FENESTRATION

New Zealand Autumn 2021

The Economics
of Zero Energy Building
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.

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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.

fairviewwindows.co.nz
 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
ON THE COVER:
Project: Thwaites Aluminium
working in the building industry which I have come to love so much; I have never
been so passionate for the future.
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 Enjoy.
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. 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

fmi.co.nz 3
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
4 fmi.co.nz
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
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 cost-
effectively 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.
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.
6 fmi.co.nz
Benefits for New Zealanders
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.
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 short-
lived, 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
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.
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 energy-
efficient 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
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 University of Otago, The Nature of Fuel Poverty in New Zealand, 2012
4 StatsNZ, Around a Third of Homes Too Cold in Winter and Too Warm in Summer, 2020
5 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
8 fmi.co.nz
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.
Timeless windows
and doors make for
easy coastal living
Boathouse Bay | Snells Beach
Fairview fabricator: Elite Windows Solutions

For Jean, the decision to put her beloved “For those building coastally, it’s important to remember
Russell bach on the market and buy a that windows and doors are exposed to a high level of salt
Boathouse Bay beachfront spot was all about content, so hard-wearing joinery is key,” David notes.
simplicity, low maintenance, and easy coastal
“Homes up to five kilometres from a surf beach, or a
living as she looked to enter retirement.
few hundred metres from still marine waters, will see an
accumulation of salt residue over time,” he explains.
Taking advantage of her north-facing position on
Snells Beach, Jean opted for windows and doors
“Luckily, with a low level of maintenance, Jean’s choice
that utilised the property’s expansive views, natural
of robust joinery will remain resilient and timeless as the
daylight, and exceptional indoor-outdoor flow.
property matures.”
Local Fairview fabricator David Wilmot carefully
Jean agrees that an abundance of insulation, double glazing,
selected windows and doors that provided a
and hard-wearing joinery has helped create a stunning,
modern flush look to complement the clean,
energy-efficient home where she will enjoy many long
contemporary home.
summer evenings and cosy winter days.
“The main feature of the house is a 3.2m high living
Retirement has never looked so good!
room stacker with raked overlight, looking across
Snells Beach to Kawau Island. The raker’s highest
www.fairviewwindows.co.nz
point lines up with the off-center apex of the roof,
which is complemented by the exposed tongue and
groove ceiling,” explains David.

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
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.
10 fmi.co.nz
Sources: 2019-2020 Team Zero Inventory; UK Passivhaus Trust
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 energy-
efficient 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”.
fmi.co.nz 11
 Fairview fabricator:
Shearmac Aluminium

12 fmi.co.nz
 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 long-
term 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
We know
GLASS
53 years of glass experience, locally made for
applications across thousands of Kiwi homes.
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
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 code-
compliant 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 long-
term 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 Interview with Passive House Institute of New Zealand, October 2020
10A 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
14 fmi.co.nz
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.
 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.

Typically, average spacers will often lead to IGU’s failing prematurely

IG
U

due to climate and mechanical loads as well as material

Co R ED
X
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incompatibilities that cause the spacer sealants to leak.

er GE
dis spa
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WHY GO
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Made up of five different components, our rigid spacer system has been designed to withstand New
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UNBREAKABLE BARRIER
Unlike other spacer manufacturers, we use a stainless steel vapour barrier and combine it with a
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TWICE AS MUCH DESICCANT

Although the chances of moisture passing through the stainless steel barrier are little to zero, a
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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.

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.

XR EDGE spacer exploded

THE
BREAKDOWN
5

1. Desiccant:
Removes moisture from the enclosed air during
production and subsequently absorbs water vapor 1 2
that penetrates until the end of its absorption
capacity.

2. Primary Sealant (PIB):

Maintains gas tightness and minimizes moisture 4
ingress into the unit. PIB is applied to the sidewalls
of the spacer and creates a seal between the
spacer and the glass.

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

4. Stainless Steel Vapour Barrier:

XR EDGE spacer
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.
4 1 2
5

HOW DO WE 3

CO M PA R E
ALUMINIUM FOAM TPS
FEATURES
SPACER SPACER SPACER

RIGID SPACER
P O O P
WARM EDGE
O P P P
DESICCANT ON ALL FOUR SIDES
O P P P
DESICCANT MOISTURE
50% 35% 35% 100%
ABSORPTION CAPACITY
ZERO EXTERNAL
VAPOUR PERMEATION P O O P
STAINLESS STEEL EXTERNAL
VAPOUR BARRIER O O O P

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
Fairview fabricator: Fairview Whakatane
where the proportion of owner-occupied homes with heat
pumps rose from almost zero in 2000 to 46% in 201515.
Methodology
FMI ZE/R build
The thermal performance and construction costs of the DOE
The second, simpler approach, called “FMI ZE/R”, added and FMI ZE builds were compared to an identical house built
three modular items to a regular code-built house: to New Zealand’s building code. We repeated the exercise
• Windows with R value 0.72 instead of 0.2 (note: installed without photo-voltaic panels to assess the ZER versions of these
R values) builds.
• A heat pump for space conditioning The three-bedroom house drawings were uploaded
• A heat pump water heater. into Passive House Planning Package (PHPP). This software
Note that technology is rapidly evolving. As we wrote prepares an energy balance and calculates the annual
this report we heard of a Mitsubishi Energy heat pump energy demand of the building based on inputs relating to
water heater that also delivers space heating – though not the building’s construction characteristics as well as its site
cooling. orientation and local climate. Parameters regarding the

18 fmi.co.nz
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
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
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.
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 The ZER homes cost $12,000 to $34,000, or about 4 to 11% more to build at the outset:
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. Figure 5
Continued on page 23 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”. 16 Source: Build Magazine, Issue 117, published in 2010.

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.
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 PAE R FHOI RG
MHANC
P EE TRH F
E ROMR
A LMGA
L ANS SCTE
E CT
HHNO
ELR
OMG 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 Solace Low-E double glazing reduces the likelihood of
performance thermal technology. An almost invisible low condensation forming on the surface of your window.
emissivity coating is applied to our ultra-clear glass and placed
into an insulated glass unit (IGU). For ultimate condensation resistance, talk to us about our
thermally broken joinery solutions.
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 Solace Low-E glass ensures your home is less reliant on
compared to double glazing without Solace low-E. 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
BETTER FOR THE ENVIRONMENT
reflective piece of glass Solace Low-E reflects solar heat (sun With fewer energy resources required to keep your home
heat) outwards to prevent excessive amount of heat buildup. healthy and comfortable year round, Solace Low-E offers
overall greater energy efficiency. Opting for Solace Low-E
clear or
ultra clear glass
LOW-E coating on
ultra clear glass
Tint/Reflective or
Solace Dual
LOW-E coating on
ultra clear glass
ensures your home is a sustainable one.

MORE NATURAL LIGHT, BETTER WELLBEING

Installing Solace Low-E ensures optimum levels of light
Cooling
transmittance within the home and the workplace.
Heating
Solar heat Energy
Energy
Argon gas
Argon gas

Studies show that offices with larger window circumference

Outside Inside Outside Inside and light transmittance can improve general wellbeing and
Cooler climates Warmer climates 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.

DOUBLE GLAZED TRIPLE GLAZED QUAD GLAZED

SOLACE Solace Low-E

ultra clear glass
Solace Low-E
ultra clear glass
Solace Low-E
ultra clear glass
with Argon gas
Low-E coating
Experience energy efficiency with our Low-E coating Low-E coating

cle
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entry level Solace Low-E

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Argon gas

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• MOST AFFORDABLE

las
Argon gas

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g
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las
• REDUCES ENERGY BILLS, INCREASES SAVINGS

s
• EXPERIENCE THE SOLACE LOW-E BENEFITS AT AN
AFFORDABLE PRICE POINT.

DOUBLE GLAZED TRIPLE GLAZED QUAD GLAZED

SOLACE UltraClear Solace Low-E Solace Low-E Solace Low-E

ultra clear glass ultra clear glass ultra clear glass

with Argon gas

ult
Low-E coating

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Low-E coating

ult
Low-E coating

ult

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Feel and see the difference with premium

ar
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gla
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ultra-high clarity

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gla
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gla

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Argon gas

ar

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Argon gas
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gla
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gla
gla

• PREMIUM ULTRA CLEAR GLASS

ss
ss
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• HIGHEST LIGHT TRANSMITTANCE

• MAXIMUM CLARITY

DOUBLE GLAZED TRIPLE GLAZED QUAD GLAZED

SOLACE Dual Solace Low-E

ultra clear glass
Solace Low-E
ultra clear glass
Solace Low-E
ultra clear glass
with Argon gas or Krypton gas
Low-E coating

ult
Low-E coating
Maximize heat in your home with our
ra
ult

Low-E coating

cle
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ult
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highest thermal performance

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Argon gas or
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• ULTIMATE INSULATION
gla

Argon gas or
gla

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gla

Krypton gas
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gla

• ULTIMATE SOLACE LOW-E

ss

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• ULTIMATE THERMAL COMFORT

• ULTIMATE ENERGY EFFICIENCY

TRIPLE GLAZED QUAD GLAZED

SOLACE UltraThin
Solace Low-E
with Argon gas or Krypton gas Solace Low-E ultra clear glass
ultra clear glass

A revolutionary thin glass for modern

ult

Low-E coating
triple and quad glazing solutions
ra
ult

ult

Low-E coating
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cle
ult
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• SUPERIOR THERMAL OUTPUT

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• SUPER SLIM GLASS
las
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Krypton gas
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• 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 HEAT GAIN VLT

(R Value) (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: 0.18
INCREASE: 0%

FMI DG SOLACE
R VALUE: 0.58
INCREASE: 222%

FMI TG SOLACE
R VALUE: 0.88
INCREASE: 389%

FMI QG SOLACE
R VALUE: 1.03
INCREASE: 472%

To find out more about Zero Energy Façades email:

archteam@fmi.co.nz or visit www.fmi.co.nz
 FMI’s thermally
FMI’s thermally
brokenbroken
façadefaçade
pursues
pursues
high energy
high energy
performance
performance
and minimal
and minimal
environmental
environmental
impact.
impact.

TRIPLE GLAZED
TRIPLE
PROPERIES
TRIPLE GLAZEDPROPERTIES
GLAZED OF
PROPERIES
FMI ZEROOF
ENERGY
FMI ZERO
FAÇADES.
ENERGY FAÇADES.

SPLIT TRANSOMSPLIT TRANSOM

TRANSOM

MULLION MULLION

MULLION

TRANSOM TRANSOM

SPLIT TRANSOM

Turning inspiration
Turning inspiration
into reality
into reality
An elevationAn
ofelevation
100 Carbine
of 100
Road
Carbine
façade.
Road façade.

rbine Road, Mt
100Wellington
Carbine Road, Mt Wellington
3800

3800

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 cost-
optimised 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 self-
consumption 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 north-
facing 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
Long recognized by installers in the market for supplying the best glass
products available in New Zealand, Vetro Raccordi balustrading and

SOPHISTICATION
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
safetyrecognized by standards.
and building installers in Our
the market
premium forrange
supplying the best
of fixing glass
options
products available in
and architectural Newwill
styles Zealand,
provide Vetro Raccordi
a solution balustrading
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.
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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 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
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.
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
Obstacles to resolve
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
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.
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.
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 Solar + batteries Roof insulation
“[I wish] … more local window Becoming more affordable but Available up to R7.0
manufacturers built more high still offer a poor ROI in NZ (with
performance triple glazed, potential for ROI to worsen if
thermally broken, windows.” – electricity prices reduce).
Architect.
(importing windows for passive houses)

Slab insulation Wall insulation

“Insulated slabs are very Up to R2.8 possible
cost effective and easy with 90mm frames.
to install now” – Builders and
Group builder. architects we spoke
to use 140mm frames
for passive.

Ventilation & heating

“You can get cheap smart Airtightness
ventilation systems for $1-2k, and 2 Project management Achieving 0.6 air changes per
hour for passive requires care
ducted systems cost the same or “There’s a limited number of
less than 3 heat pumps and a fire” builders who can do [passive] across several trades and
- Group builder and are willing to take the risk repeat testing.
“I don’t think we’re too far from on their first project” –
MHRV systems for $2.5k”- Group builder.
Urban planner
(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 • Kāinga Ora is one of the largest market participants: they represent about 7% of the residential
Ora’s programme construction industry in New Zealand and are planning to replace ~20,000 homes with med-high
to build energy density homes and expecting to rebuild ~30,000 more as single dwellings
efficient housing • 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 supply-
side investments and accelerate economies of scale

Adopt and extend • MBIE’s proposed thermal and total energy performance requirements take the minimum
MBIE’s proposed performance required by newly built homes to a level close to ‘Passive house’
building code • Further code improvements should be considered to ensure three significant regulatory barriers to
changes 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 leak-
proof 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 • Interviews indicate that while awareness of low energy homes is growing, many consumers do
campaigns to not understand how low New Zealand’s building performance requirements are, nor the benefits
educate Kiwis on of investing in higher performing homes. For example, BRANZ consistently finds that homeowners
the potential for ZE “believe their homes are in much better condition than an independent assessor finds”19 and also,
homes 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
Home workforce – but greater reach (eg for designers and sub-contractors of builders) and scale (eg as part of
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 Rationale
Use this report • The large number of variables and options that go into building a ZE home can make getting started
as a starting daunting
point for your ZE • Our analysis indicates that the first components to consider should be footprint design (eg orientation),
projects 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
Invest in • Not only are there a lot of new components to learn before starting one’s first ZE home project, there are
completing an also a lot of nuanced changes to the building process that are important to understand before starting a first
energy efficient project in ‘green’ building
building course – 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
Partner with • Builders, architects and developers who are accustomed to conventional building projects may find their
the right usual preferred sub-contractors have limited experience with energy efficient building practices (for example,
subcontractors 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

21 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

ai161603960113_FV-Halfpage_Ad_V1.pdf 1 18/03/2021 4:53:21 PM

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 Fibreglass batts of product Spray Foam insulation to improve Fibreglass batts of product rating high enough to deliver
material rating high enough to deliver air tightness required installed performance
required installed performance
Ceiling insulation As for wall insulation As for wall insulation As for wall insulation
material
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 Triple glazed, low-e coating, Double glazed, low-e coating, thermally broken
broken aluminium frames thermally broken aluminium frames aluminium frames
Air tightness Building paper Exterior air-tightness layer [e.g., Exterior air-tightness layer [e.g., membrane or sheathing
sheathing board/plywood/OSB board/plywood/OSB]
with wet applied weatherization]
Ventilation None None Balanced mechanical ventilation system with heat
recovery minimum efficiency 85%
Space conditioning Direct electricity heaters Heat pump Heat pump
appliance
Hot water heating Direct electricity hot water Heat pump water heater Heat pump water heater
appliance cylinder of 180L
Photo-voltaic panels None 4.6kW system, 32 m2 of panels. 4.6kW system, 32 m2 of panels. Assumptions: 14.35% or
Assumptions: 14.35% or 7m2 7m2 per kW, 1438 annual kWh per kW system
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 Coefficient of Performance ~1 Coefficient of Performance 2.7 Coefficient of Performance 2.7
appliance

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 $1,195 $1195 $1,380
material
Ceiling insulation $1,795 $1,795 $2,210
material
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 $500 $3,620 $3,620
appliance
Hot water heating $2,130 $6,400 $6,400
appliance
ZER IMPACTED TOTAL $58,020 $70,140 $91,940
ZER PREMIUM OVER n/a $12,120 $33,925
CODE
PV Panels n/a $10,830 $10,890
ZE PREMIUM OVER n/a $22,950 $44,810
CODE

fmi.co.nz 47
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