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Green Building Blog

New Passive House Rules Take Effect

The U.S. based certifying group puts a climate-based standard into effect, capping three years of research and a top-down rewrite

A new climate-based passive house standard is here. More than 1,000 locations in the U.S. have their own set of performance requirements under a revised standard written by the Passive House Institute U.S. The standard and location-specific requirements are posted on the PHIUS website. Click on a location and up come the requirements.
Image Credit: PHIUS

Until now, anyone planning to build to the Passivhaus performance standard had a single set of rules to follow. Whether you lived in San Diego or International Falls, Minnesota, buildings could use only a certain amount of energy for heating and cooling, and were allowed a very specific amount of air leakage in the building envelope.

The rule-writing agency in the U.S., Passive House Institute US (PHIUS), has now launched a new set of certification guidelines that for the first time link building performance to climate. The change moves PHIUS further away from the Passivhaus Institut in Germany, where the certification standard originated, and gives builders in North America much wider latitude in adapting buildings to local conditions.

For some builders, meeting the standard will get a little easier. For others, it’s likely to get just a bit tougher.

“We were trying to make things more fair, more realistic,” says Graham Wright, PHIUS senior scientist and chair of its technical committee. Wright describes the process of rewriting the certification standard with PHIUS Executive Director Katrin Klingenberg and Betsy Pettit of the Building Science Corp. under a Department of Energy grant in a blog posted at the PHIUS website. Their work resulted in a report published in March.

Recently, Wright discussed the thinking that went into changes for all three “marquee pillars” of the standard — airtightness, space conditioning criteria, and limits on source energy consumption. The changes also are covered at length in an article by GBA senior editor Martin Holladay posted in January.

There ‘was something funny going on’

The original Passivhaus standard was developed in Darmstadt, Germany. Early on, architects of the Passivhaus building standard came up with two ways of measuring how much energy was used for heating and cooling. One was the annual heating demand, set at 15 kilowatt hours per square meter per year. The other was the peak heating demand — the amount of energy it would take to satisfy heating needs when outdoor temperatures were at their coldest — established at 10 watts per square meter.

The rules allowed buildings to meet either limit as part of its certification but did not require both.

Wright said it became obvious to PHIUS co-founder and executive director Katrin Klingenberg that “there was something funny going on” when those limits were applied to two different climates.

“PHIUS started certifying to that and kind of noticed in different climates the relationship between that peak load and the annual demand varies a lot because some places have long heating seasons but they don’t get very harsh,” he said. “The minimum design temperatures are kind of mild but their heating season might be long.

“In other places,” he continued, “you have kind of the opposite. If you’re designing for a low peak load and you have a really cold outdoor design condition that’s going to be really difficult. And that turned out to be the case pretty much away from the coasts.”

For builders in California, New York, or the Pacific Northwest, getting to the 10 watt/meter threshold was feasible. But it was proving a lot more difficult for builders in the middle of the continent. There, many builders found the annual energy limit easier to meet.

“The way the criteria were written, an annual demand as an alternative was easier to meet in most places,” Wright said. “We went through the database for the final report and looked, and sure enough in Zone 3C and 4C, people certified on the peak load criteria maybe half the time. But outside of those zones, people went for the annual demand 92 percent of the time because it was easier.”

Eliminating the ‘either or’ rule

Some builders were holding down the annual demand for heat by designing buildings for a lot of solar gain. That, Wright said, drove builders toward classic passive solar designs with a lot of glass, and what they got was an inherent risk of overheating — the same problem that plagued many passive solar designs in the 1970s and ’80s.

Plus, the default assumptions for internal heat gains generated by lights and appliances were too low.

“It was an interaction between the way the criteria were written and the climate that led designers a bit astray,” he said. “We wanted to fix that, and also revisit the question of how low to go.”

So the authors settled on two revisions to the classic Passivhaus standard. The first was to require builders to meet both annual heating and cooling limits and peak heating and cooling demand. No longer would builders be able to choose one or the other.

Second, the standard varied by climate. For instance, a building in Duluth, Minnesota (Climate Zone 7) could have an annual heating demand of no more than 8,400 Btu per square foot per year (KBtu/sf/yr) and a peak heating load of 4.6 KBtu/sf/hour (there are separate requirements for annual cooling and peak cooling demand). In Santa Barbara, California (Climate Zone 3C), annual heating demand was pegged at 1.8 KBtu/sf/yr and peak heating load at 2.9 KBtu/sf/hour.

Those values are available for more than 1,000 locales in the U.S. at the PHIUS interactive website.

Make certification a simple ‘moon shot’

Will the revised, climate-specific standard — dubbed the PHIUS+ Passive Building Standard — make it easier for a builder in Duluth and other very cold areas to win certification?

“The short answer is yes,” Wright said. “They should be able to meet our standards without doing something crazy in terms of passive solar design or a hot passive house design. That’s definitely our expectation. We’re trying to make things more of a moon shot for people in Duluth as opposed to a Pluto fly-by.”

In “very rough numbers,” the new PHIUS standard is twice as generous as PHI, Wright said, but in keeping limits on both the annual and the peak demand, the idea was to prevent designers from going for whichever option was easier “and being led astray and getting their designs out of balance.”

“There’s still going to be a cost premium,” Wright said of building meeting the PHIUS standard. “If you compare it to the 15 kWh/square meter target, oh, gosh, we’re allowing twice as much. But we’re talking about the difference between a 70 percent reduction from code minimum and an 80 percent reduction from code minimum. So why are we having this fight?

“And if you’re worried that we’re backing off too much, and endangering the comfort story or something like that,” he continued, “in the study we incorporated maximums on the U-values for windows to make sure in the winter design conditions the inside surface temperature stays up there about 60 degrees.”

Changes in the airtightness rule

Under the old Passivhaus rule (which still apply in the recently revised German standard), air leakage is limited to 0.6 air changes per hour with a pressure difference between inside and outside of 50 pascals — the familiar and tough-to-meet 0.6 ach50 rule.

While the standard is clear, it allowed larger buildings to be as much as seven times as leaky as a single-family home, PHIUS said, because the standard is based on building volume. PHIUS abandoned that requirement in favor of one based on the “shell area” of the house. The new requirement is 0.05 cubic feet per minute (cfm) at 50 pascals and 0.08 cfm at 75 pascals per square foot of gross envelope area.

“For a normal sized residential house, it would represent a bit of a relaxation in ACH terms, from 0.6 to more like 1,” Wright said. “In a nutshell what we did in the airtightness study was we set this criteria of 0.05 cfm50 per shell area and looked at what that does to the moisture situation in a wall, and then looked to see if gets a whole lot better if we tighten it more.”

After running a number of computer simulations, the authors didn’t see significantly lower risks from moisture between 0.05 cfm50 and 0.02 cfm50, so they set the standard at 0.05.

The new rule brings the PHIUS passive standard into line with recommendations on how leakage is measured from both the Air Barrier Association of America and the U.S. Army Corps of Engineers, Wright said.

Limits on total ‘source’ energy

The last hurdle was the limit on “source energy,” the amount of energy consumed to produce electricity distributed over the grid and used at a building. In the new PHIUS standard, the residential limit is 6,200 kWh per person per year, and it all has to do with global carbon emissions.

As much as 80 percent of the energy we consume comes from fossil fuels, Wright said, and according to the Intergovernmental Panel on Climate Change, there’s only so much fuel that can be burned if global temperatures are to be kept in check.

“So, we’ve got a problem there,” Wright said. “The idea of a cap on what a building’s source energy uses is consistent with a global emissions limit. For residential, anyway, you’ve got an individual share of that global carbon budget, and the reason for that is because the atmosphere is a commons. The C02 that’s emitted anywhere affects everyone. It’s intellectually appropriate to do a fair share calculation of that emissions budget.”

The math turns out to be 1 ton per person per year, after taking out carbon emissions due to transportation, embodied energy in the goods we buy, and other non-building related sources.

PHIUS also has set the source energy factor for grid electricity at 3.16, which means that every 1 kWh or electricity taken from the grid is the equivalent of 3.16 kWh of electricity when the inefficiencies of generation and transmission are included.

Measuring source energy on a per-person basis, rather than a per-square-foot basis as the PHI standard does, creates what Wright calls a “McMansion penalty”: The new rule won’t allow certification of a huge house built for only one or two people.

PHIUS sees the 6,200 kWh limit as a “temporary shock absorber” and would like the standard tightened to 4,200 kWh per person per year at some unspecified point in the future.

Finally, the revised standard allows credit for onsite renewable electricity generation as long as the power is used as it is produced. This puts power from photovoltaic arrays, for example, on the same footing as solar hot water in the old standard. “It’s another bullet to meet the source energy limit,” Wright said.

Reaction from the building community

Klingenberg announced three years ago that PHIUS would undertake an examination of the standard, so designers literally have had years to chew on the impact that climate-specific requirements would make. Predictably, the change finds people on both sides of the divide — those who claim a loosening of the standard is a bad idea as well as those who think it could be positive, as Richard Defendorf first wrote in an article for GBA back in 2012.

Dozens of people expressed similar ideas after Holladay’s detailed post appeared earlier this year.

Even as interest in passive house building continues to rise, as Klingenberg and Mike Knezovich of PHIUS describe in an article for Environmental Law in New York, it’s still of interest to only a tiny target audience when compared to the million or so housing starts in the U.S. annually.

Performance-based energy requirements widely embraced in Europe have yet to take root in the U.S. For now, whether builders chose the German Passivhaus standard or the PHIUS standard may seem beside the point in a country where an Energy Star home is still a step up for lots of buyers.

Still, Wright is “cautiously optimistic” that the revised PHIUS standard will move building in the right direction and be accepted by builders and designers.

“We expect that it’s more practical or more realistic over a wide range of climates,” he said. “The economics have been looked at in as a nuanced way as we could.”


  1. vensonata | | #1

    Made it!
    So if I understand these new figures rightly, we are now Passive house standard. Interesting how close the figures provided (I had to use Calgary as the closest climate model) came to the reality of all our efforts to improve energy and heating. We are off grid as well. So in total heating per year we are bang on, peak heating we are just slightly under. Total kwh per year per person we are 50% below passive house standards! Wow, that was fun.

  2. Expert Member
    Dana Dorsett | | #2

    The prescribed limits on total source energy are bogus.
    Applying a single 3.16 multiplier for source efficiency based on carbon output for all locations and all time is simply not reflecting the true carbon output of the energy used.

    The carbon content & thermal efficiency of kwh of electricity drawn from the grid in Washington state where over 90% of the grid generation is from zero-carbon sources is very different from a kwh drawn from the grid in West Virginia where over 90% of the power generation is from sub-critical coal fired plants. And yet, the PassiveHouse in Washington state uses the same source-energy multilplier as a Passivehouse in West Virginia (?), despite the WV house having 800-900% of the source energy carbon emissions of the WA house.

    OK. that make sense (on Mars.)

    Earth to PHIUS: What does the 3.16 efficiency factor really mean? It's a number of some relevance when talking about thermal coal, or single cycle natural gas power generation (though it's the wrong and much too high of a number for combined cycle gas, which is the vast majority of gas kwh going onto US grids), but is completely out of context for wind or hydro, which are dominant grid sources in several parts of the US.

    Without adjustments to reflect the actual local grid power mix on the date of certification, it's a totally ridiculous number, with no bearing at all on the actual carbon emissions. It's nice that they give credit for site-generated power that's used as it is generated, but that's just the frost on the tip of the iceberg, and may in fact be counter productive. A PV array that is feeding the grid when low-efficiency oil & gas fired peaker generation is offsetting more carbon than it would being applied locally during times of lower grid load using higher efficiency fossil burners, yet the credit for that offset per the PHIUS standard is nil.

    If (as asserted by PHIUS) carbon emissions is the driving rationale for the source energy limits, there simply HAS to be a rational accounting of the actual carbon, not some multiplier that might have applied to the German grid in 1995. It's not a single number for all places & all time (and never was), and sticking with any single number is fraudulent (especially when that number is 3.16), since that overstates actual carbon emissions of MOST grids in the US, and is also more than the US average.

    There is ample public data to estimate the average annual carbon impact per kwh at any given US location. It needs to be updated at least every 5 years to stay relevant, but it's not a hard problem. It's tougher to do the real-time math on fossil-peaker-power carbon offsetting from site-PV exports to the grid, but crediting site generated power exports to the grid at the same average as the imported power carbon would at least be a good start, and far more accurate than crediting it at zero.

    Of course this basically lets the folks in WA off scot free- they would have to work at it to use as much power to emit as much carbon as the WV house running at the 6,200 kWh per person. (Even in a code-min house heated with electric baseboards wouldn't get there, but it's still economically rational to heat with heat pumps in WA which would put them at even lower carbon emissions.) But if the true carbon content of power use are never addressed in the standard, PHIUS's new clothes are nowhere to be seen. The carbon emissions implied by 3.16 are but a figment of the imagination in many locations, but possibly real in a dwindling number of locations.

    If the standard's carbon goals are real, they need to GET real, and quit using silly, nearly-arbitrary source energy numbers!

  3. GSWright | | #3

    Source energy
    To Dana Dorsett’s point, it did bother us to be using a too-low source energy factor from Europe, which is why we changed it from the 2.7 and later 2.6 that was built into PHPP. In the pilot program phase we based it on NREL technical report TP 550 38617 “Source Energy and Emission Factors for Energy Use in Buildings", Table B-2, which shows a national average source energy factor of 3.138. As this is a 2007 report, we surmised that the grid had likely gotten a bit cleaner from all those wind deployments and rounded down to 3.1. But commenters on our draft report noted that the IECC 2012 and 2015 use 3.16 and suggested we align with that code, which we decided to do. (The default in NREL’s BEopt 2.3 is 3.15.)

    The NREL report breaks the numbers down for the major interconnected regions: 3.272 for the East, 2.374 for the West, 3.545 for ERCOT (Texas), 3.304 for Alaska, and 3.549 for Hawaii. Indeed there is finer grained data, but only at the scale of the major regions does the complication of accounting for local imports and exports go away.

    The Tech Committee did discuss this and decided yes, we are indeed going to ask Western builders in hydro country to subsidize their fellow Americans in coal country. This was motivated by a sense of all-in-this-together on the total impact front. (That’s the right place for one-number-for-all thinking.)

    At this time we don’t see any percentage in developing and practicing a more elaborate protocol in this area. (Such elaboration adds overhead cost to the practice of the standard and other commenters cautioned us about that general point.) We’ll revisit this again in 2018 perhaps.

    As for exports to the grid, these are indeed credited with an additional badge, IF they rise to the level of source-net-zero. That is, they are treated as a separate category. Putting a limit on source energy, net of onsite-captured-and-used renewable energy only, puts conservation first and that is intentional. Putting limits on space conditioning loads puts passive measures first among conservation measures and that is also intentional. Three hurdles to net zero. It’s so great we can hardly stand it. Thank you everyone in advance for your support.

  4. vensonata | | #4

    Thoughts on the grid source energy multiplier
    Thanks Dana for making me think about that multiplier for grid source. Now doesn't it make more sense to give credit to a low energy house which is on a dirty grid than to a house, as in Washington state, that is on a clean grid? After all, there is much more benefit to the environment from a large number of efficient houses killing off a coal fired plant than if they simply reduced the energy coming from a hydro source. So strangely enough the multiplier factor is upside down. The dirtier the source the more praise a passive house deserves for not using it. If we credit Pv power at say 1 for a multiplier, a coal connected house should use 0.3 as a multiplier.

  5. Expert Member
    Dana Dorsett | | #5

    And the rationale for Net Zero being treated differently is...


    There's nothing magic about Net Zero exports to the grid vs. exports greater or lesser than Net Zero.

    Given the rapid build-out of midwestern wind (and PV on both sides of the meter in many states) & rapid displacement of sub-critcial coal by combined cycle gas since 2007, it seems fraudulent in 2015 to be picking a one-size-fits-all national number based on the national averages of nearly a decade earlier.

    "The Tech Committee did discuss this and decided yes, we are indeed going to ask Western builders in hydro country to subsidize their fellow Americans in coal country. This was motivated by a sense of all-in-this-together on the total impact front."

    Huh? Yes we ARE all in this together, but by what reasoning does applying the multiplier in WA (where it's effect on net carbon are pretty much zero) a cross subsidy to folks in coal country? The real net effect is that the one number gives the coal-country folks a pass on higher-than-estimated carbon emissions, while forcing folks in greener grid regions to spend significant capital for nought. For a solution for a problem this large to be effective it has to be cost-effective. Making people in WA expend capital for negligible gain & negligible impact isn't cost effective- it's just wasted capital that could have been more effective elsewhere.

    If it were to be a REAL cross subsidy with REAL "total impact", the folks in WA would be allowed a more (appropriate) relaxed standard, and have them GIVE some of the avoided cost money to the folks in coal country to meet more stringent goals. (Not that there's PHIUS mechanism available for making that happen.) Nothing even remotely close to that occurs with the one-number policy. The assertion that the policy it's somehow a subsidy to the folks in coal country and that it somehow has more impact is completely misguided. It's just plain wrong- there is no such subsidy, and it has no such impact.

    The one number approach merely increases the average $/ton of carbon emissions avoidance costs within the PHIUS program, which is not a great policy position to be taking. It's pretty broken- WAY too much fuzzy accounting / thinking built into it. As the grid grows ever greener (and it will) the PHIUS approach will year-by-year make ever less sense, as the carbon avoidance rationale evaporates. And when site PV + battery reaches grid price parity (and it will, sooner than most of us think), the cost of net zero with or without grid exports leveraged with heat pumps likely to be a cheaper more cost-effective solution to carbon emission reduction than PHIUS.

    Net Zero Energy for new houses in CA will be required by code as of 2020 under current versions of Title 24. If PHIUS type levels of energy conservation are the most cost effective way to get there I'm sure we'll see that. But at the rate PV (& battery) costs are falling, I'll be surprised if that's how it actually plays out.

  6. Expert Member
    Dana Dorsett | | #6

    A more rational source-fuel energy multiplier factor proposal.
    It would be more rational and a clearer "fair share" to use the real (and more recent) multipliers to calculate the emissions, broken down by state or grid-region, but insist (and allow) the high-carb grid dwellers offset more carbon with site-sourced power (even short of Net Zero) if the calculated source-fuel emissions are somehow still higher than the standard after clearing the other conservation hurdles.

    That would in fact not be a severe burden to impose on folks in coal country, not nearly as severe as the burden place on those in green grid country currently (a burden than has negligible impact on real carbon emissions), since the lifecycle cost of grid tied PV is already below retail-rate parity in much of the US, and will likely be cheaper than coal-country power by 2018, if that's when the next revision is being released.

    If the bogus carbon accounting issue isn't fixed by then the prognosis for PHIUS having any traction going forward looks pretty poor. Ven has it right- it's completely upside-down in the current version using the one-number approach, which does more harm than good. I'm not really anti-PHIUS, but I am anti-BS. To the extent that the standard retains fuzzy-accounting, the less relevant it is, despite all the other good aspects.

  7. GSWright | | #7

    Source energy
    Thanks for the reply, Dana.

    I’m much less confident than you about predicting the future. No need to borrow too much trouble yet on what might happen in future years, but sure, let us think about the next round of standard adjustment.

    Regarding source energy, you might be rhetorically exaggerating the differences - Washington wouldn’t be “scot free” if we adjusted their factor down to 2.4 and they get more than “naught” for their extra investment if we didn’t - the sun still shines in Seattle from time to time, air-to-air heat pumps work well, etc.

    Again, by it’s structure, our standard establishes priority 1 on taking the load off the heating and cooling system with passive measures, priority 2 on taking the load off the grid with efficiency measures and locally used renewables, and priority 3 on exporting to the grid what can’t be used right away on site. Savings are more important than generation, and generation to cover local, immediate use is more important than generation for export. Why? In a word, resilience, local resilience. (If something goes wrong with your superwindow, you can probably restore some level of function with vice grips, duct tape, and WD-40. Don’t try that with your burned-out digital charge controller.)
    Some people like building with natural materials, some people like net zero, some people like off-grid, we like this micro load super envelope passive house thing.

    As to subsidy, your point is taken, and the response is, there is a subsidy, it takes place directly in the atmosphere. Suppose Adam builds a (all-electric) dentist’s office in Virginia and Dan builds one in Seattle. They both design to the source limit that let’s say is 3.16 in some units, like 1 equals 10 MWh. Suppose the occupant behavior falls in line, so, under the uniform factor their site energies are both 1. But Dan’s office is only actually emitting 2.4 worth into the atmosphere because of his cleaner grid, while Adam’s is putting out 3.5. Dan’s emits less so Adam’s can emit more, that’s what I’m calling a subsidy.

    You and I agree, I think, on which way it breaks. I’d say yes, Adam gets a break (but not a complete pass.)

    If instead, we have a limit of 3.16 and vary the source factor “accurately” by grid region, then when Dan designs to the limit, his site energy will be 1.3, while Adam has to design for a site energy of 0.9. Because Adam didn’t get that subsidy in the atmosphere, now he’s got to spend more money on the ground to make his building better, while Dan gets to spend less. (Keep in mind here that current US building stock is using something like 5.5 site and 17.4 source on this scale, so they are quite challenged in either case.)

    My rejoinder is, what you are suggesting is that for the sake of accuracy, we should complicate the protocol with regional source energy factors, thereby creating a fairness problem, which we would solve by the further complication of transfer payments. I say this is unnecessary embellishment, no percentage in it.

    Our framework nips the “rebound effect” in the bud, and transfers some of the benefit of clean grids to builders in dirty grid regions, not in any overt cash flow sense (agreed), but compared to what would have been the case under the other calculation with local source energy factors. With simple uniform source energy factor together with the uniform cap, clean-grid regions "share their bounty" with dirty-grid regions directly in the atmosphere. No complex carbon accounting and pricing system needed.

    I might go so far as to say that perhaps everyone should be using the global average source energy factor for electricity. That way, if some massive deployment of renewables or co-gen or CCS should happen in the US or some sub-region, lowering it’s source energy factor for electricity even to like 0.2, US or local builders do not get to take full advantage of that to raise their site energy, but only to the extent that the needle has moved on the world average source energy factor. That would be a way of heavily blunting the rebound effect if you’re worried about the source energy limit effectively vanishing because the source factor drops. And it would be good justice from the global south’s point of view, I surmise. Or we could just lower the limit. In any case, we’ve got some time to consider options. :D

    A related point, in the Building America report and in the OP here, is that a uniform source energy limit is consistent with the idea that emissions are NOT subject to economic considerations, they are subject to CAP, and whatever must be done, must be done to avoid those severe and irreversible impacts the IPCC has identified. The space conditioning limits are based on cost-competitive envelope investment as the leveling principle, but the source energy limit is based on a different principle, it’s in a different category. I’m not personally opposed to building some cap-and-trade system on top of that, yet. But establishing a cap is the first step and that’s in place.

    We would posit that a net zero passive house is better than a net zero house that is not a passive house. It's structurally impossible to meet PHIUS+ 2015 with PV (just as it is in PHI’s standard), and for the same reason: by definition PV cannot reduce the heating and cooling loads (peak or annual). Only passive measures can do that, and PV is not on that list. That’s on purpose, a feature. It solves this “problem” of what-if-PV-becomes-free. Then great, source energy is solved, and we have more money to spend on passive measures to make a durable, comfortable, and resilient building, which the space conditioning criteria still require us to do.

    Finally, our procedure for setting the space conditioning performance targets IS based on economic analysis, but mostly did NOT key on the annualized cost crossover point with PV, but rather on the diminishing returns behavior of the conservation measures. That is a fundamental and robust procedure that will not be unduly affected by changes in PV prices, incentives, or net metering rates. It’s best to minimize influence of those variables on the criteria that are there to drive the investment in the envelope, because those variables are unstable and the building is long-lived. At the least, a moving average should be used rather than a snapshot. And as alluded to in the OP, the analysis was predicated on air-tightness for building durability, superwindows for comfort, and ducts inside. This should keep things from going off the rails in any serious way.

  8. Dana1 | | #8

    A few more comments.
    The granularity of using the entire grid regions is unrealistically large. While it's theoretically possible for a wiling buyer on one end of the grid region to purchase power from a generator on the opposite end, in practical terms there isn't sufficient transmission resources within the grid regions for that to be very meaningful. Using the granularity of the state or regional grid Independent System Operators (ISOs) would be more realistic. The amount of power exported from CA or (the heavy coal parts of UT/WY) to WA is nil, the converse is not necessarily so, but power conserved in WA doesn't automatically get exported to CA or UT. But they are all within the western transmission grid region. The granularity proposed by the EPA makes far more sense, and is in no way a burden to track (since the EPA is tracking and updating the carbon emissions multipliers within the mapped regions):

    Note: This is still coarser granularity than the European grid regions.

    At 5% interest and the current US average of $3.50/watt (all-in, installed price, without subsidy) the 25 year levelized cost of PV is about 21 cents/kwh. That is the current residential retail price of electricity in New England. Right now in 2015 the world price for small scale rooftop solar is about $2/watt, which at 5% financing with a 15% capacity factor (average for areas outside of the US sun belt) comes in at a 25 year LCOE about 13 cents, which is just over the US average residential price of 12.29 cents. ( ) In more evolved solar markets such as Germany or Australia they pay pretty much the world price, and it's not because labor in those countries is cheaper or more productive than the US. The price is continuing to drop year on year.

    The 40 year learning curve on PV is about 20% cost reduction at every doubling of installation. (Since 2007 that's been closer to 30%). Since 2005 the doubling rate has been increasing, accelerating as the LCOE of PV drops below local parity prices. The current doubling rate is less than 2 years worldwide, and slightly shorter in the US. The cost in the US in recent years has been beating the 20% learning rate, but clearly there is plenty of fat left on the costs, since the same systems can be installed in other first-world countries at a 40%+ discount from what it costs here. It's unlikely that PV will cost more than $2/watt in the US in 2020, and $1.50/watt is not out of the question. Buck-a-watt (the DOE Sun Shot target) by 2025 seems more likely than not. (Buck a watt PV would have an LCOE of 7.5 cents/kwh at 5% financing and a 15% capacity factor.)

    There are no technical barriers to keeping the learning curve perking along at 20% or more, in fact known innovations not yet in full production that will accelerate the learning curve abound. (Thinner-lighter multi-cell topologies that will require less or NO racking, pre-wired racking that trades $50/hr rooftop labor for lesser hours of $15-25 factory labor, etc.) The worldwide international banking sector is clued into these numbers. In the past 18-24 months there have been multiple analyses from the likes of UBS, Kepler Cheveux, City Group, Morgan Stanley, Barclays, Bloomberg, and even the National Bank of Abu Dhabi, all publishing (very conservative) estimates of where the costs are going, and how fast they'll get there, and what that means for the fossil fuel industry. Most of those projections have already been undercut by real-world pricing.

    This past week Tesla Energy launched it's initial offerings of grid-tied residential scale batteries at a price point about 2/3 lower than most analysts had been anticipating (and more than 2/3 lower than the nearest competition.) Unlocking the financial value of that type of product will require changes in utility regulations in most areas, but those regulatory changes are already under way in NY and CA, and a handful of other states.

    There is reason for optimism regarding PV.

    I'm happy to retain the other conservation performance points of PHIUS- resilience is good. But we'll probably have to agree to disagree about the source energy vs. site energy carbon accounting part though.

  9. Expert Member
    Dana Dorsett | | #9

    And there is more...
    As more information is coming out on how the Tesla batteries are going to pay off in different markets, Solar City's Lyndon Rive made the statement:


    But “if HECO is preventing someone from going solar, there are other options,” Rive said. One option is taking customers off-grid with battery-solar systems that can provide all their electricity needs. As part of SolarCity’s Friday announcement, “we’re expecting to have a zero-down lease product in Hawaii some time next year that will be sub-HECO prices,” he said.


    This is a direct broadside in the vertically integrated utility business model. It's cost effective to defect from the grid in Hawaii right now, based on the equipment cost & financing fundamentals, and if Rive's leased grid-defectable system offer comes to pass, that can be achieved with $0 up-front capex by the homeowner, and with immediate cash-flow savings.

    If the source fuel multiplier can't be more nuanced and up to date, or more properly credit non-net-zero site sourced power), it's a albatross around the neck. It does nothing to achieve the intended carbon goals in greener-grid locations, and seeming denies just how low-carb many locations are rapidly becoming. In Hawaii's case this is a rapid trajectory from a very-high carbon grid eight years ago back in 2007 based on the NREL estimates used by PHIUS, to what will become a very low carbon grid by the end of the next eight years.

    The economics of distributed site source power are just TOO compelling in Hawaii's case (even more so in high-carb high-cost Australia), but PV costs are crossing the retail electricity boundary very rapidly in continental US locations. If the value of the battery can be unlocked by regulators, allowing it to be used for ancillary grid services (and compensated for those services on a level playing field), before the 2018 update of PHIUS we'll be looking at a whole new carbon-emissions landscape in many parts of the US, with many low-capacity high-carb peaking generators being retired as uneconomic. Not giving carbon-credit where that credit really IS due, and over-crediting it where there are already low-carb local grids is a fundamental error in the PHIUS source-energy accounting method.

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