Regional Cost-Optimization Study of
Progressively Improving Energy Efficiency
Towards Net Zero Houses
Phase One of a four-year project lead by
Natural Resources Canada
• The Regional Cost-Optimization Study of Progressively
Improving Energy Efficiency Towards Net Zero Houses, is
part of a (NRCan) four year initiative.
• The project aim is to:
• Develop a framework and methodology to carry out regionallysensitive recommendations to reach certain milestone reductions
(ERS 80, ERS 85, ERS 80 – 50%, ERS 80 – 75%, and 100%
• Specify a series of recommendations for builders in the 35 Model
National Energy Code of Canada for Houses (MNECH) zones.
• Four archetype houses were used from plans
commissioned by NRCan
Archetype Descriptions For GTA Region Study
Baseline and Progressive Reductions
• Each archetype is modelled for: Baseline (ERS 75 – OBC 2006);
ERS 80; ERS 85; ERS 80 – 50%; ERS 80 – 75%; 100%
• The following information is presented for each progressive level
of reductions for each archetype:
Summary of energy reduction measures
Reductions on fuel consumption
Impact of increased insulation levels
Impact of Alternate Energy Technologies (AET) and Renewable Energy
• Impact of load management
• Cost optimization (10 and 20 years) - Projected Operating Costs with
Estimated Premium for Energy Reduction Measures
• Net Present Value
• An average of current fuel rates was determined via an online survey of fuel and power providers in the GTA region,
carried out in March 2009.
• For illustrative planning purposes, the current rate was
used to estimate fuel costs for years 1-5. For years 6-10
the initial rate was multiplied by 150% and for years 11-20,
the years 6-10 rates were multiplied by 150%.
Projected Fuel Rates
Assemblies and Mechanicals
• A variety of possible superinsulated and advanced wall
assemblies are created and costed.
• Current installed costs associated with various mechanical
systems are also compiled.
Energy Modelling Tools
• Hot 2000 (v.10.31) is used to model the reductions in energy
• Drainwater heat recovery reductions is measured using the online calculator developed by Natural Resources Canada and
hosted at www.ceati.com/calculator/.
• To get to Net Zero (100 on the Energy Resource Station [ERS]
scale), the modified ERS rating developed for the EQuilibrium
Housing Initiative is used.
• The performance and sizing parameters for the 6m2 collector
solar hot water system and the PV systems associated with
each house in various scenarios are based on RETScreen
results for such a system in Toronto as modelled in the CMHC
study Approaching Net Zero in Existing Houses.
Financial Valuation Methods
• Accepted methods of analyzing return on investment (Net
Present Value in this instance) assess the attractiveness of
an investment against the baseline ERS 80.
• Planning assumptions for cost of capital are included in the
calculation of ROI (Net Present Value).
• A high hurdle rate of 7% is used in order to generate
Energy Reduction Measures
• The space heating scenarios for this archetype changes
• The ERS 85 reduction scenario shows a 7 kW, COP 3 air-to-air heat
pump, increasing the electrical load, but, in conjunction with further
envelope improvements, reduces the space heating energy use by
• In the 75% and 100% reduction scenarios, a combination solar
thermal system with a high-efficiency instantaneous water heater is
modelled to handle both space and water heating.
Reductions in Fuel Consumption
• Envelope improvements from ERS 80 to ERS 85 drop
natural gas consumption for space heating by 70%.
• The ERS 85 shows the change in electrical use where an
air-to-air heat pump is modelled.
• Where the heating system changes to a lower-efficiency air
handler (75% reduction), there is a less impressive drop in
the space heating fuel use. The electrical load increases
due to ventilation and the lower efficiency air handler.
Reductions in Fuel Consumption
Reductions in Fuel Consumption
Impact of Increased Insulation Levels
• Most significant is the reduction in space heating requirements
over the first four scenarios (Code 2006, ERS 80, ERS 85, ERS 80
– 50%) as these relate directly to the envelope improvements.
• Where solar thermal is brought into play (75% reduction
scenario, column 5 next page), the DHW and space heating
loads are so low as to allow for a cost-effective system to supply
up to 50% of the space heating requirements and 90% of the
• Where ventilation (red bar) is a fairly constant, small portion of
overall energy use, the more space heating can be integrated
into a ventilation scheme (as opposed to ventilation being
integrated into a space-heating system), the less electrical
energy will be required.
Impact of Increased Insulation Levels
Aggregate Reductions in Space Conditioning Energy
Impact of Alternate Energy Technologies (AET)
and Renewable Energy Technologies (RET)
• The drainwater heat recovery unit can save up to 73 m3 of
natural gas annually (equivalent to 2774 MJ, assuming 1 m3 =
38MJ), even more when the load is dropped by 150L/day.
• AET and RET measures are carried out only in the 75% and
100% reductions after all envelope improvements are carried
• The 6.8 kWp PV system introduced in the 100% reduction
scenario produces enough power annually to compensate for
the energy used by the natural gas fired water heater that
provides back up to the solar thermal combination space and
water heating system.
Energy Reductions Through AET and
Impact of Load Management
• A 7kW air-to-air heat pump is modelled in the ERS 85
reduction scenario to see how much electricity use
increases when the envelope is reasonably improved.
• The amount of electricity required for space heating and
ventilation increases to just over 6,000 kWh annually
(about 16 kWh/day).
• If the baseloads are dropped from 24 kWh/day to 10 kWh/
day, this combination of envelope improvements and space
heating system would only increase the electrical
consumption by 2 kWh/day (730 kWh/year) over “typical”
electrical consumption in a Canadian household of four.
Cost Optimization (10, 20 years)
Projected Operating Costs with Estimated Premium for Energy Reduction Measures
Net Present Value
The best investment for 2 Storey is 50%. This
illustrates the importance of archetype in
accessing best investment.
Cost of capital 7% (a high hurdle rate in order to generate conservative results)
Initial investment in energy savings measures made at once at the beginning of Year 0
Consistent annual cash flows for Years 1…n
Improve Typical Assemblies First
• The Ontario new home market is price/location driven first,
and specification driven second (by consumers).
• The production housing market in Ontario tends to deal
poorly with dramatic changes.
• The most effective starting point is to improve typical assemblies
before looking at the use of different materials.
• Modifying typical wall assemblies allows production builders to
quickly and easily compare cost differences, as the original
assembly is familiar and a revised assembly would be easy to
benchmark within current costing databases.
Market and Labour Constraints
• One way of reaching better air tightness goals is to use
closed cell insulation in the stud cavities with a few inches
sprayed on the attic side of the ceiling prior to loose fill
• ICF foundations would also likely need to be implemented to achieve
• However, in Southern Ontario, there are significant hurdles
to overcome in order for production builders to bring down
air leakage levels to achieve substantial reductions past
ERS 80, including:
• Extreme price sensitivity of the market (housing as a commodity)
• Scheduling concerns
• Labour and union resistance to new construction methods
Major Shift in Focus Away from Space
• As the envelope improvements reduce the heating load, the
relationships between the various end uses change in the
house. Appliances and other internal gains, such as occupants
and available passive solar gain begin to play a stronger role in
the space heating regime.
Conventional Envelope, 4 to 5 ACH
Superinsulated envelope 1 ACH
Preparation for Solar & PV Makes Sense
Solar ready features (preplumbing, prewiring) are
achievable in cost-effective manners and also provide
• Current costs for renewables, such as PV, are not in line
with production builder pricing at this point, but preparation
for these items makes sense as building envelope
improvements are made.
• The ROI analysis calculated Net Present Value (NPV) for
all archetypes for all scenarios compared to the ERS 80
• The findings indicate the importance of the house type in
determining the best investment in energy savings.
• For example, current costs for materials, labour and fuel (as well as
Ontario’s premium on green power production) show that the 50%
reduction scenario is the best option for both Archetypes 2 and 3 (2
storey with basement and 2 storey slab on grade, respectively)
• While the 100% reduction scenario is the best option for Archetypes
1 and 4.
Constraints Posed by Common Building
• The parameters required by the GTA builders who
participated in the study required that, out of several
proposed options, the most expensive wall assembly be
used – a 2x6 assembly with 25mm (1”) rigid foam to the
exterior and the stud cavity filled with a high-density closed
cell foam (RSI 0.041/R-6 per unit thickness).
• With better market penetration, the cost of the closed cell
foams (or other, lower cost materials with equivalent high
insulation and good air sealing qualities) could drop,
making this type of wall assembly more cost effective.
• Where material costs can be reduced, the ROI analysis
would change dramatically.
• Additional analysis carried out in other zones as part of The
Regional Cost-Optimization Study of Progressively
Improving Energy Efficiency Towards Net Zero Houses will
assess the impact of zone on cost optimization and return
• Future research may include sensitivity analysis and
stochastic modelling for variables such as cost of capital
and fuel costs to provide a more robust analysis of ROI.