NIST Special Publication 1172

Life-Cycle Cost Comparison of the 

NIST Net Zero Energy Residential 

Test Facility to a Maryland 

Code-Compliant Design

Joshua Kneifel

http://dx.doi.org/10.6028/NIST.SP.1172

NIST Special Publication 1172

Life-Cycle Cost Comparison of the 

NIST Net Zero Energy Residential 

Test Facility to a Maryland 

Code-Compliant Design

Joshua Kneifel

Applied Economics Office

Engineering Laboratory

http://dx.doi.org/10.6028/NIST.SP.1172

May 2014

U.S. Department of Commerce 

Penny Pritzker, Secretary

National Institute of Standards and Technology 

Patrick D. Gallagher, Under Secretary of Commerce for Standards and Technology and Director 
Certain commercial entities, equipment, or materials may be identified in this

document in order to describe an experimental procedure or concept adequately.

Such identification is not intended to imply recommendation or endorsement by the

National Institute of Standards and Technology, nor is it intended to imply that the

entities, materials, or equipment are necessarily the best available for the purpose. 

National Institute of Standards and Technology Special Publication 1172

Natl. Inst. Stand. Technol. Spec. Pub. 1172, 61 pages (May 2014) 

http://dx.doi.org/10.6028/NIST.SP.1172

CODEN: NTNOEF
iii

Abstract

The National Institute of Standards and Technology (NIST) received funding through the 

American Recovery and Reinvestment Act (ARRA) to construct a Net Zero Energy 

Residential Test Facility (NZERTF). The initial goal of the NZERTF is to demonstrate 

that a net-zero energy residential design can “look and feel” like a typical home in the 

Gaithersburg area. The demonstration phase of the project intends to demonstrate that the 

operation of the house does perform at “net zero,” or produces as much electricity as it 

consumes over an entire year. The NZERTF began the demonstration phase in July 2013 

and will be completed in June 2014.

The purpose of this report is to compare the life-cycle cost performance of the NZERTF 

design to a comparable Maryland code-compliant building design using the results of 

EnergyPlus (E+) whole building energy simulations, local utility electricity rate 

schedules, and a contractor report estimating the associated construction costs. The 

combination of initial construction costs and future energy costs are used to estimate the 

total present value costs of constructing and operating the NZERTF relative to the 

Maryland code-compliant house design. The NZERTF is more costly to build, but saves 

the home owner money in energy costs and increases the market value of the home at 

resale. Assuming the NZERTF is purchased with a 30-year mortgage at 4.5 % and a 20 % 

down payment, the home owner would realize net savings of $41 714, or a 5.6 % 

adjusted internal rate of return.

Keywords

Net zero energy construction; energy efficiency; residential building; whole building 

energy simulation
iv
v

Preface

This study was conducted by the Applied Economics Office (AEO) in the Engineering 

Laboratory (EL) at the National Institute of Standards and Technology (NIST). The study 

is designed to compare the life-cycle cost performance of the NZERTF design to a 

comparable Maryland code-compliant building design using the results of EnergyPlus 

(E+) whole building energy simulations and a contractor report estimating the associated 

construction costs. The intended audience includes researchers in the residential building 

sector concerned with net zero energy residential performance.

Disclaimer

The policy of the National Institute of Standards and Technology is to use SI units in all 

of its published materials. Because this report is intended for the U.S. construction 

industry that uses U.S. customary units, it is more practical and less confusing to include 

U.S. customary units as well as metric units. Measurement values in this report are 

therefore stated in metric units first, followed by the corresponding values in U.S. 

customary units within parentheses.
vi
vii

Acknowledgements

The author wishes to thank everyone involved in the NZERTF project. A special thanks 

to the team at Multinational Group, LCC for their hard work on the contract that 

developed the construction cost estimates used in this report. Thank you to everyone for 

their advice and recommendations for the writing of this report, including Dr. David 

Butry and Dr. Robert Chapman of EL’s Applied Economics Office, Dr. Hunter Fanney of 

EL’s Energy and Environment Division, and Dr. Nicos S. Martys of EL’s Materials and 

Structural Systems Division.

Author Information

Joshua D. Kneifel

Economist

National Institute of Standards and Technology

100 Bureau Drive, Mailstop 8603

Gaithersburg, MD 20899-8603

Tel.: 301-975-6857

Email: joshua.kneifel@nist.gov
viii
ix

Contents

Abstract.............................................................................................................................iii

Preface................................................................................................................................ v

Acknowledgements ......................................................................................................... vii

Author Information ........................................................................................................ vii

List of Figures................................................................................................................... xi

List of Tables.................................................................................................................... xi

List of Acronyms............................................................................................................ xiii

1 Introduction............................................................................................................... 1

1.1 Background and Purpose...................................................................................... 1

1.2 Approach .............................................................................................................. 1

2 Energy and IAQ Performance................................................................................. 3

2.1 Assumptions......................................................................................................... 3

2.2 Total Electricity Consumption ............................................................................. 5

2.3 Interior Environment............................................................................................ 8

3 Construction Cost Data .......................................................................................... 11

3.1 Cost Estimate Approach..................................................................................... 11

3.2 Construction Cost Estimates .............................................................................. 12

3.3 Adjustments to Cost Estimates........................................................................... 13

4 Future Costs ............................................................................................................ 17

4.1 Electricity Costs ................................................................................................. 17

4.2 Maintenance, Repair, and Replacement Costs................................................... 19

4.3 Residual Value ................................................................................................... 19

5 Financial Incentives................................................................................................ 21

6 Analysis.................................................................................................................... 23

6.1 Payback Period................................................................................................... 23

6.2 Life-Cycle Cost Analysis................................................................................... 27

7 Limitations............................................................................................................... 35

8 Discussion and Future Research............................................................................ 37

References........................................................................................................................ 39

Appendix A Construction Cost Data by Category and Subcategory..................... 42
x
xi

List of Figures

Figure 2-1 Predicted Annual Electricity Consumption and Production by Building 

Design ................................................................................................................................. 6

Figure 2-2 Monthly Electricity Consumption by Building Design ................................... 7

Figure 2-3 Monthly Electricity Consumption and Production (kWh) for NZERTF Design

............................................................................................................................................. 8

Figure 2-4 Simple ASHRAE 55-2010 Not Comfortable for 2012 IECC and NZERTF 

Designs - Hours................................................................................................................... 9

Figure 6-1 Simple Payback Period – All Cash Purchase................................................. 23

Figure 6-2 Simple Payback Period – 30-Year Mortgage................................................. 24

Figure 6-3 Simple Payback Period with Financial Incentives – All Cash Purchase ....... 25

Figure 6-4 Simple Payback Period with Financial Incentives – 30-Year Mortgage ....... 25

Figure 6-5 Discounted Payback Period – All Cash Purchase .......................................... 26

Figure 6-6 Discounted Payback Period with Financial Incentives – 30-Year Mortgage 27

Figure 6-7 Monthly Cost to the Homeowner by Home Design and Interest Rate........... 28

Figure 6-8 Annual Survival Rate of U.S. Single-Family Home Ownership ................... 29

Figure 6-9 Net Costs to Homeowner by Study Period (No Resale Value)...................... 30

Figure 6-10 Residual Value by Estimation Approach by Study Period .......................... 31

Figure 6-11 Net Costs to Homeowner by Study Period (No Resale Value).................... 32

List of Tables

Table 2-1 Framing and Insulation...................................................................................... 3

Table 2-2 Window Specifications...................................................................................... 4

Table 2-3 Infiltration Rates................................................................................................ 4

Table 2-4 Electrical and Mechanical Systems................................................................... 5

Table 3-1 Examples of Labor Details by Task ................................................................ 12

Table 3-2 Initial Construction Cost Differences and Reasons by Category .................... 13

Table 3-3 Construction Cost Adjustments to Building Systems by Subcategory ........... 14

Table 3-4 Other Construction Cost Adjustments............................................................. 15

Table 3-5 Adjusted Construction Cost Differences by Category .................................... 15

Table 4-1 PEPCO Electricity Rate Schedule ................................................................... 17

Table 4-2 Estimated Electricity Costs.............................................................................. 18

Table 5-1 Energy Efficiency and Renewable Energy System Financial Incentives........ 21

Table 6-1 Life-cycle Cost Comparison: 20 % Down Payment, 4.5 % Discount Rate, 

10-Year Study Period........................................................................................................ 33

Table A-1 Construction Cost Estimate by Building Design............................................ 42

Table A-2 Construction Cost Differences by Category and Subcategory ....................... 44
xii
xiii

List of Acronyms

Acronym Definition

AEO Applied Economics Office

ARRA American Recovery and Reinvestment Act

ASHRAE American Society of Heating, Refrigerating and Air-Conditioning Engineers

BA Building America

BSC Building Science Corporation

BTP Building Technology Program

CFL compact fluorescent

COP Coefficient of Performance

DHW Domestic Hot Water

DOE Department of Energy

E+ EnergyPlus

EERE Energy Efficiency and Renewable Energy

EL Engineering Laboratory

ELA Effective Leakage Area

HERS Home Energy Rating System

HRV Heat Recovery Ventilator

HSPF Heating Seasonal Performance Factor

HVAC Heating, Ventilating, and Air Conditioning

IAQ Indoor Air Quality

IECC International Energy Conservation Code

MRR Maintenance, Repair, and Replacement

NIST National Institute of Standards and Technology

NREL National Renewable Energy Laboratory

NZERTF Net Zero Energy Residential Test Facility

O C On Center

PV Photovoltaic

SEER Seasonal Energy Efficiency Ratio

SHGC Solar Heat Gain Coefficient

VT Visible Transmittance
xiv
1

1 Introduction

1.1 Background and Purpose

The National Institute of Standards and Technology (NIST) received funding through the 

American Recovery and Reinvestment Act (ARRA) to construct a Net Zero Energy Residential 

Test Facility (NZERTF). The initial goal of the NZERTF is to demonstrate that a net-zero energy 

residential design can “look and feel” like a typical home in the Gaithersburg area. The 

demonstration phase of the project intends to demonstrate that the operation of the house does 

perform at “net zero,” or produces as much electricity as it consumes over an entire year. The 

NZERTF began the demonstration phase in July 2013 and will be completed in June 2014.

The purpose of this report is to compare the life-cycle cost performance of the NZERTF design 

to a comparable Maryland code-compliant building design using the results of EnergyPlus (E+)

1

whole building energy simulations and a contractor report estimating the associated construction 

costs. The use of life-cycle cost analysis is important because the cost flows associated with the 

NZERTF design and a Maryland code-compliant house design are different, with the NZERTF

design realizing greater initial costs, but lower (negative) annual energy costs. By accounting for 

all costs associated with both building designs for the home owner’s investment time horizon, it 

is possible to allow a direct comparison of the economic performance across designs.

1.2 Approach

The Department of Energy’s (DOE) Energy Efficiency and Renewable Energy (EERE) Building 

Technologies Program (BTP) is responsible for funding research at the national laboratories for 

the Building America (BA) program. The BA program has been at the forefront of research of 

low-energy single-family housing design through a variety of outlets, including the BA Best 

Practices Series, case studies for new construction and retrofits, and technical reports and fact 

sheets.

2 Hendron and Engebrecht (2010) defines the BA house protocols to be implemented 

when simulating house energy performance, which are used to supplement the NZERTF 

architectural specifications.

Kneifel (2012) documents the assumptions made to create a whole building energy simulation 

model in the E+ simulation software estimating the energy performance of the NZERTF design. 

The geometry, building envelope, and hard-wired lighting design as well as some energy 

performance requirements are based on the specifications defined by the NZERTF project’s 

architectural firm, Building Science Corporation (BSC).3 Based on the BSC specifications, the 

contractor selected interior equipment and lighting to meet those specifications. Occupant 

behavior assumptions for the NZERTF design are defined based on the operation during the 

 

1 Department of Energy (2013)

2 Building America (2013)

3 Building Science Corporation (2009)
2

NZERTF’s demonstration phase currently in progress as documented in Omar and Bushby 

(2013). For some operating conditions, the model uses assumptions defined in Hendron and 

Engebrecht (2010). Additional documents that assist the model design are American Society of 

Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) 90.2-2007, ASHRAE 62.2-

2010, and the ASHRAE Fundamentals Handbook.

Kneifel (2013) uses the E+ simulation defined in Kneifel (2012) to estimate the energy 

performance of the NZERTF design and a comparable Maryland code-compliant design. The 

energy efficiency requirements defined in 2012 International Energy Conservation Code (IECC)

for residential buildings are used to determine the Maryland code-compliant design. Each of the 

energy efficiency measures is removed from the NZERTF design simulation model, one-by-one, 

to reach the minimum requirements for 2012 IECC in Gaithersburg, Maryland (Climate Zone 4).

Matlock (2013) was a government contracted report completed by Multinational Group, LCC 

that documented the approach used to estimate the costs of constructing the NZERTF and a 

comparable Maryland code-compliant design. Multinational Group hired a LEED-certified 

contractor to create a bid as though it was a private sector project in Maryland being built to meet 

both the NZERTF design as being operated during the demonstration phase (proving net zero 

energy performance over an entire year) as well as minimum Maryland code-compliance (2012 

IECC). The cost estimates for each house design were delivered to NIST in spreadsheet form 

with the report. This report uses the energy performance results estimated in Kneifel (2013) and 

the line item cost estimates in Matlock (2013) to estimate energy and cost performance of the 

NZERTF relative to the same house built to meet Maryland residential code, which is based on 

2012 IECC for residential buildings.
3

2 Energy and IAQ Performance

In order to determine the economic benefits of increased energy efficiency for the NZERTF

design, it is necessary to compare the energy savings relative to the current design (2012 IECC). 

This chapter describes the E+ simulation assumptions and estimated energy and indoor 

environment performance of the NZERTF design and 2012 IECC designs.

2.1 Assumptions

The NZERTF design improves energy efficiency of five aspects of the building envelope listed 

in Table 2-1, Table 2-2, and Table 2-3: framing, wall, roof, fenestration, and infiltration. The 

NZERTF is constructed using “advanced framing,” which uses 2”x6” 24” on center (OC) 

framing instead of the common practice of 2”x4” 16” OC framing. The thicker framing allows 

for greater levels of insulation within the wall cavity while decreasing the amount of wood 

required for framing the house, making it easier to increase the thermal performance of the 

building envelope.

Table 2-1 Framing and Insulation

Insulation NZERTF 2012 IECC – Zone 4

Framing 2”x6” 24” OC 2”x4” 16” OC

Exterior Wall (Cavity/Cavity + External Wall) - /R-20+24 R-20/R-13+5

Basement Wall R-22 R-10

Roof R-45+30 R-49 or R-45+4

Note 1: Wall Cavity R-Value + Continuous R-Value

Note 2: Basement Floor Insulation is the same for both designs

The 2012 IECC wall insulation requirement for a city located in IECC Climate Zone 4 is R-20 in 

the wall cavity or R-13 in the wall cavity and R-5 of rigid insulation. The NZERTF uses 

advanced framing and adds an additional R-24 of rigid insulation to the R-20 in the wall cavity. 

The basement wall requirement for 2012 IECC is R-10 of rigid insulation while the NZERTF 

adds R-12 to the interior of the basement wall. The 2012 IECC design with typical framing uses 

blown-in insulation on the attic floor to reach R-49 of continuous insulation. The 2012 IECC 

design with advanced framing uses R-45 blown-in insulation in the rafters with R-4 rigid 

insulation on the exterior of the roof. The NZERTF roof construction uses the R-45 insulation in 

the rafters and adds rigid insulation to the exterior roof to reach an additional R-30.

The fenestration surface construction materials for windows are defined based on three

parameters: U-factor, Solar Heat Gain Coefficient (SHGC), and Visible Transmittance (VT). 

This approach allows the rated window performance to be modeled while simplifying window 

“materials” and “constructions” in the simulation. The window parameters can be seen in Table 
4

2-2, and are based on the minimum requirements specified in 2012 IECC and the BSC window 

specifications.4

Table 2-2 Window Specifications

Field Units NZERTF 2012 IECC – Zone 4

U-Factor W/m2-K 1.14 1.99

SHGC 0.25 0.35

VT 0.40 0.40

The maximum envelope air leakage rate in the 2012 IECC allowed for residential structures in 

Climate Zone 4 is 3 air changes per hour at 50 Pa. The air tightness of the NZERTF was 

measured at 0.61 air changes per hour at 50 Pa using a blower door test.5These results, shown in 

Table 2-3, are converted into effective leakage area (ELA) for the simulations and then split

between the 1

st floor and 2nd floor based on fraction of volume.6

Table 2-3 Infiltration Rates

Air Leakage NZERTF 2012 IECC

Air Changes at 50 Pa 0.61 3.00

ELA – 1

st Floor (cm2

) 98.8 403.6

ELA – 2

nd Floor (cm2

) 90.2 368.1

Table 2-4 shows that the NZERTF design implements energy efficiency measures in the lighting, 

heating, ventilation, and air conditioning (HVAC), and domestic hot water (DHW) systems, and 

installs a solar thermal hot water system and solar photovoltaic system. The 2012 IECC requires 

75 % of all light fixtures to be high efficiency. All lighting fixtures in the NZERTF design are 

high efficiency. 

 

4 These parameters assume no difference in performance of the windows regardless of the window type (awning or 

double hung).

5 Everyday Green (2012)

6 The ELA should have been split based on the fraction of surface area for each floor, not volume. However, this 

should not make a significant difference in the results.
5

Table 2-4 Electrical and Mechanical Systems

Building System Component NZERTF 2012 IECC-based System

Lighting Light Bulbs 100 % Efficient Lighting 75 % Efficient Lighting

HVAC Air Conditioning Heat Pump (SEER 15.8) Heat Pump (SEER 13.0)

Heating Heat Pump (HSPF 9.05) Heat Pump (HSPF 7.7)

Ventilation/Outdoor Air Heat Recovery Ventilator Min. Outdoor Air (0.04 m3/s)

DHW Water Heater Tank Heat Pump Water Heater Electric Water Heater

Solar Solar Thermal System 2 Panel with 80 gallon 

tank

None

Solar PV System 10.2 kW None

 * SEER = Seasonal Energy Efficiency Ratio

** HSPF = Heating Seasonal Performance Factor

The 2012 IECC design assumes a federal minimum efficiency heat pump with continuous 

outdoor air of 0.04 m3/s.7The NZERTF design replaces the minimum efficiency heat pump with 

a high-efficiency heat pump, and adds a dedicated outdoor air system with a heat recovery 

ventilator (HRV). The NZERTF design replaces the electric water heater with a thermal 

efficiency of 0.98 for the element in the 2012 IECC design with a heat pump water heater with a 

coefficient of performance (COP) of 2.6 and electric backup with thermal efficiency of 0.98 for 

the element. Additionally, the NZERTF design installs two solar thermal panels and 80 gallon 

storage tank to preheat water entering the heat pump water heater. The NZERTF design installs 

the largest possible solar photovoltaic (PV) system (10.2 kW) based on the surface areas of the 

roof.

2.2 Total Electricity Consumption

Figure 2-1 shows that constructing to the NZERTF design specification leads to a predicted 

16 242 kWh (60 %) reduction in annual electricity use relative to constructing to meet residential 

2012 IECC requirements for Climate Zone 4 (10 742 kWh versus 26 983 kWh). The solar PV 

system installed on the NZERTF is estimated to produce 15 471 kWh, resulting in the NZERTF 

 

7 Low air leakage rates without including mechanical ventilation of outdoor air into the house could lead to concerns 

over indoor air quality. Therefore, 2012 IECC requires that any house with an air leakage rate of less than 3 air 

changes per hour must include mechanical ventilation that meets either the International Residential Code or 

International Mechanical Code. The Maryland state energy code for residential buildings requires a minimum 

ventilation rate that is equivalent to those defined in the ASHRAE 62.2-2010. Since the HRV system is designed to 

meet ASHRAE 62.2 requirements, the mechanical ventilation rate for the simulations without the HRV system is 

assumed to be equivalent to those rates. The heat pump fan is used to supply a constant outdoor air flow, and the 

associated electricity consumption is captured in the “HVAC Fan” category.
6

producing 4731 kWh more than it consumes.

Figure 2-1 Predicted Annual Electricity Consumption and Production by Building Design

Figure 2-2 compares the monthly consumption for the NZERTF design and 2012 IECC design. 

The NZERTF design consumes less electricity in each month, and realizes greater reductions 

relative to the IECC design during the coldest months (November through March).

26983

10742

15471

0

2500

5000

7500

10000

12500

15000

17500

20000

22500

25000

27500

2012 IECC Consumption NZERTF Consumption NZERTF Solar PV

Production
7

Figure 2-2 Monthly Electricity Consumption by Building Design

Figure 2-3 shows the solar PV production and consumption by the NZERTF design by month. As 

would be expected, the summer months are when the most energy is produced while the winter 

months are when production lags. However, even with the varying monthly production, ten of 

the twelve months realize greater production of electricity than is consumed by the NZERTF

design.

1138

957

798

676

784

921

1096

965

849

655

771

1130

4357

3483

2478

1648

1266

1460

1757

1506

1234

1566

2163

4065

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Electricity [kWh]

NZERTF

2012 IECC
8

Figure 2-3 Monthly Electricity Consumption and Production (kWh) for NZERTF Design

2.3 Interior Environment

An important aspect of building performance is the indoor environmental conditions. Given the 

unique characteristics of the NZERTF (high insulation, low infiltration, and mechanical 

ventilation control), there are concerns that the comfort levels in the house will not meet target 

levels. There are a number of ways in which to compare indoor environment performance using 

the temperature and humidity levels inside the house. This report measures indoor environment 

performance using ASHRAE Standard 55-2010, which defines an approach to estimate a range of 

conditions (temperature and relative humidity) under which an occupant is “comfortable.” Figure 

2-4 shows the number of hours for which the conditions are considered “not comfortable” 

according to ASHRAE 55 by month for the 2012 IECC and NZERTF design.8For both designs, 

the winter months lead to more “uncomfortable” conditions, and the 2nd floor realizes a greater 

number of hours in “uncomfortable” conditions. The NZERTF design has significantly fewer 

hours for which the thermal comfort is not maintained relative to the 2012 IECC design.

 

8 These results are outputs from the E+ model for the simple approach of calculating acceptable indoor environment 

levels, which are based on combinations of operative temperature and humidity ratio. The calculations allow 

maximum flexibility in the insulation value of clothes worn by the occupant, which estimates the insulation value of 

summer clothes and winter clothes to be 0.078 m

2K/W (0.5 Clo) and 0.155 m2K/W (1.0 Clo), respectively. A Clo is 

the amount of insulation that allows a person at rest to maintain thermal equilibrium in an environment at 21°C 

(70°F) in a room ventilated at 0.1 m/s (0.33 ft/s) of air movement. For additional details, see the E+ documentation 

and ASHRAE 55-2010.

1138

957 798

676

784

921

1096

965

849

655 771

1130

809

1033

1401

1525 1627 1644 1655 1540

1330

1215

870 822

0

200

400

600

800

1000

1200

1400

1600

1800

kWh

Consumption

[kWh]

Production -

Max [kWh]
9

Figure 2-4 Simple ASHRAE 55-2010 Not Comfortable for 2012 IECC and NZERTF 

Designs - Hours

0

50

100

150

200

250

300

350

400

450

January

February

March

April

MayJune

July

August

September

October

November

December

Hours

2012 IECC

0

50

100

150

200

250

300

350

400

450

January

February

March

April

MayJune

July

August

September

October

November

December

NZERTF

1st

Floor

2nd

Floor
10
11

3 Construction Cost Data

One of the deliverables for NIST’s contract with Multinational Group was a summary cost 

estimate for the NZERTF and 2012 IECC designs. This chapter will describe the approach used 

to develop the cost estimate summaries, discuss the cost estimate for each building design, and 

explain the necessary adjustments to the estimates that are required to calculate the construction 

costs for homes built in the private sector for typical residential occupancy for both the NZERTF 

and 2012 IECC designs.

3.1 Cost Estimate Approach

The Construction Cost Summary (Matlock, 2013) estimates the overall costs and work 

hours for the construction of the NIST NZERTF if built in the private residential market 

in Gaithersburg, Maryland. Its key purpose is to determine the differences between the

NZERTF as built and a comparable house built to code in the state of Maryland. This task

was a collaborative effort with VESTA Building Industries a residential LEED certified 

contractor that is an expert in energy efficient residential construction.

All costs in the Construction Cost Summary include labor and materials as well as mark-up for

subcontractor tasks. However, based on the contractor’s experience and verification with 

several other contractors, we were able to estimate subcontractor timelines and approximate

crew sizes to complete the tasks. The assumptions made in developing the Construction Cost 

Summary are made based on the following sources:

 Contractor and subcontractor quotes

 Contractor and subcontractor information on time for task completion

 Contractor and subcontractor information on how many laborers required for task completion

 VESTA Building Industries’ professional experience with sub-contracting

 Multinational Group’s research via the internet for supplemental cost and time estimations

The quotes for sub-contracted tasks were acquired by contacting sources in the DC/Maryland

area. For the tasks that the contractor was responsible, the costs were based on wages in Ann

Arbor, Michigan and adjusted accordingly to reflect the wage differences between Michigan

and Maryland. On average, the wage gap between Ann Arbor and Baltimore, Maryland was

negligible. However, due to the proximity of Gaithersburg to Washington, D.C. Multinational 

Group determined that the wages were to be increased by 2 % to ensure wages were not 

underestimated. All general contractor tasks were described in detail to determine the number

of people required and the number of days/labor hours. Table 3-1 shows examples of the labor 

details reported for each task, including the number of workers, number of hours worked and 

the training required to perform the task.
12

Table 3-1 Examples of Labor Details by Task

Task # Persons Skill Level Hours

Rough Framing 5 Lead Carpenter (1)

General Labor (4)

1000

Exterior Siding 3 Lead Carpenter (1)

General Labor (2)

240

Drywall Installation 6 General labor 130

Flooring 4 General labor 110

Electrical Finishes 2 Licensed Electrician (1)

General Labor (1)

20

3.2 Construction Cost Estimates

Table A-1 included in the Appendix A shows the construction cost estimate for the construction

of the NZERTF as built, including all the duplicative and monitoring systems (geothermal loops, 

high, velocity ductwork, electrical system for monitoring, etc). Table 3-2 shows that the 

difference in the NZERTF and 2012 IECC design estimates is $314 787, of which $46 883 is 

overhead and profit mark-up for the builder.9The category with the most significant builder’s 

cost difference is “Building Systems” ($163 250 or 61 %), which includes HVAC, electrical, 

solar PV, and hot water heating systems. “Insulation” accounts for the next highest percentage at 

13 % ($34 800) followed by “Rough Framing” ($20 898 or 7.8 %) and “Miscellaneous” 

($20 200 or 7.5 %). No other category is over 4 % of the builder’s cost.

 

9 Table A-2 shows the more detailed subcategory differences for these categories.
13

Table 3-2 Initial Construction Cost Differences and Reasons by Category

Category NZERTF 2012 IECC Difference Reason for Difference

PRECONSTRUCTION $3430 $3230 $200

NZERTF has more detail, which increases design cost. 

Permitting may be based on total construction cost, which 

is higher with NZERTF.

HEAVY EQUIPMENT $2750 $2200 $550 Additional components and stages of construction.

FOUNDATION and 

EXCAVATION $29 628 $22 050 $7578 Additional foundation and drainage material and labor 

costs

UTILITY CONNECTIONS $6000 $6000 $0 Same requirements

CONCRETE $14 528 $10 400 $4128 Additional insulation under foundation, in-floor radiant 

heating system, and extra care in garage concrete work.

ROUGH FRAMING $85 598 $64 700 $20 898

More steps and attention to detail. Additional insulation 

materials. Much of the cost increase in the NIST home is 

due to the air-sealing details. Garage insulated for 

monitoring system.

BUILDING SYSTEMS $214 750 $51 500 $163 250

Duplicative HVAC ductwork creates complex "work 

arounds" for plumbing and electrical systems. HRV 

system, in-floor radiant heating, geothermal loops. High 

performance electrical equipment for monitoring.

EXTERIOR FINISHES $83 900 $74 100 $9800

Cost increase for NIST in this section is mainly due to the 

additional complexity of attaching siding and higher cost 

windows.

INSULATION $41 300 $6500 $34 800

Additional high priced insulation, in some cases double 

thickness and meticulous application of tape to seal. 

Insulation of garage.

PORCHES AND DECKS $2000 $2000 $0 Same design

INTERIOR FINISHES10 $173 450 $166 950 $6500 Basement drywall and installation details are the cause of 

the increase for code built above NIST home.

LANSCAPING $0 $0 $0 No landscaping included in the cost estimates.

MISCELLANEOUS $30 750 $10 550 $20 200

Miscellaneous cost higher due to overall higher costs for 

NZERTF. Offsets risk for contractor for issues with 

nonstandard processes and applications.

Builder's Cost $688 084 $420 180 $267 904

Builder's Overhead and 

Profit @ 17.5% $120 415 $73 532 $46 883

TOTAL $808 499 $493 712 $314 787

These cost differences initially appear to be excessively high for any typical homebuyer to 

consider as an economically viable option. However, there are adjustments to these costs that are 

required to correctly represent the cost associated with this house as though it is built for actual 

occupancy by a home owner in the private sector.

3.3 Adjustments to Cost Estimates

In order to compare the costs of building the two houses in the private sector (typical residential 

subdivision), the additional costs not associated with the house (i.e., duplicative system costs) as 

 

10 Interior finishes are based on medium-end quality products to better represent typical construction. The additional 

cost of using high-end/luxury finishes would be the same across both the NZERTF and 2012 IECC designs, and 

therefore, will not impact the life-cycle cost analysis.
14

it is being operated should be excluded from the estimate. These costs are related to building 

systems and construction of the garage. The subcategories for “Building Systems” are shown in

Table 3-3. The italicized line items are costs associated with systems not in operation during the 

demonstration phase of the NZERTF, and should not be included in the costs related to the 

NZERTF for this analysis because these systems would not be installed in a private sector 

construction project. Additionally, the added costs related to the more complex “work-arounds” 

for plumbing and electrical systems around these duplicative systems as well as the electrical 

system for monitoring the house would not be incurred. Therefore the additional costs for 

“Plumbing Rough,” “Electrical Rough,” “Electrical Finish,” and “HVAC Finish” should be 

removed from the cost estimate. The solar PV system included in the Construction Cost 

Summary is based on a different system than the system installed on the NZERTF. The 

difference in costs for the two systems is $7000. These adjustments decrease total costs for 

“Building Systems” by $102 750, leaving $112 000 for total building system costs or a $60 500 

difference from the 2012 IECC design.

Table 3-3 Construction Cost Adjustments to Building Systems by Subcategory

Category NZERTF 2012 

IECC

Initial 

Difference

NZERTF 

Adjusted

New 

Difference

Plumbing Rough $16 500 $12 000 $4500 $12 000 $0

HVAC Rough $23 000 $13 500 $9500 $23 000 $9500

Interior ductwork and Equipment Air to Air $15 000 $15 000 $0 $0

High Velocity Ductwork and equipment $6500 $6500 $0 $0

Heat Recovery Ventilation system $12 000 $12 000 $12 000 $12 000

Geothermal loops $37 000 $37 000 $0 $0

Multi split heat pump system $18 750 $18 750 $0 $0

Electrical Rough $16 500 $11 000 $5500 $11 000 $0

Fire Suppression $10 000 $10 000 $0 $10 000 $0

Solar PV System $28 000 $28 000 $35 000 $35 000

Solar Thermal - 80 Gallon 2 panel system $4000 $4000 $4000 $4000

Solar Thermal - 120 Gallon 4 Panel system $6000 $6000 $0 $0

Plumbing Finish $1500 $1500 $0 $1500 $0

HVAC finish $2000 $1500 $500 $1500 $0

Electrical Finish $18 000 $2000 $16 000 $2000 $0

BUILDING SYSTEMS - TOTAL $214 750 $51 500 $163 250 $112 000 $60 500

Note: In-floor radiant heating system is included in the “Concrete” cost category.

Similarly, there are costs within other categories that would not occur in a house construction in 

the private sector. In particular, the garage has been built as a laboratory for monitoring the 

performance of the NZERTF, which required insulating with closed-cell spray foam insulation 

and greater care in constructing the structure (framing and concrete). The costs for installing the 

in-floor radiant heating system in the basement slab, which is not being used during the 
15

demonstration phase, is included in the “Concrete” category. These additional costs are captured 

in the categories/sub-categories shown in Table 3-4 and total $8026.

Table 3-4 Other Construction Cost Adjustments

Category Subcategory NZERTF 2012 IECC Difference

Concrete Basement Concrete $8500 $5000 $3500

Garage – Concrete $2028 $1800 $228

Rough Framing Garage – Materials $2400 $2200 $200

Garage – Labor $2298 $1200 $1098

Insulation Garage – Roof (closed cell insulation) $3500 $0 $3500

Total $8026

Table 3-5 shows the costs differences for each category, which have shifted dramatically from 

the initial cost estimates, shown in Table 3-2. “Building Systems” still accounts for the greatest 

cost difference, but it has been significantly reduced (44 % of builder’s cost). “Insulation” is now 

23 % of builder’s cost while “Rough Framing” and “Miscellaneous” are 14 % and 15 %, 

respectively.

Table 3-5 Adjusted Construction Cost Differences by Category

Category Initial 

Difference

New 

Difference

PRECONSTRUCTION $200 $200

HEAVY EQUIPMENT $550 $550

FOUNDATION and 

EXCAVATION $7578 $7587

UTILITY CONNECTIONS $0 $0

CONCRETE $4128 $400

ROUGH FRAMING $20 898 $19 600

BUILDING SYSTEMS $163 250 $60 500

EXTERIOR FINISHES $9800 $9800

INSULATION $34 800 $31 300

PORCHES AND DECKS $0 $0

INTERIOR FINISHES $6500 $6500

LANSCAPING $0 $0

MISCELLANEOUS $20 200 $20 200

Builder's Cost $267 904 $138 457

Builder's Overhead and Profit @ 

17.5% $46 883 $24 230

TOTAL $314 787 $162 687

Percent of Total Costs for 2012 

IECC Design 64 % 33 %
16

After controlling for all these additional costs related to constructing the NZERTF as a test 

facility instead of a house constructed for basic residential occupancy, the cost difference 

between the two building designs is greatly diminished. Table 3-5 shows that the builder’s cost 

difference was decreased from $267 904 to $138 457. Lowering the builder’s cost also lowers

the builder’s overhead and profit mark-up, leading to costs reductions for the home purchaser of 

$162 687.

One last item to consider is the risk-related costs in the “Miscellaneous” category. The builder 

included an additional $20 000 in the estimate to cover any unforeseen issues related to the “nonstandard processes and applications” and higher costs of the NZERTF. These costs currently 

exist in the short term, but in the long-run should diminish and eventually disappear as the 

builder becomes more familiar with the new processes and applications. Therefore, these costs 

are associated with the learning curve related to net zero energy residential construction.
17

4 Future Costs

The cost performance of the two building designs are impacted by the initial construction costs, 

operating energy costs, maintenance, repair, and replacement (MRR) costs of building 

components, and the resale/residual value of the house at the end of the study period. This 

chapter will analyze the costs for both house designs for each of these factors, and calculate the 

life-cycle costs for owning and operating both houses for a 10-year study period).

4.1 Electricity Costs

Calculating the annual energy costs for each design requires the monthly energy consumption 

and electricity rate schedule. Table 4-1 shows the PEPCO standard rate schedule for residential 

customers in Montgomery County. The components of the rate schedule are constant across 

months of the year except for the generation charge, which is 8.8¢/kWh for June through 

September and 8.6¢/kWh for October through May estimates net metering monthly.

Table 4-1 PEPCO Electricity Rate Schedule

PEPCO Standard Offer -

Residential

Rate Schedule 

Components

Generation (June-Sept.)* 0.08789/kWh

Generation (Oct.-May)* 0.08592/kWh

Transmission 0.0069/kWh

Gross Transmission Receipts Tax 2.0408 %

Distribution Service (Flat Rate) 7.39/moth

Distribution Service (Per kWh) $0.04137/kWh

Delivery Tax 0.00062/kWh

MD Environmental Surcharge 0.00015/kWh

Montgomery County Surcharge 0.0119037/kWh

Administrative Charge 0.003/kWh

EmPower MD Charge 0.001813/kWh

Demand Resource Surcharge -0.00007/kWh

Total Cost per kWh (June-Sept.) 15.4 ¢/kWh

Total Cost per kWh (Oct.-May) 15.2 ¢/kWh

Total Lump Sum Cost $7.39/month

Note: Does not included Procurement Adjustment Cost, 

Universal Service Charge, Bill Stabilization Adjustment, 

or RGGI Rate Credit

After combining the cost rates, the total marginal cost of electricity consumption is 15.4¢/kWh 

for June through September and 15.2¢/kWh for October through May. There is also a monthly 

lump sum distribution charge of $7.39. PEPCO determines net metering consumption on a 

monthly basis. Any excess production is carried over as a credit and applied to the next month’s 
18

consumption. In the case of the NZERTF design, cumulative excess production continues to 

increase across most of the year. In this case, the consumer receives a payment from PEPCO for 

any excess production before the end of April. The rate of payment is the 12-month average 

marginal generation charge (8.66¢/kWh) multiplied by the excess production accumulated over 

the previous 12 months.

Table 4-2 shows monthly net consumption for both house designs. Based on the rate schedule 

and excess production credit, the NZERTF design leads to negative annual electricity costs 

(-$320.96) while the 2012 IECC design leads to annual electricity costs of $4205.17. In total, the 

NZERTF design decreases annual electricity costs relative to the 2012 IECC design by 

$4526.13.

Table 4-2 Estimated Electricity Costs

Month 2012 IECC

Consumption

Total Cost NZERTF Net 

Consumption

Total Cost

January 4357 $662.33 329 $7.39

February 3483 $529.39 -76 $7.39

March 2478 $376.71 -603 $7.39

April 1648 $250.52 -848 -$402.25

May 1266 $192.38 -843 $7.39

June 1460 $224.83 -722 $7.39

July 1757 $270.58 -560 $7.39

August 1506 $231.89 -575 $7.39

September 1234 $190.08 -481 $7.39

October 1566 $241.18 -560 $7.39

November 2163 $328.71 -99 $7.39

December 4065 $617.90 308 $7.39

Total 26 983 $4205.17 -4730 -$320.96

Costs are calculated monthly based on the PEPCO rate schedule.

Net metering credit is applied in April and is calculated taking excess production for 

those 12 month multiplied by the 12-month average generation charge (8.66 ¢/kWh).

Does not include any financial incentives such as production tax credits.

Energy prices tend to rise over time. In order to control for this increase, the residential 

electricity price escalation rate estimates for the South Census Region are used to adjust future 

electricity costs.11 The average escalation rate for year 25 through year 30 is used for all years 

beyond 30 years.

 

11 Annual Supplement
19

4.2 Maintenance, Repair, and Replacement Costs

The initial construction costs and operating energy costs are not the only costs associated with a 

house. Building components will require regular maintenance and repair throughout a house’s 

lifetime, including inspections and repairs to HVAC and DHW equipment. Some building 

components have a limited useful life. HVAC equipment may last anywhere from 10 to 30 years. 

Solar PV systems are warrantied for 25 years. The cost of replacing these systems should be 

included when considering the total cost of ownership for a home.

For simplicity, we assume that maintenance and repair costs will be the same for similar systems 

because it would be expected that the higher performing “off-the-shelf” equipment in the 

NZERTF would maintain its performance as well as more conventional technologies used in the 

2012 IECC design. Any costs that are identical across alternatives can be excluded from the 

analysis because the differences in costs are all that matters for life-cycle cost analysis. The 

maintenance costs for the solar PV, solar hot water, and HRV systems are assumed to be 

negligible for the initial 10 years of building operation.

4.3 Residual Value

There have been few studies to date that have considered the market value of an energy 

efficiency rating or “green” rating in the single-family residential sector. There have been studies 

that have estimated the percentage premium for green ratings in the residential sector. Brounen 

and Kok (2011) estimate a 10 % premium for higher energy efficiency homes in the Netherlands. 

Dashtrup et al (2012) finds home with solar panels sell for about a 3.5 % premium. Aroul and 

Hansz (2012) find a sale premium of 2.1 % to 2.4 % for homes in Texas rated as green, which 

included a Home Energy Rating System (HERS) rating of 83. The premium is greater in a 

jurisdiction that has a mandatory green building program (3.0 % to 4.7 %) relative to one with a 

voluntary program (0.2 % to 1.1 %). Kok and Kahn (2012) finds that a house with a certified 

green home label sell for a 9 % premium (+/- 4 %), on average, for a subset of homes in 

California. The premium is enough to more than offset the costs of constructing the homes to 

meet the rating systems. The effect is driven by the homes with an Energy Star label (statistically 

significant 14.5 % premium) while the effect of LEED and GreenPoint Rated homes is 

statistically insignificant. The green rating systems could be insignificant in the model due to the 

smaller sample size or the ratings have not yet gained recognition in the market due to 

uncertainty in the related benefits. For example, the same green rating could imply different 

levels of energy efficiency, which leads to different realized energy cost savings. These studies 

are all looking at homes with marginally better energy efficiency (<30 %), which makes it 

difficult to compare to market value of a net zero energy home.

In order to estimate the premium for the NZERTF design, it is necessary to determine an 

incremental value placed on the next unit of energy savings. Two studies have determined a 

relationship between energy cost savings and market valuation of a home. Nevin and Watson 
20

(1998) shows that for every dollar saved in energy efficiency, a house sells for an additional $20, 

or annual fuel savings is discounted at the prevailing after-tax mortgage interest rate. Research 

from the commercial sector has led to similar results. Eichholtz et al (2009) estimates 

commercial buildings with Energy Star ratings realize premiums (one dollar of energy savings 

annually leads to an increase in market value of 18.32 – capitalization rate of about 5.5 %). In 

summary, a rational homebuyer is willing to pay more for a home up to the point where the 

additional after-tax monthly mortgage costs are equal to the average monthly energy cost 

savings. 

Based on this market approach, our study will calculate the additional resale value as the addition 

to the purchase price that leads to an increase in the monthly mortgage payments equivalent to 

the average monthly energy cost savings for the last year of the study period. The last year is 

used because energy prices escalate over time, and the new homeowner will value the home 

based on energy prices at the time of purchase. Tax effects are excluded from this analysis to 

minimize the complexity of the calculations.

Life-cycle costing methodology states that the residual value of an investment should be 

calculated as a linear function of the initial investment costs and the remaining life of the 

investment as shown in the formula below:

 

 

 

Both the life-cycle costing methodology, ASTM Standard Practice E917, for estimation of 

residual value and a market approach based on Nevin and Watson (1998) are considered in this 

study while calculating market value of home resale.
21

5 Financial Incentives

There are a variety of financial incentives available at the federal, state, and electric utility levels 

for residential renewable energy technology installation and electricity production as well as 

energy efficient home construction. The combination of these financial incentives can 

significantly impact the cost performance relative to the Maryland code-compliant design.

Table 5-1 shows the financial incentives available for the NZERTF design. At the federal level, 

there is a renewable equipment income tax credit worth 30 % of the installed cost of a solar PV 

or solar thermal system. For the two systems installed in the NZERTF design, the total upfront 

federal tax credit is $11 700.

Table 5-1 Energy Efficiency and Renewable Energy System Financial Incentives

Description Incentive Type $Value

Federal Renewable Equipment 

Income Tax Credit

30 % of installed cost Solar PV 

Installation

$10 500

30 % of installed cost Solar Hot Water 

Installation

$1200

State Energy Efficiency 

Rebate Program

$1000 Solar PV 

Installation

$1000

$500 Solar Hot Water 

Installation

$500

Solar Renewable Energy 

Credits (SRECs)

80 % of SACP12 Solar PV 

Production

$26 802

Solar Water 

Heater Production

$5024

Utility

EnergyStar for New 

Homes

Varies based on HERS 

Rating

Efficient Home 

Construction

$1600

The State of Maryland offers a flat rebate for the installation of solar PV ($1000) and solar 

thermal systems ($500) as well as a renewable energy production incentive based on solar 

renewable energy credits (SRECs). SRECs are earned from production of solar energy, both 

solar PV and solar hot water. Power producers buy these SRECs from the homeowner to meet 

requirements under Maryland’s Renewable Energy Portfolio Standard. For Level I renewable 

energy producers (producers with systems under 10 kW), the purchase of SRECs must take place 

in a single, upfront payment of the present value of the SRECs over the lifetime of the contract 

discounted using the federal secondary credit interest rate as of January of the year in which the 

 

12 15-month average price per certificate (February 2013 through April 2014). Source: https://gats.pjmeis.com/gats2/PublicReports/SolarWeightedAveragePrice.
22

contract is signed (1.25 % in January 2014).13 Assuming a contract is signed for the remainder of 

the legislative life through 2028, the present value of the SRECs for the solar hot water and solar 

PV combined is $31 826.

The local utility (PEPCO) participates in the EnergyStar for New Homes program and offers a 

rebate for up to $1600 depending on its Home Energy Rating System (HERS) rating. Since the 

NZERTF design is net zero, it qualifies for the entire $1600 rebate.

All of these financial incentives are received upfront when the house is completed, which assists 

in offsetting some of the additional construction costs of reaching the net zero design. In total, 

the homeowner receives $46 626.

 

13 Even though the system is technically rated at 10.2 kW, it is assumed that the system qualifies as a Level I system 

to simplify the analysis.
23

6 Analysis

There will be two cost analysis approaches considered in this chapter: payback period and 

life-cycle cost analysis. Payback period is a simplistic comparison of the initial investment costs 

and future cost savings while life-cycle costing is a more rigorous and complete analysis 

approach.

6.1 Payback Period 

The construction costs have been described in detail in Chapter 3. In summary, the cost of 

constructing the 2012 IECC design is $493 712 while the construction costs for the net zero 

energy house design are $656 398, which is a difference of $162 687. In Section 4.1, the annual 

energy cost savings is estimated to be $4526. The simple payback approach calculates how many 

years it will take for the future cost savings to offset the initial investment costs (all in nominal 

dollars). Let’s initially exclude any financial incentives available to homeowners. Assuming the 

buyer purchases the home outright, the simple payback period is the investment costs ($162 687) 

divided by the annual cost savings ($4526), or 36 years. 

Figure 6-1 Simple Payback Period – All Cash Purchase

A more typical home purchasing approach is to finance most of the home purchase. The most 

common financing option for a new home purchase is the 30-year fixed-rate mortgage. For 

simplicity, let’s assume the purchaser makes a 20 % down payment, which eliminates mortgage 

insurance. The difference in down payments between the net zero energy home design and the 

2012 IECC design is $32 537. Assuming a 4.375 % interest rate makes the additional monthly 

mortgage payment (principal and interest) $650 greater for the net zero energy design, which 

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37

Costs and Savings [Nominal $]

Years

Nominal

Energy

Savings

Investment

Costs
24

makes the additional annual mortgage payments $7800.

14 The extra annual mortgage costs are 

72 % higher than the energy cost savings of $4526. Not only does the net zero energy house cost 

more upfront ($32 537), but the homeowner’s monthly costs (mortgage payment plus average 

energy costs) are higher by $273. The homeowner does not begin to see annual savings greater 

than annual costs until the 30 year mortgage is entirely paid off. It takes another 29 years (59 

years in total) for the savings to offset the costs.

Figure 6-2 Simple Payback Period – 30-Year Mortgage

If currently available federal, state, and utility financial incentives are included in the analysis, 

the cost savings in the first year are increased by $46 626 due to rebate and grant programs and 

the value of state-level Solar Renewable Energy Credits (SRECs) associated with the solar PV

and solar hot water system production. Figure 6-3 shows the combined cost savings from the 

financial incentives and energy cost savings, which first offset the initial investment costs of an 

all cash purchase in Year 26, which is 10 years sooner than if the financial incentives are not 

included in the analysis.

 

14 Market rate for jumbo mortgage with 20 % down for Rockville-Wheaton area of Maryland as of April 30, 2014. 

Source: http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx.

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

$220,000

$240,000

$260,000

$280,000

$300,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64

Costs and Savings [Nominal $]

Years

Nominal

Energy

Savings

Total

Nom.

Costs
25

Figure 6-3 Simple Payback Period with Financial Incentives – All Cash Purchase

In the case of a financed home purchase (a 30-year fixed-rate mortgage with 20 % down 

payment), including in the financial incentives makes the interpretation of the results more 

nuanced. The financial incentives ($46 626) are greater than the additional down payment 

($32 537), which leads to a payback period of one year. The savings are greater than the costs 

until Year 5, at which point the annual costs are greater than the annual savings until the 

mortgage is paid off in Year 30. It takes another 19 years until the total savings offsets the total 

costs again in Year 49. 

Figure 6-4 Simple Payback Period with Financial Incentives – 30-Year Mortgage

The simple payback approach does not take into account the time value of money. In order to do 

so, the future costs and savings must be discounted into present value terms. In this case we will 

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Cost and Savings [Nominal $]

Years

Financial

Incentives

Nominal

Energy

Savings

Investment

Costs

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

$220,000

$240,000

$260,000

$280,000

1 6 11 16 21 26 31 36 41 46

Costs and Savings [Nominal $]

Years

Financial

Incentives

Nominal

Energy

Savings

Total

Nom.

Costs
26

assume the discount rate is equal to the mortgage interest rate to estimate the discounted payback 

period. Assuming an outright purchase, it takes 85 years for the financial incentives and present 

value energy cost savings to offset the initial investment costs, nearly 30 additional years relative 

to the simple payback period approach.

Figure 6-5 Discounted Payback Period with Financial Incentives – All Cash Purchase

Similar to the non-discounted results for a financed home purchase, using a strict definition of 

the discounted payback period leads to a discounted payback of one year. However, since the 

annual mortgage costs are greater than the annual energy cost savings, the total costs become 

greater than the total savings starting in year 6. The costs remain higher throughout the life of the 

mortgage plus an additional 50 years (80 years in total) for the financial incentives and present 

value energy cost savings to offset the initial investment costs, which is 31 years greater than the 

simple payback period approach.

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91

Cost and Savings [PV$]

Years

Total Real

Savings

Investment

Costs
27

Figure 6-6 Discounted Payback Period with Financial Incentives – 30-Year Mortgage

The simple and discounted payback period approaches are limited in their usefulness and the 

above example shows the limitations of using payback period to determine a project’s economic 

feasibility. If strictly followed, selecting the net zero energy design would have had a simple 

payback and discounted payback period of one year. As has been shown, this approach would 

miss any benefits and costs that occur after the payback period, which are important to the

homeowner. In order to capture all the related benefits and costs associated with the house, it is 

appropriate to use a more rigorous approach.

6.2 Life-Cycle Cost Analysis

Consider the complexity of the decision for the homebuyer. The net zero energy home costs an 

additional $162 687. If the homebuyer finances the home with a 30-year fixed-rate mortgage

with a 20 % down payment at 4.375 %, the additional monthly mortgage payment (principal and 

interest) is $650 or $7800 annually.

15 The extra annual mortgage costs are 72 % higher than the 

energy cost savings of $4526. Not only does the NZERTF cost more upfront ($32 537), but the 

homeowner’s monthly costs (mortgage payment minus average energy cost savings) are higher 

by $273. For perspective, in order to make the combination of mortgage payment and energy bill 

equivalent for the two homes would require a mortgage interest rate premium subsidy of almost 

1.0 % for the NZERTF (see Figure 6-7).

 

15 Market rate for jumbo mortgage with 20 % down for Rockville-Wheaton area of Maryland as of April 30, 2014. 

Source: http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx.

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81

Cost and Savings [PV$]

Years

Total

Real

Savings

Total

Real

Costs
28

Figure 6-7 Monthly Cost to the Homeowner by Home Design and Interest Rate

However, financial incentives more than offset the higher down payment ($46 626 versus 

$32 537). The homeowner walks away from closing with an additional $14 809, but has monthly 

costs (mortgage payment plus energy bill) that are $273 greater than the Maryland 

code-compliant home. The homeowner’s investment time horizon of interest (study period) 

could significantly impact the owner’s decision-making process. Additionally, two other 

important values must be considered: differences in maintenance, repair, and replacement costs 

of house components and the difference in resale value of the house. Both of which are impacted 

by the homeowner’s selected study period. It is important to use a well-documented, 

industry-accepted methodology in order to account for the variety of costs related to the house.

The life-cycle cost methodology, as defined in ASTM Standard Practice E917, considers all 

costs related to the house over the selected study period, whether it is construction costs, 

operating costs, or resale value at the end of the study period. The following analysis will vary 

the study period from 1 year to 100 years because there is a diverse distribution of homeowners. 

Figure 6-8 shows that 15 years is the approximate half-life of homeownership, where 50.2 % of 

homeowners are still living in the house (i.e. survival rate). After 20 years, the rate at which 

homeowners move out of the house (i.e. attrition rate) is relatively constant with an average 

attrition rate of 2.2 % and a range of 1.5 % to 2.7 %. Assuming this rate of attrition from 31 

years forward, there will be 0.1 % of homeowners in their home after 60 years, although there 

are sure to be outliers that remain in the same home for longer. This study will focus on 30 years 

or fewer because approximately 65 % of all homeowners live in a home for 30 years or less.

$2,150

$2,200

$2,250

$2,300

$2,350

$2,400

$2,450

$2,500

$2,550

$2,600

$2,650

4.375 4.000 3.500 3.375

Monthly Mortgage Payment + 

Energy Bill [$]

Interest Rate for NZERTF [%]

NZERTF

Mortgage

Payments

MD Code

Home

Mortgage

Payments

(4.375%)
29

Figure 6-8 Annual Survival Rate of U.S. Single-Family Home Ownership16

In order to simplify the analysis, initially assume that the homeowner remains in their home or 

assumes there is no home price appreciation, the higher performing building design will not fetch 

a higher resale price relative to the Maryland code-compliant design (no resale value), and the 

maintenance, repair, and replacement costs are comparable between the two building designs.17

Figure 6-9 shows the life-cycle cost analysis for 8 study periods from 1 year to 100 years. For a 

study period 5 years or less, the homeowner realizes net savings in present value life-cycle costs 

because the upfront financial incentives are enough to offset the higher down payment and future 

monthly costs (mortgage payments and energy bill) for the first 5 years. However, by the end of 

year 6 the homeowner realizes net costs, which continue to increase until the mortgage is paid in 

full after 30 years. At which time the energy cost savings lowers present value net costs until net 

cost savings is realized in about year 85. Based on these results, it is better for the homeowner to 

buy the net zero energy home if the homeowner expects to move sometime in the first 5 years, 

but is not cost-effective for any longer study periods. In the worst case (30 years study period), 

the additional present value costs is equivalent to a mark-up of 7.0 % relative to the Maryland 

code compliant design to get a net zero energy, LEED platinum certified, high-performance 

house.

 

16 Emrath (2013)

17 This assumption is reasonable for approximately the first 15 years because most building systems can continue to 

work that long, and general maintenance costs will be relatively comparable except for the solar thermal system.

94.5

73.2

58.6

50.2 44.1 39.4 35.4

6.7

5.6

3.9

2.6 2.9 2.5 2.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Annaul Attrition Rate [%]

Homeowner Survivial Rate [%]

Years in Home

Survival Rate Attrition Rate
30

Figure 6-9 Net Costs to Homeowner by Study Period (No Resale Value)

Since most homeowners will sell their home at some point, it is important to consider any 

potential additional resale value (residual value) of the net zero energy house relative to the 

Maryland code-compliant home. As was discussed in Section 4.3, there are two approaches 

considered in calculating residual value. Life-cycle cost methodology takes a functional life 

approach, assuming a linear depreciation of the residual value based on the initial additional 

costs, discounted to present value terms. The residual value in this case decreasing over time due 

to fewer years of usable life for the building and discounting of the residual value back to present 

value terms. The market approach estimates the additional value of the house to be the 

discounted present value of the future energy cost savings. The present value of the residual in 

this case only decreases due to discounting.

Figure 6-10 shows the residual value estimated using both approaches across 8 study periods 

from 1 year to 100 years. Assuming a house useful life of 100 years, the LCC method leads to a 

residual value double that from the market approach in year 1 ($154 309 versus $72 814).18 Both 

values decrease as the study period increases, with the LCC method residual value decreasing at 

a faster rate. The residual values are approximately the same by year 40 and the LCC method has 

a lower residual value after 40 years. The two residual value approaches lead to different results, 

but similar interpretations.

 

18 The market approach leads to similar results to those found in Nevin and Watson (1998): for every $1 saved in 

energy costs, the homebuyer will pay an extra $16.80 in Year 0.

-$10,996

-$325

$10,421

$34,319

$21,938

$13,220

$2,860

-$3,540

-$15,000

-$10,000

-$5,000

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

1 5 10 30 40 50 70 100

Net Costs to Homeowner 

[Present Value $]

Years
31

Figure 6-10 Residual Value by Estimation Approach by Study Period

Figure 6-11 shows the net present value costs to the homeowner across 8 study periods from 1 

year to 100 years for the two approaches to estimating the residual value. Once the residual value 

has been included in the life-cycle cost analysis, the net zero energy home becomes more 

cost-effective over all study periods relative to the life-cycle costs without residual value shown 

in Figure 6-9. The homeowner realizes present value net cost savings for both residual value 

approaches for a 1-year, 5-year, 10-year, and 20-year study period, which includes 56 % of all 

home ownerships. Using the market approach, the homeowner realizes present value costs of 

$775 over a 25 year study period while the LCC residual value approach leads to net cost savings 

of $11 230. The homeowner realizes net present value costs for year 30, year 40, and year 50 

because the decrease in the discounted value of the residual value is greater than the present 

value of the energy cost savings. Although it is important to note that the net present value costs 

for either approach across those 3 study periods range from $879 to $9411, which is equivalent 

to a 0.2 % to 1.9 % mark-up of the cost of the Maryland code-compliant home ($493 712). So in 

the worst case scenario, the homeowner is paying the equivalent of a 2 % mark-up for a net zero 

energy, LEED platinum certified, high-performance home.

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

1 5 10 20 25 30 40 50 70 100

Residual Value [PV$]

Study Period [Years]

LCC

Method

Market

Approach
32

Figure 6-11 Net Costs to Homeowner by Study Period (Including Resale Value)

Let’s consider a common homeowner example in detail. Table 6-1 shows the present and future 

cost comparison of the two designs for a home owner that plans to live in the house for 10 years. 

This could be representative of a first-time home buyer that will eventually want to move to a 

larger home or perhaps changes locations due to a career-related move. The present value of the 

additional down payment minus the financial incentives is -$14 089. The present value of 10 

years’ worth of mortgage payments minus the energy cost savings is $ 24 510. In total, the 

additional present value costs to the home owner over the 10-year study period is $10 421. 

However, at the end of the 10 years, the home owner sells the house and recoups some of the 

initial additional investment costs. Depending on the residual value estimation approach, the 

present value net cost savings in life-cycle costs to the homeowner is either $41 714 or 

$84 997.19

 

19 ASTM Standard E1074

-$165,305

-$125,090

-$84,997

-$29,739

-$11,230

$2,802

$4,333

$3,659

$424

-$3,540

-$83,810

-$64,099

-$41,714

-$9,291

$775

$9,411

$5,706

$879

-$3,130

-$5,516

-$180,000

-$160,000

-$140,000

-$120,000

-$100,000

-$80,000

-$60,000

-$40,000

-$20,000

$0

$20,000

1 5 10 20 25 30 40 50 70 100

Net Cost to Homeowner of the Net Zero Design 

[PV$]

Study Period [Years]

LCC

Method

Market

Approach
33

Table 6-1 Life-cycle Cost Comparison: 20 % Down Payment, 4.5 % Discount Rate, 

10-Year Study Period

Cost Category Year 

Occurred

Discount 

Factors

Δ Cost PV Δ Cost

Down Payment 0 1.000 $32 537 $32 537

Financial Incentives 0 1.000 $46 626 $46 626

Mortgage Payments Annual 7.91 $7800 $62 100

Energy Cost Savings Annual 8.31 $4526 $37 590

Residual Value - LCC Methodology 10 0.644 $137 658 $95 418

Residual Value – Market Approach 10 0.644 $89 850 $52 134

Net Savings to Home Owner $41 714 to $84 997

Note: No equipment will be replaced in the initial 10 years of operation.

In making investment decisions, the homeowner may prefer to compare the return on investment 

to other investment options. Let’s assume that the investment cost to the home owner is the 

higher initial down payment (I). The sum of all financial incentives and future benefits and costs 

will be treated as net cost savings. Additional mortgage payments (M) are a negative cost savings 

while energy cost savings (E), financial incentives (F), and residual value (R) are positive cost 

savings. The ratio of present value net future cost savings to initial investment costs, which is the 

savings-to-investment ratio or SIR, is calculated using the following formula:

 

 

 

Based on the formula, the SIR is calculated to be 1.28 to 2.61, which means the home owner 

receives a total return on investment over the 10 years of 28 % and 161 %, respectively.

20

The SIR can be used to calculate an adjusted internal rate of return or AIRR, which is the 

estimated annualized return on investment the home owner realizes assuming a given 

reinvestment rate (i) for the study period (n).21 In this case the reinvestment rate is assumed to be 

equal to the discount rate or 4.375 %. The formula for calculating the AIRR is the following:

 

 ⁄ 

Based on this formula, the AIRR is estimated to be 5.6 % and 14.9 %, respectively.

22

These calculations do not account for a number of factors that will impact costs. There is 

assumed to be no maintenance, repair, and replacement (MRR) cost differences between the two 

buildings. All equipment is assumed to have at least a 10-year lifespan and, therefore, no 

 

20 ASTM Standard Practice E964

21 ASTM Standard Practice E1057

22 The reinvestment rate is assumed to be the mortgage interest rate of 4.5 %.
34

replacement costs will occur during the study period. The relative home values are assumed 

fixed, which ignores any changes in the housing market. Also excluded from the analysis are any 

home insurance, property tax, and income tax implications. Home insurance may be more 

expensive due to the higher market value of the home, but more energy efficient homes may 

receive a premium discount. The state of Maryland exempts many energy efficiency and 

renewable energy home investments, which should alleviate most, if not all, of the property tax 

implications. Including the itemized deduction for a home will lower the after-tax mortgage 

payments because the homeowner is getting some of the mortgage payment returned, and 

increase the residual value estimate because a lower effective discount rate increases the value of 

future energy cost savings. The magnitude of the effects will depend on a variety of other factors, 

including income levels, filing status, and other tax deductions. There is also no value placed on 

the LEED platinum rating and related “green” features, which would vary significantly across 

homebuyers.
35

7 Limitations

This study has a number of limitations related to the whole building energy simulations and cost 

data and assumptions. Whole building energy simulation software is limited in its abilities to 

estimate real world energy performance because it is difficult to control for all potential variables 

that can impact the thermal conditions in a building. There may be discrepancies between the E+

model and the actual NZERTF design. Electrical equipment consumption may be overestimated 

or underestimated dependent on whether equipment operates as simulated. Air infiltration may 

not be accurately estimated in the E+ model. Building components may not perform at the 

manufacturer specifications, such as solar photovoltaic, heating, ventilation, and air conditioning, 

and domestic hot water systems). Actual weather varies from year to year while the simulation 

uses “typical” weather patterns, which may lead to over or under-consumption to maintain the 

building’s desired indoor conditions. These concerns are currently being addressed through 

extensive monitoring of the NZERTF under actual weather conditions to determine where the 

discrepancies are between the simulation model and the measured performance and adjust the 

model in order to better replicate measured performance.

There are limitations to the cost analysis in this study. The cost estimates are based on data from 

one contractor and cannot account for the variation that may occur in the marketplace across 

contractor project bids. A lack of reliable maintenance, repair, and replacement rates and cost 

data make it difficult to account for all the cost differences throughout a building’s lifetime, 

particularly after 15 years. The life-cycle cost analysis excludes a variety of factors that may 

have significant impacts on the cost-effectiveness of the NZERTF design. In general, this study 

took a conservative approach to estimating the life-cycle cost performance of the NZERTF:

home value appreciation, mortgage income tax deductions, and the economic value associated 

with the non-energy related sustainability aspects of the home are excluded from the analysis. 

Each of these factors is expected to have a positive effect on the life-cycle cost-effectiveness of 

the net zero energy, LEED Platinum home design.
36
37

8 Discussion and Future Research

This study analyzes the life-cycle cost performance of the Net Zero Energy Residential Test 

Facility (NZERTF) relative to an identical house built to meet the Maryland residential energy 

code, which is based on 2012 IECC. Life-cycle cost analysis requires information on both initial 

construction costs as well as any future costs associated with operation of the building and 

maintenance, repair, and replacement (MRR) activity. 

Whole building energy simulation software (E+) is used to estimate the annual electricity 

consumption of both the net zero energy and 2012 IECC designs. The net zero energy design 

leads to a reduction of 60 % in energy consumption relative to the 2012 IECC design while 

doing a better job at maintaining a “comfortable” indoor environment for the occupants. If the 

net zero energy design were to be compared to an older edition of IECC, the percentage 

reduction would be even larger because the goal for 2012 IECC was to be 30 % more efficient 

than 2006 IECC.

The life-cycle cost analysis is not simple for the homeowner to understand. The net zero energy

design is approximately 33 % ($162 687) more expensive to construct than the 2012 IECC 

design due to its complex construction design (additional insulation, tighter air leakage control, 

HRV system, solar systems, etc.). However, the net zero energy design is projected to reduce 

electricity costs by $4526 annually ($4205 in consumption costs plus net metering sales to the 

utility of $321). Additionally, there are state and federal financial incentives that can offset a 

portion of the upfront costs. There is also evidence to suggest the more energy efficient design of 

the net zero energy home increases its market value at the time of resale (i.e., residual value). 

If the homeowner finances the home with a 30-year mortgage with a 20 % down payment at 

4.375 %, the financial incentives are greater than the additional funds needed for the down 

payment. However, the additional costs from the mortgage payments are greater than the energy

cost savings, the equivalent of a 1 % mortgage rate premium. As a result, the length of time the 

homeowner intends to live in the house has a significant impact on the life-cycle 

cost-effectiveness of investing in the net zero energy home instead of the Maryland 

code-compliant home.

Assuming a 10-year study period, 20 % down payment, 4.5 % discount rate/mortgage 

rate/reinvestment rate, and the market-based resale value estimate, the net life-cycle cost savings

of constructing and operating the net zero energy home are $41 714, which is an adjusted 

internal rate of return (AIRR) of 5.6 %. Not only does the net zero energy design have lower 

energy consumption (actually it produces more than it consumes) and improve indoor comfort 

levels for the occupants, it also provides a positive return on investment to the home owner.

The analysis in this study is limited in scope and scale, and future research should consider a 

number of factors. More in-depth economic analysis should be completed to consider all costs 

associated with the building (e.g. differences in MRR costs). Incremental cost analysis of 
38

different combinations of the components implemented in the NZERTF should be considered in 

order to search for the more cost-effective building design for home owners. The NZERTF is set 

up to test a number of different component and system configurations, such as geothermal heat 

pumps and high-velocity duct systems. These alternative configurations should be analyzed to 

determine if any of them are more cost-effective than the current operation of the NZERTF. The 

construction cost data is based on a single contractors cost estimate. It would be beneficial to 

receive similar bids from a subset of the home builders in Maryland and the surrounding states to 

determine a median cost and the potential variation in costs of constructing additional homes in 

the region to meet the energy performance of the NZERTF design. Appraisers should be 

consulted in order to determine the additional value placed on energy efficient, net zero energy, 

and LEED certified homes in the current market.
39

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41

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41
42

Appendix A Construction Cost Data by Category and Subcategory

Table A-1 Construction Cost Estimate by Building Design

Category NZERTF

COST

MD CODE 

COST

PRECONSTRUCTION $3430 $3230

HEAVY EQUIPMENT $2750 $2200

Telelift $2000 $1800

Crane $0 $0

Misc Tools $750 $400

FOUNDATION and EXCAVATION $29 628 $22 050

Excavation $1800 $1800

Stone $4000 $1500

Drainage $1800 $750

Sand $0 $0

Foundation Installation $20 000 $16 500

Backfill $1528 $1000

Final Grade $500 $500

UTILITY CONNECTIONS $6000 $6000

Disconnect $0

Electrical $1000 $1000

Gas/Propane $2000 $2000

Water $1500 $1500

Sewer $1500 $1500

CONCRETE $14 528 $10 400

Basement Concrete $8500 $5000

Basement Floor Insulation $1500 $1100

Garage Concrete $2028 $1800

Driveway $0 $0

Sidewalk $0 $0

Sonatubes $800 $800

Porch/other $1700 $1700

ROUGH FRAMING $85 598 $64 700

Exterior Wall framing Labor $13 550 $7000

Interior Wall/Floor framing Labor $5500 $5500

Roof Framing Labor $19 000 $13 950

Trusses/Rafter material $4500 $4500

Rough Materials $30 000

Exterior Walls $14 000 

Interior Wall/Floor $10 000 

Roof $14 000 

Garage Materials $2400 $2200

Garage Labor $2298 $1200

Beam Materials $350 $350

BUILDING SYSTEMS $214 750 $51 500

Rough

Plumbing Rough $16 500 $12 000

HVAC Rough $23 000 $13 500

Interior ductwork and Equipment Air to Air $15 000

High Velocity Ductwork and equipment $6500

Heat Recovery Ventilation system $12 000

In-floor radiant (incl in concrete work)

Geothermal loops

Horizontal Loop $10 500

Slinky Loop $10 500

Vertical Loop $16 000

Multi split heat pump system $18 750

Electrical Rough $16 500 $11 000

Fire suppression $10 000 $10 000

Solar Systems

PV $28 000 $0

HW see below $0

80 Gallon 2 panel system $4000

120 Gallon 4 Panel system $6000

Finishes

Plumbing finish $1500 $1500

HVAC finish $2000 $1500
43

Electrical Finish $18 000 $2000

Fireplace $0

Security System $0

EXTERIOR FINISHES $83 900 $74 100

Windows and doors $33 000 $22 000

Window Wells $1200 $1200

Door Other $0 $0

Garage Doors $6500 $6500

Siding $23 000 $23 000

Siding other $0 $0

Exterior painting $8000 $8000

Cultured stone $4200 $4200

Roofing $8000 $8000

Eavestrough $0 $1200

INSULATION $41 300 $6500

Roof $15 800 $2500

Exterior Walls $10 500 $2000

Air Barrier Membrane $4300 $0

Open cell spray foam $2500 $1500

Foundation/Basement walls $4700 $500

Garage roof (closed cell) $3500 $0

PORCHES AND DECKS $2000 $2000

Porch Fixed $0

Screened porch $2000 $2000

Deck $0

INTERIOR FINISHES $173 450 $166 950

Drywall $17 000 $10 500

Wall Tile $15 000 $15 000

Flooring

Wood $24 000 $24 000

Tile $18 000 $18 000

Cabinets

Cabinet Material $12 000 $12 000

Cabinet Installation $3000 $3000

Vanities $3000 $3000

Vanity Installation $350 $350

Kitchen Countertop $9000 $9000

Vanity Tops $1200 $1200

Shelving $0 $0

Interior Painting $9500 $9500

Interior Design $0 $0

Appliances $14 000 $14 000

INTERIOR TRIM

Trim Material $25 000 $25 000

Trim other

Trim Installation Labor $7000 $7000

Interior Doors Material $10 000 $10 000

Interior Doors Labor $1200 $1200

Other Trim Material $0 $0

Other Trim Labor $0 $0

Shower Doors and Mirrors $4200 $4200

LANSCAPING $0 $0

Retaining Walls $0 $0

Sod/Hydroseed $0 $0

Miscellaneous $0 $0

MISCELLANEOUS $30 750 $10 550

Demolition $0

Disposal/Recycle $900 $700

ORDER DUMPSTER

REMOVE DUMPSTER

Final Cleanup $850 $850

Garage Chair lift $4000 $4000

Miscellaneous $25 000 $5000

Builder's Cost $688 084 $420 180

Builder's Overhead and Profit @ 17.5% $120 415 $73 532

TOTAL $808 499 $493 712
44

Table A-2 Construction Cost Differences by Category and Subcategory23

Category NZERTF

COST

MD CODE 

COST COMPARISON

PRECONSTRUCTION $3430 $3230 NZERTF has more detail, which increases design cost. Permitting may be 

based on total construction cost, which is higher with NIST home.

Permits and Design

HEAVY EQUIPMENT $2750 $2200 Additional components and stages of construction.

Telelift $2000 $1800

Misc Tools $750 $400

FOUNDATION and 

EXCAVATION

$29 628 $22 050

Stone $4000 $1500 Additional drainage material (gravel/stone )

Drainage $1800 $750 Roof drip drainage and gravel bed not included in code built house

Foundation Installation $20 000 $16 500 Extra work due to drainage and insulation 

Backfill $1528 $1000 Roof drip drainage and gravel bed.

CONCRETE $14 528 $10 400

Basement Concrete $8500 $5000 In floor heating system (additional planning and labor).

Basement Floor Insulation $1500 $1100 Additional insulation in the foundation

Garage Concrete $2028 $1800 Additional cost due to extra care with regard to labor.

ROUGH FRAMING $85 598 $64 700 More steps and attention to detail. Much of the cost increase in the NIST 

home is due to the air-sealing details.

Exterior Wall framing 

Labor

$13 550 $7000 Extra care to assure proper fits and seals for additional insulation.

Roof Framing Labor $19 000 $13 950 Extra care to assure proper fits and seals for additional insulation.

Rough Materials $30 000

Exterior Walls $14 000 Additional Cost due to extra insulation materials for insulation 

Interior Wall/Floor $10 000

Roof $14 000 Additional Cost due to extra insulation materials for insulation 

Garage Materials $2400 $2200 Additional framing costs due to additional insulation

Garage Labor $2298 $1200 Extra care to assure proper fits and seals for additional insulation.

BUILDING SYSTEMS $214 750 $51 500

Rough

Plumbing Rough $16 500 $12 000 Extensive ductwork leads to additional “work arounds” required for the 

plumbing.

HVAC Rough $23 000 $13 500 Cost of HVAC system

Interior ductwork and 

Equipment Air to Air

$15 000 Extensive ductwork leads to additional “work arounds”. Also additional air 

handler/gas furnace.

High Velocity Ductwork 

and equipment

$6500

Requires lots of Plenum work to improve performance.

Heat Recovery Ventilation

system

$12 000

Included an HRV system for appropriate outdoor air flow.

In-floor radiant (incl in 

concrete work) In-floor radiant heating in the basement.

Geothermal loops Note: This has been discounted assuming all three excavations done 

together to conserve costs. 

Horizontal Loop $10 500

Slinky Loop $10 500

Verticle Loop $16 000

 

23 Excludes categories and subcategories that have the same costs for the NZERTF and Maryland code-compliant 

design.
45

Multi split heat pump 

system

$18 750 Typically done post-construction

Electrical Rough $16 500 $11 000 Several “work arounds” with HVAC and Plumbing. Additional wiring for 

several HVAC systems. Additional costs comes from the higher 

performance items (breakers, etc.).

Solar Systems

PV $28 000 LG 300W MONO X panels. The performance will be between 10-15% 

below the SunPower panels. These are the next best panels on the market 

at the best price. SunPower with a $7000 cost up on average.

80 Gallon 2 panel system $4000 Solar water heating on NIST house not in typical house construction.

120 Gallon 4 Panel system $6000 Solar water heating on NIST house not in typical house construction.

Finishes

HVAC finish $2000 $1500 Additional HVAC equipment.

Electrical Finish $18 000 $2000 Several “work arounds” with HVAC and Plumbing. Additional wiring for 

several HVAC systems. Additional costs comes from the higher 

performance items (breakers, etc.).

EXTERIOR FINISHES $83 900 $74 100 Cost increase for NIST in this section is mainly due to the additional 

complexity of attaching siding.

Windows and doors $33 000 $22 000 Pella Triple pane SunDefence LowE with Argon. NZERTF used Serious 

Materials Windows, which are no longer available.

Eavestrough $0 $1200 Not needed in NZERTF due to drip drainage system.

INSULATION $41 300 $6500 NIST home increase cost due mostly to the cost of the polyisocyanurate. 

Additional increased cost due to air-sealing membrane and insulation of 

areas not typically insulated.

Roof $15 800 $2500 Additional high priced insulation, in some cases double thickness and 

meticulous application of tape to seal

Exterior Walls $10 500 $2000 Additional high priced insulation, in some cases double thickness and 

meticulous application of tape to seal

Air Barrier Membrane $4300 $0 Additional high priced insulation, in some cases double thickness and 

meticulous application of tape to seal

Open cell spray foam $2500 $1500 Additional high priced insulation, in some cases double thickness and 

meticulous application of tape to seal

Foundation/Basement 

walls

$4700 $500 Additional high priced insulation, in some cases double thickness and 

meticulous application of tape to seal

Garage roof (closed cell) $3500 $0 Additional high priced insulation, in some cases double thickness and 

meticulous application of tape to seal

INTERIOR FINISHES $173 450 $166 950 Basement drywall and installation details are the cause of the increase for 

code built above NIST home.

MISCELLANEOUS $30 750 $10 550 Miscellaneous cost increased due to overall cost increase for NIST. 

Nonstandard processes and applications also increase Miscellaneous 

account.

Disposal/Recycle $900 $700

Miscellaneous $25 000 $5000 Risk mark-up due to cost of materials and required expertise.