The Impact of Higher Energy Efficiency Standards on Housing Affordability in Alberta

Author

Naima Canada, Consumer Council of Canada

Organization

Consumers Council of Canada (CCC)

Published

2010

Summary

This report presents the results of the costing analysis completed for upgrades of EnerGuide 80 levels of energy efficiency in Alberta homes. The two major cities, Calgary and Edmonton, were considered in the analysis. The elements of residential construction were identified and pricing data was obtained to better understand the cost impact of energy efficiency upgrades on a home. Housing price indexes, construction material price indexes, unionized trade wages, and land value were the measures identified as the costing elements of residential construction. When graphed, the price of a home in Calgary and Edmonton was strongly driven by land value. Material and labour costs showed an increasing trend but land value remained as the primary reason for the rising price of homes in Calgary and Edmonton.

Pricing was obtained for the 2006 Alberta Building Code (ABC) minimum requirements and the energy efficiency upgrades. The capital cost borne by the homebuyer for every upgraded envelope component and mechanical appliance was determined using costs reported by Canadian builders in 2009. In addition, material costs were also obtained from Alberta construction material retailers to corroborate the builder reported costs. For a standard two-storey detached house, the total incremental cost to upgrade from the 2006 ABC to EnerGuide 80 levels of energy efficiency is approximately $6,000.

A life cycle costing analysis was completed which compared a standard house constructed to EnerGuide 80 levels of energy efficiency to one built with the 2006 ABC minimum requirements. In Calgary, the EnerGuide 80 levels of energy efficiency resulted in a positive net present value of approximately $6,600 (energy savings minus initial capital cost) over the study period, while in Edmonton the same upgrades resulted in a positive net present value of approximately $11,000. In other words, investing $35 a month as part of a mortgage to purchase the package of energy efficiency upgrades results in a monthly energy savings of about $70 in Calgary and $100 in Edmonton.

Moving to EnerGuide 80 levels of energy efficiency for housing in Alberta makes homes more affordable for homebuyers by lowering their total monthly housing costs.

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Source: Consumer Policy Research Database

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