THE ECONOMICS OF ZERO-ENERGY HOMES

This report by the Rocky Mountain Institute (RMI) analyzes the incremental costs of building zero-energy (ZE) and zero-energy ready (ZER) single-family homes in the United States. It argues that the cost premiums for these homes are modest and often fall below consumer willingness-to-pay and long-term savings thresholds, suggesting that outdated perceptions of high costs are a primary barrier to market penetration.

• The incremental cost to build zero-energy (ZE) and zero-energy ready (ZER) homes is significantly lower than commonly perceived. ZE homes have an average cost premium of 6.7%–8.1% (or 7.3% in specific techno-economic analysis), while ZER homes range from 0.9%–2.5% (or 1.8% average) compared to homes meeting local energy codes.
• ZER homes consistently meet several financial cost thresholds, including the mortgage, resale, and consumer willingness-to-pay (WTP) thresholds in most US markets. ZE homes consistently pass the mortgage threshold and are close to passing the resale threshold.
• Incremental costs for ZE homes are projected to decline to between 3% and 5.5% by 2030. This reduction is driven primarily by declining solar PV costs and increased efficiency of building components, which reduces the size of the solar array required to achieve zero energy.
• Heat pumps are identified as an essential component for ZE and ZER homes. Ductless mini-splits can outperform best-in-class central air conditioners by over 30% in efficiency, and newer models can operate in temperatures as low as 5°F, with some reaching -12°F.
• Cost-optimal building practices include the use of ENERGY STAR-certified appliances, LED lighting, and EPA WaterSense-certified water fixtures. These measures can reduce electric loads enough to downsize solar PV systems by 1.5 kW–1.9 kW, saving between $3,000 and $4,100 at an average incremental cost of $260.
• A shortage of skilled construction labor is a significant industry crisis that may impact the cost of ZE homes. Because ZE homes require more specialized installation and commissioning for components like mini-splits and air sealing, they may require more labor expenditures than code-compliant homes.
• In cold climates (Climate Zones 6 and 7), ZE and ZER homes still meet mortgage, resale, and WTP thresholds. However, these regions require specific strategies, such as maximizing south-facing solar PV and using electrical resistance heating to support heat pumps during extreme cold.
• The report recommends that policymakers support the transition to ZE homes through prescriptive incentives for heat pumps and high-performance windows, subsidizing building certifications like the DOE ZERH program, and supporting labor training for specialized high-performance building techniques.

APA

Petersen, A., Gartman, M., & Corvidae, J. (2019). THE ECONOMICS OF ZERO-ENERGY HOMES. RMI. https://rmi.org/app/uploads/2018/10/RMI_Economics_of_Zero_Energy_Homes_2018.pdf

Chicago

Petersen, Alisa, Michael Gartman, and Jacob Corvidae. THE ECONOMICS OF ZERO-ENERGY HOMES. RMI, 2019. https://rmi.org/app/uploads/2018/10/RMI_Economics_of_Zero_Energy_Homes_2018.pdf.

Wikipedia

{{cite report |last1=Petersen |first1=Alisa |last2=Gartman |first2=Michael |last3=Corvidae |first3=Jacob |title=THE ECONOMICS OF ZERO-ENERGY HOMES |publisher=RMI |date=2019 |url=https://rmi.org/app/uploads/2018/10/RMI_Economics_of_Zero_Energy_Homes_2018.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{petersen2019economics, author = {Petersen, Alisa and Gartman, Michael and Corvidae, Jacob}, title = {{THE ECONOMICS OF ZERO-ENERGY HOMES}}, institution = {RMI}, year = {2019}, url = {https://rmi.org/app/uploads/2018/10/RMI_Economics_of_Zero_Energy_Homes_2018.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }