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Passive House or Hard Pass: Psychological and Market Barriers for Potential Passive House Clients

Updated: Oct 8, 2021

Whether you're an architect, contractor, or policymaker, working in the passive buildings community has its challenges. Every day, we walk the fine line between this niche technical industry and a largely unaware - sometimes, in denial- general public. Many industry professionals must learn the delicate dance of convincing and collaborating with clients who sometimes are on very tight budgets. This process requires a lot of time, patience, expertise, and even downsizing plans - but the resulting homes and buildings bring a wealth of comfort, safety, and joy for many decades.

As the passive building community grows, so does the general awareness around the need for energy-efficient, safe and sustainable dwellings. Many worldwide now know about passive house, deep-energy retrofitting (DER), and the need to address inefficiencies in the residential and commercial sectors. Given the stark awareness of environmental issues and the benefits of energy-efficient technologies, why is the uptake of passive builds and deep-energy retrofits so low?

Photo by Sven Mieke

As an industry professional, an enthusiast, or a homeowner, you may be familiar with some of the barriers to starting and completing a passive house build or deep energy retrofit. While this article will not focus on any technical or physical concerns ( i.e., issues with the existing building shell, location, or climatic conditions), it will look at market failures, human behaviors, and other barriers that impede these processes. In a follow-up article, we will discuss how reframing, knowledge mobilization, and complimentary smart policy can alleviate and break down these barriers.

Unfortunately, building a passive house or completing a deep-energy retrofit is expensive- well, kind of. The common misconception that passive homes are much more costly to build no longer holds true. There is plenty of official and anecdotal evidence showing the construction cost of a passive build can be equal to or within a 10% margin of a code-built home. Regardless of upfront costs, the operational costs of passive vs. code buildings are much smaller. While the assumption of a more costly project can prevent homeowners from considering a passive build, the financial barriers for these desired dwellings are much more complex. Finance is a barrier for some passive and DER projects as low carbon and high-quality build materials as well as energy-efficient technologies may have a higher upfront cost. Despite these costs being recouped through operational and maintenance fees in the following years, this must be recognized as a potential financial and psychological barrier for homeowners on a tight budget. Although various regions offer competitive pricing allowing these projects to be completed at a similar cost to a conventional build, many homeowners are hindered by the novelty of this technology and the lack of qualified professionals in their area.

But more often than not, the average homeowner simply can not afford the cost of home renovations. Lack of financial assistance is a significant barrier (PDF) for those wishing to transition to an energy-efficient dwelling. While small regional and provincial supports exist, these do not carry enough weight to break this barrier for most homeowners. "But have they considered all of the fantastic benefits of a passive or efficient home?" While many within the industry tout the return on investment for passive builds and deep-energy retrofits (** a complex topic we will explore in a later article), such risks trigger loss aversion behaviors in consumers. This powerful tendency leads consumers to avoid assumed risks even when the benefits of the action are equivalent or even more significant. In context, the misconception that passive homes are particularly expensive to build and can't guarantee a return on investment prevents homeowners from ever considering the project. This combination of poorly understood building costs, inaccessible financial aid, and intrinsic loss aversion create a potent combination of barriers for homeowners who wish to make their houses energy efficient.

Photo by Scott Graham

Let's assume a homeowner can afford to fund their dream passive house or deep-energy retrofit; where do they go from here? The internet. We live with the modern convenience of google *(or your preferred search engine), a realm of information at our fingertips. Unfortunately, this endless supply of facts, and of course fiction, can overwhelm consumers. For example, one can quickly link from a 90-second video explaining "What is a Passive House?" to an online technical debate over which window or heat pump model is "the best." As industry professionals, we often take our ability to sieve through technical information for granted; for the average consumer, this jargon is off-putting. Thus, leading us to the next barrier.

Bounded rational and asymmetric information heavily influence a consumers' willingness to engage in mitigative behaviors. Lengthy decision-making processes strain our limited cognitive ability and free time. We have so many other things to think about and do, and so little time! Imperfect (a.k.a asymmetric) information describes a knowledge imbalance between a consumer and a supplier. When this market failure skews in favor of the supplier, they hold more information, thus more power, in a transaction. As a result, consumers are forced to distinguish between an excellent sales pitch and established scientific facts. This information imbalance renders them vulnerable in their passive building or deep-energy retrofitting project, thus adding to their hesitancy to engage at all.

On that note, let's talk about trust. Many of us working in the environmental sector (or anyone living on this planet through the Covid-19 pandemic) are familiar with distrust influencing the publics' willingness to engage with policy, procedures, services, and goods. Our own negative experiences, or those of our neighbors and friends, influence our ability to trust. In the passive building and deep-retrofit world, this distrust is aimed at governing bodies, construction companies, and even energy-efficient technologies. Distrust breeds hesitancy which is exacerbated by the consumers' inability to decipher biased and unbiased information.

At this point, we have a homeowner who is reluctant to make a significant life investment due to financial strains or the fear of losing money. They must deal with many hidden costs, such as the inconvenience of construction and the time needed to conduct research. They are required to make numerous complicated decisions on technology and processes they do not fully understand. Finally, this process is delivered by companies, backed up by science, and regulated by governments they may not trust. What were once minor concerns have now compounded, creating major barriers for homeowners to engage with the passive building or deep-energy retrofitting processes.

These market failures and psychological behaviors hinder the uptake of passive builds and deep-energy retrofits - what can we do? While the identified barriers are intrinsic human behaviors, market failures, and significant concerns for many homeowners across Canada (and globally), they can be altered and alleviated. The passive and energy efficiency community, combined with policymakers and non-profits such as Passive Buildings Canada, are responsible for addressing these obstacles. Together, we can make the passive and deep-retrofitting processes accessible, not just for those who can afford it but to all members of our communities. We want all homeowners to experience the wide-reaching, social, health, and environmental benefits of a passive home. Read Part 2: Recognizing and Utilizing Drivers for Passive House Uptake

*** This article is inspired by internal research conducted by the Tipperary Energy Agency located in Cahir, Ireland. I was part of this research team. In 2019, the TEA's SuperHomes deep-energy retrofit pilot program concluded after four years. It ran in tandem with grant incentives from the Sustainable Energy Authority of Ireland, covering 35-50% of homeowners' final build costs. After a thorough analysis of the program applications and final retrofit projects, the Agency identified the key drivers and barriers for deep-energy retrofit uptake in the Irish residential sector. In addition, further analysis of applicants' demographics provided significant insight for market segmentation. Finally, it must be noted that the SuperHomes pilot project was successful and has continued to offer a 'one-stop-shop for home energy retrofits. While this report remains internal, the results aligned with existing findings from behavioral economics literature and provided considerable insight for this and subsequent articles.