NextGen Affordability Case Study

How to build a net zero energy home affordably

At a sales price of $366,000 green|spaces' NextGen Home project was aimed at advancing market rate home construction, but many of the strategies and lessons can be applied to even more affordable housing. It is important to consider ongoing costs such as utility bills to determine the true affordability of a home. The following is a reliable approach based on our experience. We are currently working with EPB and Habitat for Humanity of Greater Chattanooga to apply these strategies in homes for low-income residents.

Step 1 - Site Selection

Our NextGen Home project was built on a relatively steep slope, but in a highly visible location to demonstrate how to resolve slopes in an appealing way for builders maximizing every lot in high value neighborhoods. Building a home the same size with the same performance on a flat lot would substantially decrease cost and improve the schedule.

Subterranean issues are the biggest unknown on every new construction project so care should be taken to identify potential risks such as contamination or weak soils to avoid cost overruns during this phase. 

The site should be located within walking distance of basic needs and/or access to public transportation providing convenient access to basic needs to help reduce the necessity and costs of driving and to encourage physical activity. 

Cost savings from NextGen Home: $10,000-$20,000

Additional cost compared to minimum code requirements: $0

(Unquantified savings in transportation needs, health, and lower carbon footprint)

STEP 2 - Passive Design

Because Chattanooga is in the Northern Hemisphere, the sun travels directly overhead in the summer and travels low across the southern sky in the winter. Any home can take advantage of this fact by maximizing well-shaded south-facing windows to eliminate direct gain in the summer but let the sun in and allow for heat in the winter. Saving deciduous trees (trees with leaves that fall off in the winter) on eastern and western exposures or providing deep overhangs or vertical shading elements will also help improve energy performance.

Natural ventilation with high exhaust windows pulls air up through the house during months when active heating and air conditioning isn't necessary. Blocking prevailing winter winds with evergreen trees can be useful in colder climates.

Cost savings from NextGen Home: $0

Additional cost compared to minimum code requirements: $0

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: (See step 5)

Step 3 - Home Size

The NextGen Home is 1700 SF with three bedrooms and three bathrooms and while smaller than other market rate homes with which it is designed to compete, it is more spacious than necessary. A family of four can live comfortably in well-proportioned spaces with two bedrooms and two bathrooms in 1000 SF. The best way to reduce total construction cost of a home is to reduce the amount of home that is built even though it will tend to inflate the construction cost per square foot. Furthermore, the energy loads for a small home are similarly smaller. 

Cost savings from NextGen Home: ~$80,000-$100,000

Additional cost compared to minimum code requirements: $0

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: $40/month $480/year

Step 4 - Walls, Roof, and Foundation (Envelope)

The key to achieving a high performance home lives here. There are entire sections of libraries filled with books dedicated to the minutia of high performance envelope design but we will provide a few simple recommendations for our region (Climate zone 4). Building with advanced framing (2x6 studs at 24in on center) on either a concrete slab above rigid insulation or a conditioned crawlspace, wrapping that framing with a high performance air barrier, shooting for less than 1.0 ACH at 50pa (this is a measurement of air sealing and essentially measures how many times the entire volume of air in the house escapes through holes in the envelope when pressurized with a fan installed in a door. 0.60 ACH or less is achievable), and filling the cavity completely with insulation will take you a long way toward your net zero goal.

For the NextGen Homes we used Vaproshield for our air barrier, a vapor permeable air barrier, but Advantech ZIP sheathing, and Structural Insulated Panels are also frequently used for super tight construction. For insulation, we used blown cellulose, Rock Wool, Greenguard certified open-cell spray foam in rafters, and closed cell spray foam in the crawl space. To reduce cost though, blown-in blown-in cellulose in cavities and wall spaces and a slab on grade above rigid insulation can be extremely cost effective while still maintaining the level of performance needed to get to zero. 

Cost savings from NextGen Home: ~$2500 (Replacing open cell spray foam and rock wool with blown cellulose)

Additional cost compared to minimum code requirements: $2500 (Vaproshield or similar high performance air barrier)

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: (See step 5)

Step 5 - Heating, Air Conditioning, and Ventilation

Air quality and air temperature are paramount for the comfort of occupants, especially in our climate with hot, humid summers, and cold winters. After building a tightly sealed and well-insulated envelope it is important to right-size the systems responsible for heating and air conditioning and to provide dedicated and balanced fresh air. Luckily, by limiting the size of the home, and achieving a high degree of air tightness, your system only has to heat and cool the fresh air. Our NextGen Home used two ductless mini split systems: one indoor unit and one outdoor unit for upstairs and one indoor unit and one outdoor unit downstairs. Mitsubishi's Hyper Heat inverters are variable capacity and can heat using the heat pump even at very low temperatures when a normal on/off system resorts to inefficient emergency heat. By limiting the square footage, you can reduce costs further by only installing one of the two systems which can serve the entire house. 

Next air quality is extremely important, especially with such a tightly sealed house. We are often asked, is there such thing as having a house that's too tight? The answer is no, but only when you are provide dedicated ventilation to every room with an Energy Recovery Ventilator (ERV), Heat Recovery Ventilator (HRV), or similar balanced whole-house ventilation equipment. If you air seal a home and don't provide dedicated fresh air, you can have buildup of exhaled carbon dioxide, carbon monoxide from appliances, radon from the ground, and off-gassing from finishes and furniture, none of which are healthy.  Our NextGen Home used an ERV, but in our climate, less expensive HRVs can provide much of the energy advantages at a slightly lower cost. 

Cost savings from NextGen Home: $6000 (based on smaller home size)

Additional cost compared to minimum code requirements: $0 (Thanks to Steps 2, 3, and 4)

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: $33/month $400/year

Step 6 - Windows and Doors

The simplest item here is to use energy star qualified windows and doors which provides standards for both the insulating value of glass (U-factor less than 0.30) and the amount of heat the window allows in the home from direct sunlight (Solar Heat Gain Coefficient less than 0.40). Investing in casement windows, thermally broken frames, and multi-point lock doors will help improve performance further by improving tightness of the envelope, but are not absolutely necessary to achieve net zero. Keep in mind, if you are using passive solar, you will want to use the exception in the Energy Star program to have higher solar heat gain coefficients but only if the window is properly shaded and is part of a passive design scheme. 

Cost savings from NextGen Home: ~$11,000

Additional cost compared to minimum code requirements: $1000

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: $10/month $120/year

Step 7 - Water Heater

TVA did great research on the integrated impact of various technologies in their Campbell Creek Automated Homes. One of the lessons was that heat pump water heaters out-performed their competition, not only because they heat water more efficiently, but they also help out your mechanical system. 

Cost savings from NextGen Home: $0

Additional cost compared to minimum code requirements: $500

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: $20/month $240/year

Step 8 - Lighting

LED lighting is a no-brainer. The prices have fallen steeply in the last few years and you can now find even dimmable LED bulbs for less than $2 each. You can get recessed fixtures for less than $50. Unless you are heating a chicken coop, just use LEDs. 

Cost savings from NextGen Home: $0

Additional cost compared to minimum code requirements: $40

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: $12/month $152/year

Step 9 - Appliances

Energy Star appliances are the way to go. Depending on the appliance and brand there is often minimal, if any, cost difference. Some appliances cannot receive Energy Star, like microwaves or ovens, so for those look for low wattage. If a convection microwave and a small induction cooktop will sufficiently fill the cooking needs, that will save a lot of money and energy rather than using a traditional electric range. One important feature appliance used in the NextGen Home was a Whirlpool Heat Pump Dryer which not only operates more efficiently than a typical dryer, it also saves energy by not exhausting conditioned interior air.

Cost savings from NextGen Home: $2000

Additional cost of Energy Star refrigerator, washer, dishwasher compared to minimum code requirements: ~$0-$250

Estimated energy savings compared to average new home 2,467 square feet with average utility bill: $8.33/month $100/year

Additional cost of Heat Pump Dryer compared to typical: $900

Estimated energy savings from Heat Pump Dryer: $8.33/month $100 per year or more (It is difficult to quantify the additional benefit of saved heating and cooling from the lack of exhaust so the real savings would be more)

Step 10 - Solar

The final step is making up for the energy consumed with generation for solar panels (photovoltaics). If all of the above advice has been followed, a home can likely get to net zero energy with a very small solar array (less than 5kw). The NextGen Home has a 4.65kw array that will generate approximately 6410kWh each year offsetting demand and selling excess to generate $641 per year. As electric rates continue to rise over time, the generation value will increase proportionally, further improving the financial performance.

Cost savings from NextGen Home: $0

Additional cost compared to minimum code requirements: ~$10,805 (including $4,500 federal income tax credit) adds $545 to annual mortgage payment assuming 30 year mortgage and 3.92% interest.

Estimated energy generation: $641 per year

Step 11 - Labor

In addition to the above strategies, many net zero energy homes that have been built to maximize affordability include the option for occupants to provide some finishing services such as painting, trim, or hardware installation. This can help trim costs as much as practical and allow homeowners to customize their home.