Fenestration Magazine - Volume 1

FENESTRATION

New Zealand

The Economics of Zero Energy Building

Autumn 2021

Fairview fabricator: Shearmac Aluminium

53 YEARS ON. Still Kiwis’ favourite windows & doors brand.

New designs, better performance, more views to love Since 1968, Fairview have been producing exceptional windows and doors across New Zealand.

We’ve helped thousands of Kiwis make the most of their homes and living spaces and supported local architects and builders with a wide range of projects, both residential and commercial.

We have an extensive network of fabricators who have a deep understanding of their local markets.

Made by Kiwis for Kiwis We’ll never forget our roots that brought us to where we are today; a small steel manufacturing plant in Timaru, New Zealand that has evolved into an extensive network of fabricators that runs across the entire country.

We understand our customers because their home is our home. Our love for New Zealand and the solutions.

From classic to contemporary, architectural to thermal, we have a range to suit your needs.

With over 50 locations across New Zealand, we’re bound to be near by.

Find your local Fairview fabricator at www.fairviewwindows.co.nz/manufacturers/ and get in touch with us today to chat about your project.

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Welcome to Fenestration, Volume 1.

This is a new publication by FMI written especially for you, our industry peers, which we are delighted to provide you in the Autumn and Spring months each year.

We hope this publication will bring you a dose of inspiration, education, and a little bit of insight into where our thoughts and priorities are on industry movements, as well as our own personal research and development.

In this edition, we focus on Zero Energy homes.

As a business, FMI Building Innovation is dedicated to supporting market transformation towards net zero carbon buildings and lifting New Zealand’s relatively weak building code for new homes with a goal of achieving greater overall energy efficiency across Aotearoa.

Zero Energy homes support decarbonisation, improve the health and wellbeing of New Zealanders, and reduce household energy bills. Despite these benefits for consumers and the community more widely, the awareness and uptake of energy-efficient homes (Zero Energy and others) remains very low.

Perhaps one of the most common misconceptions is the infeasible cost of zero energy homes. The following report will discuss the ongoing perception barriers of Zero Energy homes that withhold further interest and dedication to the matter.

The time is right for greater investigation and commitment to energy efficient homes. Rapid urbanisation has left our planet’s resources dwindling, the way we humans live on our earth is sending biodiversity into a decline, and we have, in a nutshell, an environmental catastrophe on our hands.

The construction industry as a whole is one of the biggest contributors to energy related carbon dioxide emissions.

The evidence is all around us, yet barely noticeable from day to day life. The good news is that if we act now, we can put it right. We believe zero energy homes is a small step in the right direction.

I hope reading this report inspires you as much as it does me. In my 40 years of working in the building industry which I have come to love so much; I have never been so passionate for the future.

ON THE COVER: Project: Thwaites Aluminium PUBLISHER: FMI Building Innovation

It certainly is a fascinating, impactive place to be.

SUBSCRIPTIONS: If you do not wish to receive future issues of Fenestration magazine, please email info@fmi.co.nz with the subject line “opt out”.

Project: Canterbury Aluminium

FMI BUILDING INNOVATION 100 Carbine Road, Mt Wellington, 1061 2-6 Timaru Place, Mt Wellington, 1061 PO Box 51075, Pakuranga 2140, Auckland, New Zealand.

Enjoy.

Warren Lewis Managing Director FMI Building Innovation

fmi.co.nz

Zero Energy/Ready homes in New Zealand Table of Contents Executive summary Introduction The cost barrier for ZE/R homes The current cost of ZE/R homes Cost-optimal building practices for ZE/R homes Future cost projections Recommendations for policy makers, tradespeople and architects Next steps

Appendices 1. Three bedroom house drawing 2. Detailed construction differences across the three builds 3. Detail of cost differences across the three builds

Fairview fabricator: MD Aluminium

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Executive Summary Zero Energy houses support decarbonisation, improve the health and wellbeing of New Zealanders in their homes, and reduce household energy bills. Despite these benefits for consumers and the community more widely, the awareness and uptake of energy-efficient homes (Zero Energy and others) remains very low.

One barrier is the perception such homes cost too much more than minimum Code-built houses. Another is that New Zealanders tend not to factor ongoing home operating costs into their house purchase decisions.

In the face of ever-rising house prices, they prefer to spend spare funds on visible improvements like kitchens rather than long term, but invisible, energy-saving investments.

A Zero Energy (ZE) home produces as much renewable energy from photo-voltaic panels on its roof as its occupants consume over the course of a year. A Zero Energy Ready home (ZER) is a ZE home without the photo-voltaic panels. We analysed two ways to build ZE/R homes and compared their energy efficiency and build costs to a home built to New Zealand’s building code. One build, “DOE”, followed the US Department of Energy ZE requirements and the other, “FMI”, was a simple upgrade to the building code by adding high quality windows, and heat pumps for space conditioning and for water heating.

The results surprised and encouraged us. FMI achieved very similar energy performance to DOE yet its ZE cost premium was only half of the DOE build, and for ZER a mere third. FMI passed three of four cost thresholds relating to consumer willingness to pay

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and to return on initial investment over the years of a mortgage and a typical stay in a home. The FMI ZE home premium over the Code-built home was 7% and for FMI ZER it was a little under 4%.

The key building components that delivered the energy performance were high performance windows, followed by the heat pump water heating. The main source of extra ZE cost was the photo-voltaic panels.

The outlook is for panel costs to continue to fall, partly through technology but also through more demand leading to greater throughput and economies of scale.

A similar dynamic applies to heat pump water heating and high quality windows.

The time is right for greater investigation and commitment to energy-efficient homes. With the current government leading New Zealand to make changes to support its climate change commitments, both the Ministry for Business and Industry and the Climate Change Commission have recently published findings that will drive changes that encompass the housing sector. Lifting New Zealand’s relatively weak building code for new homes is on the cards, aimed at achieving greater energy efficiency.

This report was inspired by The Economics of Zero Energy Homes (Single Family Insights), a 2018 publication by Rocky Mountain Institute (RMI)1.

FMI Building Innovation has published this report to contribute to New Zealand achieving improvements to its energy and environmental resilience.

1

https://rmi.org/

Introduction About this report

Benefits for New Zealanders

The Economics of Zero Energy Homes (Single Family Insights), a 2018 publication by Rocky Mountain Institute (RMI)2, is the foundation for this report. RMI is an independent non-profit in the United States that seeks to accelerate the adoption of market-based solutions to help nations shift costeffectively from fossil fuels to efficiency and renewables.

The Economics of Zero Energy Homes aimed to open various stakeholders’ eyes to the affordability and positive cost outlook for more energy-efficient and low emission homes in the United States. Our New Zealand version incorporates recent local research, industry context and policy imperatives as it explores whether Zero Energy homes can be built here, and at what cost premium.

FMI Building Innovation (FMI) has published this report to contribute to New Zealand achieving improvements to its energy and environmental resilience. FMI has been producing window and door joinery for half a century and produces over a fifth of the windows and doors used in New Zealand each year. An innovative firm, FMI is always looking for ways to deliver better value to customers. Increasing the operational efficiency and thermal performance of New Zealand homes, while keeping costs at levels similar to those seen in the market today, is currently a core project.

Accelerating the adoption of energy-efficient homes can deliver material benefits to a variety of New Zealand stakeholders, and across a range of time frames.

Zero Energy homes in New Zealand A Zero Energy (ZE) home is a highly efficient home that, over the course of a year, produces as much renewable energy from photo-voltaic panels on its roof as its inhabitants consume in air and water heating, running appliances and so on. The same home without the solar panels is labelled “Zero Energy Ready” (ZER).

Current awareness in New Zealand of Zero Energy as a concept or label is very low. Instead, the housing industry and a small minority of interested consumers are more familiar with “Passive House”, an international standard that has proven it can achieve both high energy efficiency and indoor comfort through a regime that starts with the design and ends with the as-built certification. Passive houses are typically seen by the local building industry to be considerably more expensive than homes built to the minimum standard of New Zealand’s building code; they are also perceived to need greater care during construction, for example, to achieve the very low air changes level of 0.6 per hour.

New Zealand has one other green building system, namely “Homestar”. This locally developed building rating system encompasses broader efficiency aspects like water use and construction waste reduction, and is better known than Passive, despite having been in the market only two years longer, since 2010.

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Consumers: Energy affordability A study by the University of Otago in 2012 found that about a quarter of New Zealanders lived in energy poverty, defined as ‘going without power during the last twelve months because they could not afford the cost’.3 ZE homes help reduce energy poverty in two ways; by reducing the amount of energy required for heating, for example through better insulation and more energy-efficient heaters, and by reducing electricity demand at times when electricity prices are most expensive for consumers.

Healthier and more comfortable homes Because people in fuel poverty often reduce their heating to save energy3, energy-efficient homes can materially improve physical and health outcomes for New Zealanders.

In 2020, StatsNZ found that during winter in about one third of New Zealand homes, mean temperatures sat below the lower limit recommended by the World Health Organisation (18 degrees Celsius).4 Our 2018 census found that a third of all rental homes feel damp, which leads to health issues and is often the result of underheating. Research by Dr Michael Baker found that 1,600 additional New Zealanders die each winter, in many cases due to cold housing.5 Energy resilience Power outages, while relatively rare and usually shortlived, create discomfort and stress for a household. Outages in winter in a Code-built house leave it unpleasantly cold within a few hours. A ZE house, however, can maintain pleasant temperatures for up to a few days. Outages during summer can be allayed in a ZE home by drawing power off the solar panels on the roof, provided the system is not tied to the grid and thus turned off when the grid is out of action.

To date, solar energy storage systems have not reduced in price enough to warrant their inclusion in the US or New Zealand ZE home. For storage to become more cost effective sooner would probably require the development of new business models with electricity retailers to extract more value for the householder, and/or the introduction of tailored incentives by policy makers.

Community: Environmental resilience Improving energy efficiency of buildings has an important direct impact on helping New Zealand meet its climate commitments. Energy efficiency will help to reduce the 1.3 Mt CO2-e emitted to heat and cool our homes. This is equivalent to about 3% of New Zealand’s long-lived greenhouse gas emissions. 6 Also, changing the source of the remaining energy used by homes from fossil fuels to renewables, wherever possible, will deliver further gains. To this end, the Climate Change Commission, in its 2021 Draft Advice, recommends banning new gas heating systems from 2025 and beginning to phase out gas heating systems from 2030. 7 Grid resilience More thermally efficient homes need less heating on winter evenings. Less heating cuts peak electricity demand on New Zealand’s electricity grid, thereby enabling more electrification for a given level of grid investment. Because electrification is likely to be New Zealand’s leading option for

decarbonisation in the short term, we expect reinforcing actions like energy efficiency of buildings to be prioritised.

Better, future-proofed housing stock quality Houses last decades, and retro-fitting has proved expensive in many countries, including New Zealand.

Building higher quality new houses is an investment for the future that can be made through both the public and private sectors. The higher the standard of new houses, the lower the eventual need to retrofit them to more demanding building codes – and to higher consumer expectations.

Builders: Differentiation Builders who lean into the opportunity that energyefficient buildings present, gaining experience in the new ways of construction and educating themselves on cost efficient methods, can effectively and profitably set themselves apart from the mainstream.

Their output can also be expected to be higher quality with reduced performance risk.

Continued on next page

N E W Z E A L A N D ’S L E A D I N G suppliers of locally made innovative building solutions.

www.fmi.co.nz

Fairview fabricator: Ellisons Aluminium

Fairview fabricator: Fairview Whakatane

The time is right Strengthening Government climate policy, favourable regulatory changes and growing customer interest indicate that the time is right for ZE homes in New Zealand.

Strengthening climate policy The Zero Carbon Act commits New Zealand to do its part to address global climate change by requiring action to reduce carbon emissions. The Climate Change Commission’s first carbon budget, released on 31 January 2020, requires a 17% reduction in greenhouse gas emissions by 2030 compared to 2018 and also a 35% energy efficiency improvement in newly built homes compared to today’s performance.8 Energy-efficient buildings have a modest but still important role to play, given the decades over which installed housing stock endures.

Favourable regulatory changes On top of climate policy, regulatory changes are also likely to be favourable for energy-efficient housing.

2 https://rmi.org/ 3

MBIE’s proposed building code changes in their Building for Climate Change consultation document, released in August 2020, take space heating performance requirements in newly built homes more or less to the ‘Passive house’ standard of 15 kWh per metre squared.9 Bipartisan support for RMA reform has the potential to accelerate new home development which, if combined with stronger energy efficiency requirements in a revised building code, could materially increase demand for ZE building components.

Growing customer interest Additionally, there are signals of growing customer interest – albeit off a very small base – for energy-efficient homes. A leading Passive house architect indicated he had “done twelve Passive projects and consulted on another 55 this year…”

Customer interest is likely to increase once people have experienced living in energy-efficient homes. The role of the public sector and institutional builders like Kāinga Ora has significant potential to inform and influence mainstream New Zealand interest, lifting it beyond the still very small group of early adopters.

University of Otago, The Nature of Fuel Poverty in New Zealand, 2012 Around a Third of Homes Too Cold in Winter and Too Warm in Summer, 2020 BMC Public Health, Trends and Determinants of Excess Winter Mortality in New Zealand: 1980 to 2000, 2008 6 Climate Change Commission, 2021 Draft Advice for Consultation, pages 15 and 10 7 ”, page 55 8 Climate Change Commission, 2021 Draft Advice for Consultation, page PP 9 MBIE, Thermal Operational Efficiency, page 59 4 StatsNZ, 5

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Timeless windows and doors make for easy coastal living Boathouse Bay | Snells Beach

For Jean, the decision to put her beloved Russell bach on the market and buy a Boathouse Bay beachfront spot was all about simplicity, low maintenance, and easy coastal living as she looked to enter retirement.

Taking advantage of her north-facing position on Snells Beach, Jean opted for windows and doors that utilised the property’s expansive views, natural daylight, and exceptional indoor-outdoor flow.

Local Fairview fabricator David Wilmot carefully selected windows and doors that provided a modern flush look to complement the clean, contemporary home.

“The main feature of the house is a 3.2m high living room stacker with raked overlight, looking across Snells Beach to Kawau Island. The raker’s highest point lines up with the off-center apex of the roof, which is complemented by the exposed tongue and groove ceiling,” explains David.

Fairview fabricator: Elite Windows Solutions

“For those building coastally, it’s important to remember that windows and doors are exposed to a high level of salt content, so hard-wearing joinery is key,” David notes.

“Homes up to five kilometres from a surf beach, or a few hundred metres from still marine waters, will see an accumulation of salt residue over time,” he explains.

“Luckily, with a low level of maintenance, Jean’s choice of robust joinery will remain resilient and timeless as the property matures.”

Jean agrees that an abundance of insulation, double glazing, and hard-wearing joinery has helped create a stunning, energy-efficient home where she will enjoy many long summer evenings and cosy winter days.

Retirement has never looked so good! www.fairviewwindows.co.nz

Fairview’s Architectural Linear 35 suite achieved the perfect look for Jean’s Cape Cod-style home, but the choice of windows and doors wasn’t all about their appearance.

“Installing double-glazed insulated glass units ensured Jean greater energy efficiency, year-round comfort, and overall window longevity,” says David.

When considering the lifespan of your windows and doors, hard-wearing joinery is another key material that will offer greater longevity.

fmi.co.nz 9

The Cost Barrier for ZE homes Figure 1

Sources: 2019-2020 Team Zero Inventory; UK Passivhaus Trust

Slow take-up Despite the considerable benefits to individuals and the community of energy-efficient homes, they have achieved little traction in countries with which New Zealand often compares itself. While it is true that in the US, UK and Canada the rate of growth in energy-efficient homes to 2018 has been very fast, this is only because it has come off a very small installed base.

Figure 1 shows growth in the number of ZE/R homes and units in North America and of Passive homes in the UK. Clearly, despite their benefits, energy-efficient homes have yet to make significant inroads into the annual flow of new homes built, let alone to shift the dial on the overall housing stock.

The role of the public sector to drive greater uptake of energy-efficient homes cannot be overstated. In the US, California mandated that all new residential construction from 2020 would be Zero Energy. Barring any COVID-driven backpedaling, this mandate will add about 100,000 ZE homes every year to a 2019-20 USA installed base of 18,000 ZE single family and 7,000 multifamily units. In the UK the stock of Passive houses passed 1,000 in 2018 with, significantly, three quarters at that time having been constructed by social housing providers, who had over 500 more in their pipeline.

These patterns and drivers are echoed in New Zealand.

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With scant local awareness of Zero Energy, there is no information on the number of local buildings that would qualify. For Passive houses, the installed stock in 2020 was estimated at a mere 3510, with perhaps ten builds now being completed in a year. “Homestar”, the locally developed building rating system, has fared better. It has over 10,000 homes registered at its 6 Homestar level, and last year it gained commitment from Kāinga Ora that 3,000 social houses underway or planned will also meet its 6 Homestar standard. Nevertheless, Homestar accredited builds currently represent no more than 0.5% of all New Zealand homes or about 3.5% of new dwelling permits issued between 2010 and 2020 inclusive.

Constraints What has held energy-efficient homes back? For the USA, the RMI report points to outdated perceptions of the price tag attached to the numerous benefits of energy-efficient houses. A 2017 survey by the National Association of Home Builders (NAHB) found that over four fifths of single-family home builders either did not know the cost premium to build an energy-efficient home or thought energy-efficient home building would add more than 5% to the cost. Nearly

Figure 2

Sources: A Comparative Analysis of the International Regulation of Thermal Properties in Building Envelope, Californian energy code, PassiveHaus requirements

three fifths believed US consumers were not willing to pay more than a 5% premium for an energy-efficient home.10A Consumer research in the US yielded a similar result for home buyers.

It is worth noting here the well-acknowledged fact that our local building code is set at a low level relative to our economic and climatic peers. Figure 2 uses the example of window performance to demonstrate this. The result of an undemanding code is that buyers of newly built homes must actively choose to pay more to access energyefficient features. Few have experienced living in a home with such features which raises the bar for convincing them an upfront investment is worthwhile and preferable to putting the money into visible finishing features like kitchen and bathroom fit outs.

“About a third of our enquiries ask about solar or energy efficiency. Then they learn the cost and go for a stone kitchen bench top instead…”

A New Zealand survey for BRANZ11 found 43% of respondents in the building industry identified additional cost as the most significant barrier to exceeding the

minimum standards mandated by the local building code. A follow up consumer survey in 2020 confirmed that among homeowners the upfront cost of building work was one of the main drivers, and little thought was given to the ongoing operating costs of the home. A focus on entry costs is unsurprising given the inexorable rise in the price of New Zealand homes, driven both by increases in the costs of construction per se and by the fundamental, and currently worsening, supply-demand imbalance for homes.

What is Zero Energy and Zero Energy Ready?

A Zero Energy (ZE) home is a highly efficient home that produces as much renewable energy as it consumes over the course of the year. At times, the home will produce more energy than is needed, allowing for the surplus to be sent – often sold – to the grid, or to be stored if cost effective systems are available. At other times, such as winter evenings, the home will need to draw on the grid for power. Thus, while the home’s annual energy need is supplied by its roof, the supply does not always match demand, at all times. Some people refer to ZE homes as “Net-Zero-Energy”.

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Fairview fabricator: Shearmac Aluminium

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A Zero Energy Ready (ZER) building is so energy-efficient that all or most annual energy consumption could be offset with renewable energy if it had photo-voltaic panels on the roof. In all other respects its construction is the same as for a ZE house. Reasons for not including photo-voltaic panels can include poor orientation to the sun, shading from trees or other buildings, and budget limitations. ZER nevertheless helps “futureproof” homes against changing expectations, allows for other renewable energy solutions, and still contributes to climate change goals.

Introducing Cost Thresholds Many prospective homebuyers do not factor in longterm costs associated with home ownership, such as utility bills, maintenance, and future value. Research quoted above shows this is as true for New Zealand as the US. Although some consumers might be willing to overlook sticker price because they understand the ongoing operating cost benefits of a ZE/R or similar energy-efficient home, this is not typical. Therefore, to increase market penetration, ZE/R homes need to be financially appealing to the broader market.

In line with RMI’s approach, we have centered our analysis in this report on four “cost thresholds” that

reflect metrics both homebuyers and builders use to make investment decisions. When the cost thresholds are achieved, decision makers are more likely to bear the cost of investment in ZE homes. The relevant benchmark for ZE/R cost thresholds is the cost to build to the minimum standard of the relevant building or energy code.

We hope policymakers can use these cost thresholds to inform ZE/R programs and determine the level of incentives or cost reduction strategies required to overcome the first cost objection. Builders can use these cost thresholds to set targets for cost reduction in their ZE/R homes. This can help support their net profits by reducing costs and increasing the pool of customers they can serve with ZE/R homes.

The cost thresholds considered are: First Cost Threshold The first cost threshold compares the incremental cost to build a ZE/R home with an identical home that meets the local energy or building code. If the first cost threshold is achieved, a ZE/R home will cost the same as a code-compliant home, meaning the cost barrier to ZE/R homes will have been eliminated.

Continued on next page

We know

GLASS 53 years of glass experience, locally made for applications across thousands of Kiwi homes. www.fmi.co.nz

Fairview fabricator: Window Works

Fairview fabricator: Fairview Whakatane

Mortgage Threshold The mortgage threshold compares the initial cost premium to build a ZE/R home rather than a codecompliant one to the net present value of the anticipated energy savings over the life of the mortgage. In New Zealand, thirty years appears to be most common for mortgages being written now, but the weighted average of all residential mortgages is estimated to be nearer 25 years. Another way to think about this threshold is using net monthly cash flow: if the monthly mortgage payment increase is less than or equal to the monthly energy bill savings, then the mortgage threshold has been achieved.

The mortgage threshold might be most relevant to longterm home owners who have no intention of moving and are likely interested in owning a ZE/R home for more than just financial reasons.

The appropriate cost of capital to apply is always a vexed question; in our analysis we have used 5%. None of the thresholds include any increase in sale value from being ZE/R certified.

Resale Threshold This threshold compares the initial cost premium to build a ZE/R home rather than a code-compliant one to the net present value of the anticipated energy savings over the typical length a homeowner is expected to stay in the home before selling and moving on. In the US this is about twelve years, but in New Zealand it is currently shorter, at between seven and eight years.

Consumer Willingness to Pay (WTP) Threshold This threshold compares the initial cost premium to build a ZE/R home rather than a code-compliant one to the 10

first cost premium customers have stated in consumer research they’re willing to pay.

In the US, research from various angles found surprising consistency in the premium consumers reported they were willing to pay. According to NAHB research in RMI’s report, 42% of consumers in 2018 were willing to pay 4% more on construction costs for an energy-efficient home, and in a survey performed in California12, 51% of consumers were also willing to pay a 4% premium for a ZE home. Another study by NAHB found consumers would be willing to spend an average of $10,732 more for every $1,000 in annual energy savings, which, again, translates to almost 4% incremental cost13. Although none of these consumer WTP metrics perfectly represents how much more US consumers would be willing to pay for a ZE home, combined they point to a similar threshold that people would be willing to pay for a ZE home — roughly a 4% premium.

In New Zealand in October 2020 we used an Omnibus to survey to test similar dimensions. Almost two thirds (65%) of respondents said they were willing to pay some level of premium for an energy-efficient home and almost a quarter (24%) said “maybe”. That proportion rose to three quarters among those who had purchased a new build in the last five years. The median premium cited by those saying “yes” and half of those saying “maybe” was 9-9.5%. Note that this local research tested for the premium as a percentage of the price, not construction cost, of the house, on the basis that few New Zealanders would readily know the build cost of a home, separate from the land. As such the value of the premium is considerably greater than 9% of construction cost given that construction cost often account for less than half the sale price of a New Zealand house.

Interview with Passive House Institute of New Zealand, October 2020 S.A Jones and D Laquidara-Carr “SmartMarket Brief: Green Multifamily and Single Family Homes 2017” (NAHB 2017) 11 Unpublished BRANZ report by MacGregor and White 2018 12 “Driving NZE to Scale” by Ellen Steiner, Opinion Dynamics, last modified November 30, 2017 13“New Homes Attract Consumers Looking to Save on Energy Costs” by NAHB, modified April 6 2016 10A

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T H E L AT E S T G L A S S S PAC E R T E C H N O LO G Y I N I G U LO N G E V I T Y

T H E L AT E S T G L A S S S PA C E R T E C H N O LO G Y I N I G U LO N G E V I T Y Redefining standards for double glazing spacers around the world, FMI Building Innovation’s XR Edge is a multi-component system certified for all climate zones in New Zealand.

Designed to prevent and reduce internal condensation within an insulated glass unit, XR Edge is a revolutionary spacer for greater thermal efficiency and IGU longevity.

W H AT I S A

S PAC E R

A spacer is essentially a component that holds the two panes of glass apart within an IGU. Its main role is preventing moisture passing into the IGU, reducing the possiblity of internal condensation and fogging.

U g yin r pla ce dis spa er GE rn Co R ED X

With carefully and flawlessly manufactured insulating glass panes, our customers can expect the longest IGU life possible. That’s where XR Edge comes in.

IG

Typically, average spacers will often lead to IGU’s failing prematurely due to climate and mechanical loads as well as material incompatibilities that cause the spacer sealants to leak.

WHY GO

XR EDGE Made up of five different components, our rigid spacer system has been designed to withstand New Zealand’s climates.

UNBREAKABLE BARRIER

Unlike other spacer manufacturers, we use a stainless steel vapour barrier and combine it with a structural core made of polypropylene that offers a superior thermal performance, and greatly reduces moisture permeability.

TWICE AS MUCH DESICCANT

Although the chances of moisture passing through the stainless steel barrier are little to zero, a desiccant material is used to fill the hollow core of the stainless steel and polypropylene spacer to absorb any moisture within the air cavity.

Our spacer structure allows us to use twice as much desiccant than standard spacers. The more desiccant used, the more moisture can be absorbed, and the longer the unit lasts.

LONGER LASTING IGU’S

All four sides of our XR EDGE spacer are filled with desiccant, which in turn allows for maximized IGU performance. Our multi-component spacer system ensures our customers obtain the longest IGU service life possible.

THE FMI

DIFFERENCE Years of international research, rigorous testing, and thermal analysis have allowed us to formulate what we believe to be New Zealand’s greatest in spacer design.

We are proud to be New Zealand’s first glass manufacturer to have an IGU test lab on our own premises.

Our facilities allow us to simulate real time weather climates to verify our product is fit for purpose right here in our own factories.

The outcome? We find better solutions for our products faster, and in turn increase our manufacturing capabilities across our supply chain.

XR EDGE spacer exploded

At FMI Building Innovation we have our fingers on the pulse of industry breakthroughs which allows us to be in charge of our own destiny. We do not compromise on quality for cutting-edge technology and always push the boundaries for the latest in innovation.

THE

BREAKDOWN 5

1. Desiccant: Removes moisture from the enclosed air during production and subsequently absorbs water vapor that penetrates until the end of its absorption capacity.

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2. Primary Sealant (PIB): Maintains gas tightness and minimizes moisture ingress into the unit. PIB is applied to the sidewalls of the spacer and creates a seal between the spacer and the glass.

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3. Secondary Sealant: Provides mechanical stability to the entire IGU and protects the seal from environmental influences.

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XR EDGE spacer

4. Stainless Steel Vapour Barrier: Stops desiccant absorbing moisture from outside of the unit.

5. Warm Edge Box Structure: A composite box structure that gives the entire spacer unit overall strength and a warm edge performance.

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HOW DO WE

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FOAM SPACER

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DESICCANT ON ALL FOUR SIDES

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50%

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ZERO EXTERNAL VAPOUR PERMEATION

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STAINLESS STEEL EXTERNAL VAPOUR BARRIER

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FEATURES

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To find out more about our XR EDGE spacer email: archteam@fmi.co.nz or visit: fmi.co.nz.

The current cost of ZE homes ZE/R build options The RMI report investigated one construction method, namely DOE ZE/R, in four cities, each representing a different climate zone. By contrast, this report focuses on two different construction options, DOE and FMI, that met ZE/R definitions and standards, both modelled in Auckland’s climate.

The building on which we ran our analysis was a modest, standalone three-bedroom family home of 120m2 (see Appendix 1). The house was modelled to mimic typical construction, and Passive design strategies such as optimised window placement were not considered.

DOE ZE/R build Our first build option was taken from a well-established program in the US developed by the Department of Energy (DOE)14, using the ‘prescriptive’ approach described below.

The DOE’s ZE/R program has developed two paths for a builder to deliver a ZE/R home, namely ‘prescriptive’ and ‘performance’. Both require in-field inspections and verification by an independent verifier for a home to be certified as ZE/R, but the prescriptive path avoids the need for modelling provided the builder follows stipulated ratios and measures. The performance path provides flexibility to select a custom combination of measures that, taken together, deliver the target performance for a ZE/R home.

The cost of this flexibility is the prior modelling and the calculations that need to be verified.

Under the DOE program, ZE/R homes do not need to be all-electric, but the RMI document on which this report is based focused on fully electric ZE/R homes, and we have taken that aspect into our approach. The all-electric focus in part reflects the industry trend of electrifying building components as related technology matures; notably, 43% of new US homes in 2018 used air source heat pumps (ASHPs) for heating and cooling, compared with 10% of all existing homes as of 2015. A similar trend is evident in New Zealand where the proportion of owner-occupied homes with heat pumps rose from almost zero in 2000 to 46% in 201515.

FMI ZE/R build The second, simpler approach, called “FMI ZE/R”, added three modular items to a regular code-built house: • Windows with R value 0.72 instead of 0.2 (note: installed R values) • A heat pump for space conditioning • A heat pump water heater.

Note that technology is rapidly evolving. As we wrote this report we heard of a Mitsubishi Energy heat pump water heater that also delivers space heating – though not cooling.

18 fmi.co.nz

Fairview fabricator: Fairview Whakatane

Methodology The thermal performance and construction costs of the DOE and FMI ZE builds were compared to an identical house built to New Zealand’s building code. We repeated the exercise without photo-voltaic panels to assess the ZER versions of these builds.

The three-bedroom house drawings were uploaded into Passive House Planning Package (PHPP). This software prepares an energy balance and calculates the annual energy demand of the building based on inputs relating to the building’s construction characteristics as well as its site orientation and local climate. Parameters regarding the

number of occupants and their energy-related behaviour are also included, for example, the amount of hot water used per person per day and the preferred internal temperature range. The calculations for each of the ZE options and for the Code As-Built house were performed by a local architectural engineering firm with experience in Passive house design.

Construction costs for each option were obtained from a local consultancy firm that specialises in project and cost management services for the property and construction industries. Appendix 3 provides detail on the sources of cost difference across the three builds.

Appendix 2 tabulates the construction methods and appliance choices for each option, as well as the thermal

performance of walls, ceilings and floors. Note that the thermal performance of the code-built house was reduced from its theoretical level to an estimate of its “as-built” performance. A key issue was the impact on the walls’ R value of the amount of wood framing used. Wood has a significantly higher thermal conductivity than insulation material, and when the latter sits inside the framing, rather than on the exterior of the wall like exterior insulation and finish systems, the framing acts as a thermal bridge.

14 DOE Zero Energy Ready Homes National Program Requirements Revision 7, May 1st 2019 15 BRANZ House Condition Surveys of 2000 and 2015

fmi.co.nz 19

Figure 3

Energy supply and demand The size and design of the roof determined how many photo voltaic (PV) panels could be accommodated – in this case, 40 panels of 1.6m2 each. The panels were only applied to the north facing side of the gable roof. Given Auckland’s sunshine hours, the roof was able to produce a maximum of 13,500 kWh a year.

Despite their different construction approaches, the DOE

and the FMI homes proved to have almost the same annual energy demand of around 6,600 kWhs, well below the roof’s annual energy output (see Figure 3). When PV panels were added in the ZE builds, they reduced the demand on the grid by about 2200 kWh over the year, with the surplus being sold back to the grid. Unsurprisingly, the Code As-Built home demanded more energy than its roof could supply across a year.

Construction cost differences The quantity surveying consultancy determined that 75 - 80% of the construction cost was common across the ZE/R and the Code As-Built homes. The key areas of construction cost difference lay in the photo-voltaic panels, the up-spec’d envelope, the energy-efficient appliances for space conditioning and water heating, and, for DOE ZE/R only, the ventilation system.

Note that construction cost excludes land. If the cost of land were included, the cost premium would be a smaller percentage of the total cost.

Figure 6 digs deeper into the construction areas impacted by the demands of ZE/R and may offer at least two surprises.

First, the cost premium for the high performance windows is modest at $4700 in FMI for a lift from R0.2

20 fmi.co.nz

to R0.72 installed; this may seem optimistic given the reportedly high prices charged today for these products, whether sourced domestically or from overseas. The costs used here reflect manufacture in one of FMI’s local plants and are based on levels of throughput high enough to generate adequate recovery of overheads.

Secondly, it appears that the simple modular approach taken in the FMI house needs only half the extra cost incurred by the DOE ZE home to deliver almost the same annual energy use of about 6,600kW. The implication is that the DOE ZE home’s investments in framing and so on do not add to the energy efficiency of the house, only to its cost. We do acknowledge these investments may deliver measurably better internal environmental quality in terms of humidity and

Figure 4 temperature stability but have not analysed this.

Why might the various DOE ZE investments not seem to pay off?

Within the PHPP model, elements interacted with each other to deliver the overall energy performance; their effects were not independent and simply additive to each other.

Thus, excellent insulation in the DOE ZE envelope meant that the high performance windows had less to contribute. In the FMI home, high performance windows were the only improvement made to the envelope, and in consequence were the source of all the thermal savings from that aspect of the home.

Continued on page 23

The ZER homes cost $12,000 to $34,000, or about 4 to 11% more to build at the outset:

Figure 5 The ZE homes cost $23,000 to $45,000, or 7 to 14% more to build at the outset:

Figure 6

fmi.co.nz 21

Fairview fabricator: Fairview Whakatane

22 fmi.co.nz

Continued from page 21 Windows’ role It is worth noting that local research in 201016 found that windows and doors provided the single biggest opportunity to raise the operational efficiency and thermal performance of new home builds in New Zealand. At that time, windows contributed 50% of the heat loss in a newly constructed building envelope, as shown on the right. Windows’ role in heat loss could approach 65% if air leakage from window frames and doors were also included.

Improving thermal performance requires addressing the three mechanisms of heat loss in an installed window: 1. thermal loss through the window 2. air leakage 3. internal moisture.

In the next chapter we show estimates of each building element’s contribution to the overall thermal performance and compare these to the costs above to identify which elements deliver best “bang for buck”.

ZE/R Cost Thresholds The maximum incremental cost to meet each cost threshold was calculated and compared to the current incremental cost to build each type of ZE/R home, as shown below.

16

Source: Build Magazine, Issue 117, published in 2010.

Inevitably, none of the ZE/R build options passed the First Cost threshold. However, FMI ZER and ZE passed all the other three thresholds. DOE ZER and ZE, with almost double FMI’s incremental premium to the As-Built Code house, only passed the mortgage threshold.

Continued on page 32

fmi.co.nz 23

LOW-E LOW- E A H I G H PA E R FHOI RG MH ANC P EE TRH F E RO MR A LMGA L ANS SCTE E CT HH NO ELR OM G YA L

GLASS

TECHNOLOGY

FMI.CO.NZ

G R E AT E R I N S U L AT I O N , M O R E CO M F O RT, H E A LT H I E R HOMES Solace Low-E is an advanced thermal glass technology that provides year-round energy efficiency and comfort. .

Designed to withstand New Zealand’s harsh climates Managing temperature in different ways for different environments, Solace Low-E ensures your home stays warm in the winter and cool in the summer.

We offer a wide range of Solace Low-E performance levels and price points, there is something for everyone.

Take a look and explore our range.

Credit: Rowe Baetens Archiecture | Simon Devit Photography

WHY GO

SOLACE LOW-E

WHAT IS SOLACE LOW-E GLASS?

LESS CONDENSATION

Solace Low-E is a type of low emissivity glass – a high performance thermal technology. An almost invisible low emissivity coating is applied to our ultra-clear glass and placed into an insulated glass unit (IGU).

Solace Low-E double glazing reduces the likelihood of condensation forming on the surface of your window.

YEAR ROUND COMFORT

GREATER SAVINGS ON ENERGY COSTS

In cooler climates, Solace Low-E reflects warmth generated from heating systems inwards, cutting window heat loss compared to double glazing without Solace low-E.

Solace Low-E glass ensures your home is less reliant on heating and cooling systems, providing significant energy savings over the course of the year.

In warmer climates, Solace Low-E reflects cool air generated from cooling systems inwards. When paired with a tinted or reflective piece of glass Solace Low-E reflects solar heat (sun heat) outwards to prevent excessive amount of heat buildup. clear or ultra clear glass

LOW-E coating on ultra clear glass

Tint/Reflective or Solace Dual

For ultimate condensation resistance, talk to us about our thermally broken joinery solutions.

LOW-E coating on ultra clear glass

BETTER FOR THE ENVIRONMENT With fewer energy resources required to keep your home healthy and comfortable year round, Solace Low-E offers overall greater energy efficiency. Opting for Solace Low-E ensures your home is a sustainable one.

Heating Energy

Outside

Inside

Cooler climates

Solar heat

Argon gas

Argon gas

MORE NATURAL LIGHT, BETTER WELLBEING Cooling Energy

Outside

Inside

Warmer climates

Installing Solace Low-E ensures optimum levels of light transmittance within the home and the workplace.

Studies show that offices with larger window circumference and light transmittance can improve general wellbeing and productivity, greatly improving the appeal of environments for employees that often lack exposure to natural sunlight.

THE SOLACE

DIFFERENCE If you’re familiar with Low-E, you will be aware of the multiple Low-E glass offerings in the New Zealand market. So why choose Solace Low-E?

WIDE RANGE OF PRICE POINTS AND PERFORMANCE LEVELS We offer Solace Low-E in double, triple and quad glazing, an overall total of 16 combinations that allows our customers the ability to select an IGU that is best suited to their individual needs.

SUPERIOR ENERGY EFFICIENCY RATINGS Some people refer to it as ‘R value’; we simply like to refer to it as energy efficiency.

Naturally, a result of our extensive Solace Low-E range is the high energy efficiency ratings we provide to our customers and to the New Zealand market.

LONGEST IGU SERVICE LIFE POSSIBLE Our IGU’s not only have extreme thermal efficiency, but they are also some of the most durable in the market.

Why? Our latest XR Edge spacer technology, a revolutionary high-performance spacer that provides our customers with the longest IGU service life possible.

WE ONLY COAT SOLACE LOW-E ON ULTRA-CLEAR GLASS Unlike other glass manufacturers, we only coat Low-E on ultra-clear glass so our entire Solace Low-E offering retains a high percentage of visible light transmission.

For us, this means our customers do not have to compromise on exceptional clarity for a more energy efficient home – because at FMI Building Innovation, we believe that all Kiwi’s deserve access to affordable and effective glass solutions.

AT F M I B U IL D IN G INNOVAT ION WE B E L IE V E AL L K IW I’S D E S E RV E ACCE SS TO A FFO R DA B L E AND E F F ECT IV E G L AS S SOLUT IONS

THE RIGHT

SOLACE FOR YOU Choosing the right Solace for your desired outcome is important. We have an extensive range of Solace offerings, from affordable entry-level solutions to maximum thermal performance, there is guaranteed to be something for everyone.

TRIPLE GLAZED

DOUBLE GLAZED

SOLACE

Solace Low-E

Low-E coating

g ar cle

s las

Argon gas

Argon gas

s las

g ar cle

s las

s las

rg

g ar cle

a cle

s las

las

Argon gas

Low-E coating

g ar cle

Low-E coating

rg

• MOST AFFORDABLE

ultra clear glass

ultra clear glass

a cle

Experience energy efficiency with our entry level Solace Low-E

Solace Low-E

Solace Low-E

ultra clear glass

with Argon gas

QUAD GLAZED

s

• REDUCES ENERGY BILLS, INCREASES SAVINGS • EXPERIENCE THE SOLACE LOW-E BENEFITS AT AN AFFORDABLE PRICE POINT.

TRIPLE GLAZED

DOUBLE GLAZED

SOLACE UltraClear

Solace Low-E

Solace Low-E

Low-E coating

Low-E coating

ultra clear glass

Solace Low-E ultra clear glass

ultra clear glass

ult

with Argon gas

cle

ra

ar

ar

gla

cle

Argon gas

gla

ss

ss

gla

ss

ss

gla

gla

ss

ss

ar

gla

ar

ar

Argon gas

Low-E coating

ra

ult

cle

ar

cle

cle

• PREMIUM ULTRA CLEAR GLASS

ra

cle

ra

ra Argon gas

ult

ra

ult

ult

ult

Feel and see the difference with premium ultra-high clarity

QUAD GLAZED

• HIGHEST LIGHT TRANSMITTANCE • MAXIMUM CLARITY

TRIPLE GLAZED

DOUBLE GLAZED

SOLACE Dual

Solace Low-E

ult

Low-E coating

ra ar ss

gla

Argon gas or Krypton gas

ss

ss

ss

gla

gla

ar

gla

cle

ar

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ss

ar

gla

cle

Argon gas or Krypton gas

cle

ult

ra

ar

ult

cle

ra

ult

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ra

ss

gla

Argon gas or Krypton gas

ultra clear glass

Low-E coating

ult

ar

cle

• ULTIMATE SOLACE LOW-E

ra

• ULTIMATE INSULATION

Solace Low-E

ultra clear glass

Low-E coating

ult

Maximize heat in your home with our highest thermal performance

Solace Low-E

ultra clear glass

with Argon gas or Krypton gas

QUAD GLAZED

• ULTIMATE THERMAL COMFORT • ULTIMATE ENERGY EFFICIENCY

QUAD GLAZED

TRIPLE GLAZED

SOLACE UltraThin

ult ar s

s gla

s las

s las

g ar

g ar

cle

cle

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s las

s las

g ar

g ar

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Argon gas or Krypton gas

Low-E coating

ra

ra

ult

ra

ult

ra

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ult

• SUPER SLIM GLASS

Low-E coating

ra

• SUPERIOR THERMAL OUTPUT

ultra clear glass

ultra clear glass

ult

A revolutionary thin glass for modern triple and quad glazing solutions

Solace Low-E

Solace Low-E

with Argon gas or Krypton gas

Argon gas or Krypton gas

• SUPER LIGHT WEIGHT • MAXIMUM SOLACE LOW-E • STANDARD UNIT SIZE, GREATER GLASS CAPACITY

KEY CHART Argon

Argon gas is a low-cost, clear, non-toxic, naturally occurring gas with a lower thermal conductance than air. Use of argon between glazing panes instead of air can reduce the amount of heat conducted across the gap and improve the R-value of the glazing by 5–20%.

Krypton

Krypton gas is an alternative filling option to Argon gas. It has a very low thermal conductivity that slows down the transmission of outside cold through the IGU and into the home. *Krypton gas filling is subject to availability.

IGU

An insulated glass unit (IGU) combines multiple glass panes into a single window system. Most IGUs are double glazed (two panes of glass) with three panes (triple glazing) or more becoming more common due to higher energy costs. The panes of glass in IGUs are separated by a spacer and a still layer of air or gas. The glass is then fitted into window frames, which is made wider to accommodate the two panes .

OUR

S O L AC E DATA Discover more about our Solace Low-E offering and understand the data that backs our superior ratings.

LOW-E TYPE

ENERGY EFFICIENCY (R Value)

HEAT GAIN

VLT

(SHGC)

(Visual Light Transmission)

Argon SOLACE DG

0.83

61%

81%

SOLACE TG

1.08

58%

74%

SOLACE QG

1.30

54%

68%

Argon SOLACE UltraClear DG

0.83

66%

82%

SOLACE UltraClear TG

1.08

62%

76%

SOLACE UltraClear QG

1.30

58%

71%

Argon

Krypton

SOLACE Dual DG

0.89

1.00

57%

80%

SOLACE Dual TG

1.60

1.80

53%

74%

SOLACE Dual QG

1.80

1.95

50%

68%

Argon

Krypton

SOLACE UltraThin TG

0.98

1.49

53%

73%

SOLACE UltraThin QG

1.14

1.68

50%

68%

KEY CHART R-Value R-Value is the thermal resistance of a material. The higher the value, the less heat is lost through the material and the better the insulation and efficiency will be.

VLT

Visible Light Transmittance (VLT) describes the percentage of visible light transmitted through the glass. The higher the percentage the more daylight transmitted.

SHGC

The Solar Heat Gain Coefficient (SHGC) is the total fraction of available solar radiation that is transmitted through the window as heat gain. The lower the solar heat gain, the less solar heat it transmits.

To find the right Solace Combination that is best suited to your project, contact archteam@fmi.co.nz

Z E RO E N E RGY FAÇ A D E Optimising our customer’s glass selection to perform at its best, this thermally broken interface between the building and its environment contributes substantially to our net zero building offering.

FMI’s thermally broken façades are available in the following IGU’s FMI SG CLEAR R VALUE: INCREASE:

0.18 0%

FMI DG SOLACE R VALUE: INCREASE:

0.58 222%

FMI TG SOLACE R VALUE: INCREASE:

0.88 389%

FMI QG SOLACE R VALUE: INCREASE:

1.03 472%

To find out more about Zero Energy Façades email: archteam@fmi.co.nz or visit www.fmi.co.nz

TRIPLE GLAZED TRIPLE PROPERIES GLAZEDPROPERTIES OF PROPERIES FMI ZEROOF ENERGY FMI ZERO FAÇADES. ENERGY FAÇADES. TRIPLE GLAZED SPLIT TRANSOMSPLIT TRANSOM

TRANSOM

MULLION

MULLION

MULLION

TRANSOM

TRANSOM

SPLIT TRANSOM

Turning inspiration Turning inspiration into reality into reality

3800

An elevationAn ofelevation 100 Carbine of 100 Road Carbine façade.

Road façade.

3800

rbine Road, Mt 100Wellington Carbine Road, Mt Wellington

FMI’s thermally FMI’s thermally brokenbroken façade façade pursues pursues high energy high energy performance performance and minimal and minimal environmental environmental impact. impact.

1200

1200

1200

1200

Figure 7

Continued from page 23 Cost Optimal Building Practices There is no “one-size-fits-all” solution for building a costoptimised ZE/R home. A truly optimised design would reflect not only local climate but also site constraints, local labour rates, electricity rates and applicable subsidies and incentives. However, our analysis revealed several principles that are widely relevant.

Bang for buck When our two divergent ZE/R ‘recipes’ delivered very similar energy savings performances, but different first cost premiums, we wanted to understand which building elements mattered in each case.

The following analysis is a simplification of reality, and is based on the heat losses attributed to each element over the course of a year. Nevertheless its insights are instructive.

In both our ZE homes, the higher performance windows in fact made the largest contribution to the energy savings

32 fmi.co.nz

achieved versus the Code As-Built home. The DOE ZE/R house used somewhat lower R value windows (0.65 versus 0.72 installed in FMI) but compensated with significantly more insulation. After windows, the next most significant energy saving element for both builds was the heat pump water heater.

Figure 7 shows the drivers of energy demand for each house. The ZE builds benefit from the offset of selfconsumption of solar energy from the PV panels on their roofs.

Figure 8 shows the by-element contribution for each home to the almost 100kWh/m2 annual energy saving each achieved in the modelling compared to the Code As-Built home.

The financial value of the ZE elements reveals more surprises in Figure 9. The calculation is a 25 year net present value, at 5% cost of capital, of the value of energy savings attributable to an element, less the upfront cost to buy and install it.

Again, windows and water heating offered the greatest net present value investments. The extra insulation and

Figure 8 especially the air tightness layer delivered a weak return. Interviewees in the building trade spoke to the challenges of achieving airtightness and the need for well trained staff; these data suggest the effort may not be worth it.

Evolving costs Technology and costs change rapidly, and in the next chapter we examine the cost outlook for key elements in ZE/R construction.

However, recent changes are also relevant. The building industry at large – those not typically involved in green projects – may be unaware of shifting prices and the current attractiveness of certain build elements. The RMI report referred to ingrained perceptions

Figure 9

fmi.co.nz 33

Fairview fabricator: Window Works Nelson

“Passive is easier to achieve at medium density. For example, you already need an engineered façade, so removing thermal bridges isn’t incremental” – Group Builder in the US that LED lighting, for example, was a low value efficiency measure. In the last decade costs have dropped 75%, while LED bulb efficiency has more than doubled. It may, as RMI say, be necessary to educate the building trade about the rapidly changing situation for some of these ZE/R-supporting solutions.

In New Zealand, we have heard that ducted heat pumps with clean air systems are becoming more mainstream and are replacing older approaches of, say, three heat pumps and a fire. Similarly, heat pump water heaters are beginning to make inroads but are still perceived to cost more. A recent example of “combined” water heating and space heating heat pump offers a new level of efficiency gains.

Planning ahead Investing the time and budget early in architects who have experience designing ZE/R homes can also materially reduce downstream costs. For example, simplifying the building envelope can make achieving higher energy performance easier while reducing costs. A design with

34 fmi.co.nz

fewer complex angles reduces the chance of insulation gaps and avoids the extra labour time needed to install insulation in difficult spaces.

Good architects will also undertake upfront testing or modelling to optimise low energy investments alongside design choices. An example is managing the trade-off between high performance windows or reduced northfacing windows.

Building type Architects we engaged with reported that higher density buildings can achieve higher levels of energy efficiency at lower costs per square metre compared to stand alone dwellings. Higher density buildings already require architects and engineers, and mechanical ventilation and heating systems. Reduced exterior surface to floor ratio – for example by sharing two walls and a roof with other apartments – means less incremental spend on insulation and windows, and more floor area to spread any incremental costs over.

FUNCTIONALITY MEETS FUNCTIONALITY SOPHISTICATION

MEETS SOPHISTICATION

Long recognized by installers in the market for supplying the best glass products available in New Zealand, Vetro Raccordi balustrading and shower products are installed across hundreds of high-end architectural designs and family homes every day throughout New Zealand.

Vetro Raccordi’s frameless glass balustrades are the least obstructive fencing options. They allow an uninterrupted vista, whilst still meeting Long by standards. installers in Our the market forrange supplying the best glass safetyrecognized and building premium of fixing options products available in Newwill Zealand, Vetro Raccordi balustrading and architectural styles provide a solution to match your and requirements. shower products are installed across hundreds of high-end architectural

designs and family homes every day throughout New Zealand.

Likewise, our timeless shower enclosures, custom designed to suit your space, will enhance your bathroom to provide minimal visual intrusion Vetro Raccordi’s frameless glass balustrades are the least obstructive and maximum light flow.

fencing options. They allow an uninterrupted vista, whilst still meeting safety and building standards.

Our premium range of options A full range of handles and shower hinge products arefixing available to tailor specifically to yourwill design goals. and architectural styles provide a solution to match your requirements.

Along with standard chrome and satin products, our new colour finishes include Matt Black, Satin Gold, Rose Gold, Satin Nickel Plate Likewise, our timeless shower enclosures, custom designed to suit your and Gun metal.

space, will enhance your bathroom to provide minimal visual intrusion anddesign maximum lightorflow.

For advice to chat with one of our experts, email archteam@fmi.co.nz.

A full range of handles and shower hinge products are available to Learn more | www.vetroraccordi.com tailor specifically to your design goals.

Fairview fabricator: Window Works Nelson

The future cost of ZE homes in New Zealand While this report concludes that ZE/R homes may be economically attractive to consumers today, with cost premiums below 4% for FMI ZER, it is important to understand how costs are likely to evolve.

Reductions in the cost premium of ZE/R homes seem likely. Key components such as photo-voltaic panels, HPWH systems and windows all have room to fall from current levels. Proposed lifts to New Zealand’s building code will demand significantly better energy efficiency and are likely to increase the cost to build a baseline home but, longer term, this will drive economies of scale in key components.

Growth in higher density buildings will also help to spread incremental ZE/R costs over more square metres of living space, while maturation of ZE/R design practices will reduce the upfront investment needed in ZE/R components. We expect unit cost reductions, higher density developments, along with the policy and

36 fmi.co.nz

consumer appetite trends discussed in the Introduction, to drive economies of scale.

Photo-voltaic panels Photo-voltaic (PV or solar) panels are expected to fall in cost with economies of scale and technology innovation.

As Figure 10 shows, while New Zealand is already relatively efficient in residential PV installations, a 14% price reduction could be possible if we matched Australia’s 2017 volumes.

On top of this, Figure 11 shows how innovation in PV panel technology is expected to deliver cost reductions of ~20-70% by 2030. Because PV panels contribute 24 – 47% share of the incremental cost to build a ZE home, a reduction in cost of one third or more will have a large impact on the economic attractive of ZE homes. Figure 11 illustrates our expectations for solar panel cost reductions.

Figure 10

Figure 11

fmi.co.nz 37

Heat pump water heaters Heat pump water heating (HPWH) systems are also expected to decline in cost from a relatively high base.

We expect economies of scale to help reduce the ~35% price premium consumers in New Zealand relative to ones in Australia for similar systems.17 According to US National Renewable Energy Laboratory, technology innovation may reduce the cost of HPWH by an additional ~19% by 2030.18 17

Windows Significant savings are possible in higher performance windows compared to prices charged today. The analysis presented in this report uses best expected market prices based on good levels of demand and factory throughput for a domestic manufacturer. As such, the window cost fall opportunity has already been incorporated into the ZE and ZER numbers presented here.

Plumbing plus: tinyurl.com/y4z23sqn, HWC NZ: tinyurl.com/y4pnwrdc, 1st choice Aus: tinyurl.com/yyqlsnmf, Powerland Aus: tinyurl.com/yyrjqvfh, Home Depot: tinyurl.com/y3adqj9o 18 Future cost forecast source: nrel.gov/docs/fy18osti/70485.pdf

Fairview fabricator: Shearmac Aluminium

38 fmi.co.nz

fmi.co.nz 39

Fairview fabricator: Shearmac Aluminium

Recommendations for policy makers, tradespeople and architects The benefits from accelerating uptake of ZE/R building practices in New Zealand are material: healthier families, living in greater comfort with lower energy bills, and emitting fewer greenhouse gases. While we expect

uptake to continue growing incrementally, if household energy efficiency is to materially contribute to New Zealand’s 2030 and 2050 climate commitments, we need to act today.

Obstacles to resolve

suppliers, builders, architects and policy makers.

For uptake to be supported, New Zealand needs to scale local production of high performance windows and ensure there will be sufficient capability to design, project manage and build ZE/R homes. Encouraging investments in scale will require interventions that accelerate demand growth.

Despite the tail winds of improving economics, growing customer appetite and supportive policy, it will not be all smooth sailing for ZE/R homes. Figure 12 illustrates the practical supply-side challenges to building ZE/R homes that we identified through interviews with product

40 fmi.co.nz

Figure 12

P ra c t i c a l c h a l l e n g e s t o Z E h o m e s i n N ew Z e a l a n d

High spec windows

“[I wish] … more local window manufacturers built more high performance triple glazed, thermally broken, windows.” – Architect.

Solar + batteries

Becoming more affordable but still offer a poor ROI in NZ (with potential for ROI to worsen if electricity prices reduce).

Roof insulation Available up to R7.0

(importing windows for passive houses)

Slab insulation

Wall insulation

“Insulated slabs are very cost effective and easy to install now” – Group builder.

Up to R2.8 possible with 90mm frames.

Builders and architects we spoke to use 140mm frames for passive.

Ventilation & heating

“You can get cheap smart ventilation systems for $1-2k, and ducted systems cost the same or less than 3 heat pumps and a fire” - Group builder “I don’t think we’re too far from MHRV systems for $2.5k”Urban planner

2 Project management “There’s a limited number of builders who can do [passive] and are willing to take the risk on their first project” – Group builder.

Airtightness

Achieving 0.6 air changes per hour for passive requires care across several trades and repeat testing.

(who did bang for buck analysis)

Practical Challenges.indd 1

23/03/2021 2:36:08 PM

fmi.co.nz 41

Recommendations for policy makers Based on our research and interviews, we have four recommendations for policy makers.

Recommendation

Rationale

Accelerate Kāinga Ora’s programme to build energy efficient housing

• Kāinga Ora is one of the largest market participants: they represent about 7% of the residential construction industry in New Zealand and are planning to replace ~20,000 homes with med-high density homes and expecting to rebuild ~30,000 more as single dwellings • Kāinga Ora have programmes underway which will drive more energy efficient housing, such as developing their own Passive house standard and piloting Passive houses • But interviewees indicate that they are unlikely to be building passive or low energy homes in a material way for at least another six years • Accelerating Kāinga Ora’s adoption of low energy building practices will catalyse material supplyside investments and accelerate economies of scale

Adopt and extend MBIE’s proposed building code changes

• MBIE’s proposed thermal and total energy performance requirements take the minimum performance required by newly built homes to a level close to ‘Passive house’ • Further code improvements should be considered to ensure three significant regulatory barriers to improving the thermal performance of windows are removed: – Revise standard E2/AS1 to enable recessed windows to be installed if they also meet air and water leakage requirements.

– Revise standard NZS4211 to require window manufacturers to deliver window frames with leakproof mitre joins, removing the requirement to install windows outside of the building insulation layer per E2/AS1.

– Revise standard NZS4223 such that glass performance requirements are performance based rather than prescriptive. For example, prescriptive safety glass limits and prescriptive triple glazed limits.

• If implemented, code changes will reduce the incremental cost of low energy home investments and therefore improve the perceived cost-benefit to consumers. Additional code changes should be implemented over time to drive retrofitting of the existing housing stock.

Launch awareness campaigns to educate Kiwis on the potential for ZE homes

• Interviews indicate that while awareness of low energy homes is growing, many consumers do not understand how low New Zealand’s building performance requirements are, nor the benefits of investing in higher performing homes. For example, BRANZ consistently finds that homeowners “believe their homes are in much better condition than an independent assessor finds”19 and also, wrongly, perceive a code-built house to be high quality rather than merely minimum standard • Similarly, many builders, tradespeople, designers and product manufacturers are not aware of the opportunity to incorporate more energy efficient practices into their standard designs and builds • Awareness needs to be accelerated to stimulate demand for and supply of low energy building practices

Invest in developing • Sufficient workforce capability and capacity are needed to deliver energy efficient homes New Zealand’s ZE • There are programmes available – such as one provided by the Passive House Academy for builders – but greater reach (eg for designers and sub-contractors of builders) and scale (eg as part of Home workforce standard apprenticeship training) may be needed • Without sufficient workforce capability and capacity low energy building practices may increase in cost as demand increases, and New Zealand may miss the opportunity to move early on building operating emissions

19 BRANZ,

Mapping the Consumer Landscape, 2020

42 fmi.co.nz

Recommendations for tradespeople and architects Tradespeople and architects looking to grow a ZE home practice should note three recommendations.

Recommendation

Use this report as a starting point for your ZE projects

Invest in completing an energy efficient building course

Partner with the right subcontractors

Rationale

• The large number of variables and options that go into building a ZE home can make getting started daunting • Our analysis indicates that the first components to consider should be footprint design (eg orientation), higher quality windows and HPWH systems • Our price threshold analysis also indicates that customers are willing to pay for more energy efficient homes and that there is a strong financial argument for investing in ZE components (even before non-energy benefits are considered) • While builders and architects should refine their approach for their specific project’s context, we hope our analysis provides a useful foundation • Not only are there a lot of new components to learn before starting one’s first ZE home project, there are also a lot of nuanced changes to the building process that are important to understand before starting a first project in ‘green’ building – For example, undertaking Passive House modelling at the start to determine how your design is likely to perform, or the importance of testing for air tightness between sub-contractors to avoid considerable risk at the end of the project • There are multiple courses available which teach the fundamentals of designing and building highly energy efficient home, such as the Passive house course by the Passive House Academy • Builders, architects and developers who are accustomed to conventional building projects may find their usual preferred sub-contractors have limited experience with energy efficient building practices (for example, maintaining airtightness throughout the build) • Several builders and architects we interviewed noted engaging high quality and experienced subcontractors as one of the most difficult but important requirements to successfully build low energy homes • The Passive House Institute of New Zealand provides a list of Members who offer Passive house services which encompass energy efficient building practices.

TIMELESS SHOWER DESIGNS FOR MODERN LIVING www.vetroraccordi.com To find out more about Vetro Raccordi products email: archteam@fmi.co.nz.

Next Steps Theory versus reality

Testing and Building

Most of what lies in this report, and indeed, in the RMI report it is based on, is the product of theory and modelling.

Reality does not always cooperate, however, and it is possible that what seems achievable and attractive on paper will not translate once a house is actually built and lived in for a year, even if the building has achieved certification.

The challenges of ZE/R homes not performing as intended were the subject of conversation at a ZE conference in the US two years ago.20 Closer to home in 2020, Level 6 Homestar builds were found wanting by University of Auckland studies 20 21, both in their promised internal environment quality as well as in the claims of only 1-2% upfront construction cost premiums.

FMI intends to take two further steps in its exploration of the ZE/R opportunity and its feasibility for New Zealand.

First, a second pass at the thermal modelling will provide another set of results to confirm or refine the current data set.

Next, FMI will begin the build of the FMI ZE home described in this report. The intention is to measure its construction cost and lived-in energy performance against the modelled results emerging from this paper and the additional thermal modelling. When the results are in, we will make an amended version of this report available.

Studies worldwide indicate that there is a significant gap between building energy targets (as-designed) and the actual measured building energy consumption (as-built).”23

20

Personal recollection by FMI management Rochelle Ade & Michael Rehm, 2020. “Cold comfort: A post-completion evaluation of internal temperatures and thermal comfort in 6-Homestar dwellings.” Building & Environment vol 167, January 2020 22 Rochelle Ade & Michael Rehm, 2020. “Reaching for the stars: green construction cost premiums for Homestar certification,” Construction Management and Economics, vol. 38(6), pages 570-580, June.

23 “The Discrepancy between As-Built and As-Designed in Energy-efficient Buildings: A Rapid Review”; Sustainability August 2020 21

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Appendix One: house drawings

fmi.co.nz 45

Appendix Two: Construction detail and performance targets across the three builds Construction Detail Construction Detail

Code As-Built

FMI ZE/R

DOE ZE/R

Framing

90 x 45mm @35% framing ratio

94x 47mm @ 20% framing ratio

190 x 45mm @ 20% framing ratio

Wall insulation material

Fibreglass batts of product rating high enough to deliver required installed performance

Spray Foam insulation to improve air tightness

Fibreglass batts of product rating high enough to deliver required installed performance

Ceiling insulation material

As for wall insulation

As for wall insulation

As for wall insulation

Slab

100mm slab (uninsulated)

100mm slab (uninsulated)

100mm slab with 60mm EPS under-slab insulation and 60mm EPS insulation around the perimeter of the slab

Window design

Double glazed, non-thermally broken aluminium frames

Triple glazed, low-e coating, thermally broken aluminium frames

Double glazed, low-e coating, thermally broken aluminium frames

Air tightness

Building paper

Exterior air-tightness layer [e.g., sheathing board/plywood/OSB with wet applied weatherization]

Exterior air-tightness layer [e.g., membrane or sheathing board/plywood/OSB]

Ventilation

None

None

Balanced mechanical ventilation system with heat recovery minimum efficiency 85%

Space conditioning appliance

Direct electricity heaters

Heat pump

Heat pump

Hot water heating appliance

Direct electricity hot water cylinder of 180L

Heat pump water heater

Heat pump water heater

Photo-voltaic panels

None

4.6kW system, 32 m2 of panels.

Assumptions: 14.35% or 7m2 per kW, 1438 annual kWh per kW system

4.6kW system, 32 m2 of panels. Assumptions: 14.35% or 7m2 per kW, 1438 annual kWh per kW system

Performance Targets Installed performance

Code As-Built

FMI ZE/R

DOE ZE/R

Framing - walls

R 1.7

R 1.7

R 3.5

Ceiling

R 2.9

R 2.9

R 6.7

Slab

R0

R0

R 1.8

Window

Rw = 0.26

Rw = 0.70

Rw = 0.65

Air tightness

5 air changes per hour

3.5 air changes per hour

3.5 air changes per hour

Space conditioning appliance

Coefficient of Performance ~1

Coefficient of Performance 2.7

Coefficient of Performance 2.7

46 fmi.co.nz

Appendix 3: Construction cost detail in $ across the three builds (incl GST)

Construction Detail in $ Code As-Built

FMI ZE/R $

DOE ZE/R $

Framing

$13,875

$13,875

$20,445

Wall insulation material

$1,195

$1195

$1,380

Ceiling insulation material

$1,795

$1,795

$2,210

Slab

$13,800

$13,800

$17,940

Window design

$23,345

$28,070

$27,525

Air tightness

$1,380

$1,380

$5,520

Ventilation

$0

$0

$6,900

Space conditioning appliance

$500

$3,620

$3,620

Hot water heating appliance

$2,130

$6,400

$6,400

ZER IMPACTED TOTAL

$58,020

$70,140

$91,940

ZER PREMIUM OVER CODE

n/a

$12,120

$33,925

PV Panels

n/a

$10,830

$10,890

ZE PREMIUM OVER CODE

n/a

$22,950

$44,810

fmi.co.nz 47

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EUROWOOD EXTERIOR PRODUCTS

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Cladding & Sidings

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Weatherboard

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Liners

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Fascia

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Soffit Liner

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Roof Insulation

Exterior

Interior