do it.
Purchase rebates for PV
This is a big one. The federal government is offering a tax credit of 30% of the cost of purchasing and installing a PV system through 2032. Learn more.
Production credits for electricity generated by PV
Some states, such as Washington, offer homeowners $.08 to $.12 per kilowatt hour produced by their PV systems.
Rebates on energy efficient appliances
When purchasing Energy Star or other energy efficient refrigerators, washing machines, dishwashers, or other appliances for your home, check to see if your state offers incentives or rebates. The Inflation Reduction Act will also offer appliance rebates on a national level.
Payback Period of Your Net Zero energy home
If you add up the cost savings of reduced energy bills, how many years would it take to recoup your initial investment?
The RMI study found that the payback period for net zero energy homes averages about 12 years. This may seem like a long time, but it doesn’t take into account the energy savings you will start enjoying as soon as you move into your new home, or the long-term savings you will get over the entire life of your PV system and your home.
The Zero Energy Project (ZEP) has an excellent article, “Zero Energy Homes – A Financial Win for Homeowners,” which makes the case for looking at going net zero as an investment rather than an expense. They point to other calculations that paint a more complete picture of the “payback” of a net zero home. The one I want to look at here is return on investment.
Return on Investment (ROI)
The ZEP looked at five cities, taking the initial amount invested to reach net zero and then adding up the full energy costs savings for 15 years, assuming 2% energy cost inflation, and found an annualized return on investment of between 3.2% and 6.33%.
Back when interest rates were near zero and borrowing costs were low, ROIs this high were a very good deal. This has shifted somewhat now that the Fed has raised rates so sharply. However, if you look at these numbers in the long term and assume that rates will eventually come back down, this is a respectable return on your initial investment in energy efficiency.
What’s more, energy savings are a very safe bet, and reducing your home’s energy usage and bill to zero can be an excellent hedge against inflation. It seems unlikely indeed that the cost of electricity will ever go down, and it may even rise faster than the 2% baked into the above calculations.
How to save money on your net zero energy home
As I mentioned above, building an energy efficient house or a net zero home costs more than building the equivalent less-efficient home. However, you do have control over how much more it will really cost to build it. Here are a few ways you can trim costs.
When it comes to energy efficiency, simplicity is key
When looking at different building plans or working with a designer to come up with custom plans, try to reduce the square footage of your home if possible.
The emphasis should be on using the space wisely rather than just adding more space. For instance, since most people spend very little of their waking hours in their bedroom, make these spaces smaller.
Simplifying the shape of your home’s exterior can also help reduce costs. Homes with lower surface area (that are closer to the shape of a cube) not only cost less to build but are more efficient.
Another way you can simplify the process is by choosing a level, cleared lot with utilities close by and easy road access. Choosing to build a net zero home on sloped property or in a remote or sensitive area can add cost and headaches to the permitting and building process.
Skipping the basement also cuts down on excavation and materials costs.
Other cost-saving ideas for zero energy homes
- Use a trussed roof system rather than vaulted roofs: You’ll miss the soaring ceilings and interior volume, but you can save some money.
- Choose a finished concrete floor: If you opt for a slab foundation when you build a net zero home, you can save on additional flooring costs simply by staining and polishing your concrete floor. It also will serve as an excellent heat sink to keep your indoor air temperature more even.
- Use mini-split heat pumps rather than an in-floor radiant system: Mini splits still can’t match the comfort and efficiency of an in-floor radiant heat system, but they’ve come a long way, and they can cost much less.
- Skip the HRV: A heat recovery ventilator exchanges stale indoor air for fresh outside air without losing a lot of heat. These machines are always nice to have, but in milder climates, it can sometimes be more cost effective to use a simple exhaust fan and a makeup air unit that’s only activated when you’re using your stove.
- Use reclaimed materials: Not only do reclaimed materials add character and conserve resources, but they can save money.
- Specify more outdoor space: Outdoor living space is cheaper to build than conditioned indoor space, and it can be more enjoyable to spend time in, too.
Building a net zero home costs more than a standard home, but the incremental cost is modest and varies based on factors such as region, materials, and finishes.
A net zero home can save money in the long run by eliminating monthly electric and natural gas fees and reducing repair costs.
If you are considering building a net zero house, we would be happy to be of assistance. Please feel free to contact us for help.