Zero-carbon homes may look nice but they aren’t cheap

The Lighthouse by Potton
The Lighthouse by Potton

Carbon Commentary has visited two sites to look at the costs of building houses under the new rules (not yet mandatory) established by the Code for Sustainable Homes (CSH). By 2016, all new UK homes will have to have no net carbon emissions (‘Level 6’) and the implications for construction techniques are profound. Today, most homes are built to about Level 1, or possibly 2. To get to Level 6 will require huge changes in how houses are built, heated, and ventilated. And they will need expensive renewable energy technologies built into the home as well.

At Wimpey’s 145-home development in Milton Keynes, construction costs of houses at Level 3 are running at ‘100-110%’ more than standard. The self-build company Potton is offering a Level 6 design (one of the first in the UK) for an even more expensive £180 a square foot, up from about £75 for a standard Level 3 model. This takes the construction cost of a standard 1,000 sq ft (92 sq metre) home up from £75,000 to £180,000. Much of the increment comes from the need to install large amounts of renewable electricity generation. Some of the cost premium over today’s badly insulated homes will eventually erode as builders get better at building air-tight houses. But we shouldn’t be in any doubt about the huge implications of the CSH for builders, landowners, and buyers.


Every few weeks, Potton holds crowded seminars at its demonstration Code 6 house at the Building Research Establishment near Watford, just north of London. Potton is proud of its elegant design, shaped like a spinnaker in wind. The seminar leader talks with obvious emotion about the huge changes that are about to hit UK housebuilding.

Having lagged the rest of northern Europe for half a century, the UK will have the toughest building regulations in the world by 2016. This astonishing turnabout divides the construction industry into two. The more conservative elements in this most old-fashioned of industries are quietly and not-so-quietly saying that the rules will be impossible to meet and calling for a concerted campaign to persuade the government to relax the Code.

The rest of the industry is intrigued by the challenge, clearly hoping that the Code will finally erode the reliance on the UK’s standard brick and block construction. It will be difficult to achieve the insulation targets using old methods and, at long last, builders will be forced to erect pre-fabricated timber and steel frames houses with infinitely better standards and finish. There’s no question about which side of the fence Potton sits on. As a subsidiary of the Irish modular buildings group Kingspan, Potton is an unashamed modernist, proud of designing the first Level 6 single family home.

The Lighthouse is an extraordinary building. Elegant and graceful from the outside, it is covered in sweet chestnut cladding. Inside, it is a mixture of beauty and function. The bottom floor is small and undistinguished, with the two quite small bedrooms sharing the space with a drying area and a large wood-pellet burner.

Upstairs is hugely attractive. Light and airy rooms with high ceilings are uplifting to the spirit. This is a small house by most people’s standards but the simplicity of the design gives it grace and style. An effective heat recovery system collects the warm stale air at the top of the house and uses it to heat the incoming colder fresh air. The quality of the triple-glazed windows means that even on a dull January day one barely needs to turn the lights on.

Broadly speaking, a very well insulated and air-tight house will get the builder to Level 4 of the CSH, a level that will have to be reached within a few years. Level 6 is going to be obligatory by 2016, only eight years away. It’s important to note that the steepness of the demands the CSH places on builders increases as time goes on. Level 6 is the Everest of construction standards. It requires the builder to measure the total prospective energy use of the building, including the electricity for appliances and lighting as well as heating, and then completely offset this by renewable energy technologies installed on or near the house.

How does the Lighthouse reach net carbon neutrality and achieve Level 6? Not only does the house have to have the highest insulation and air tightness standards, but it has a huge expanse of solar photovoltaic panels on the roof

Here are the details of expected energy demand for the building:

Energy use Kilowatt hours (kWh) per year Comment
Lighting 500 Average UK house about 750. The Lighthouse number looks high as it only has energy efficient bulbs. 300 might be a better estimate
Ventilation and heat recovery equipment 200 Not used in conventional houses
Other fans and heat distribution equipment 400 All houses need hot water pumps and the like. This is a bit higher than the typical home
Catering 900 The house has no gas, so all cooking is via electricity. This number looks very low for a family that cooks often at home
Appliances 2,100 This looks high for a house of this size
TOTAL ELECTRICITY 4,100 About 10% more than a typical UK house of this size
Domestic hot water 3,000 Solar thermal panels on the roof reduce this from about 4,000 in the typical house
Space heating 1,700 Typical conventional house of this size has a demand of about 14,000 kWh
TOTAL GAS 4,700 Typical house has total gas demand of 19,000 kWh
ELECTRICITY PLUS GAS 8,800 Nearer 24,000 for typical house

As might be expected, the Lighthouse shows huge reductions in gas demand. The high-quality insulation reduces total heating need from 19,000 kWh to 1,700 kWh – a cut of 90%. This heating demand, and the hot water need of 3,000 kWh, are met by a wood-burning stove burning pelleted wood. In the summer, the hot water use is covered by a solar hot water system. Total heating demand will be met by not much more than half a tonne of dry wood a year – equivalent to about a full load of logs in a farmers’ pick-up van.

Because heating demand is provided by wood, there is no carbon consequence. And Potton estimate that the cost of this wood is about £30 a year (perhaps a little optimistically). This is the complete fuel bill for the house. At current prices, an average house of this size might have gas and electricity costs of about £1,000 a year.

On the other hand, total electricity demand is slightly higher than the UK average. This is partly because the ‘air conditioning’ system – heating incoming air with the heat from the stale outgoing air – needs fans and pumps to power it. And, second, all cooking is done with electricity. (Most UK houses use gas for at least some cooking.) The heating may be carbon neutral because of the wood fire, but grid electricity has to be used. A Level 6 house has to incorporate on-site renewables to cover the complete 4,100 kWh used for appliances, lighting, fans, and pumps.

The Lighthouse uses solar photovoltaic panels to ‘offset’ the electricity need. The economics are, as might be expected, quite shocking. The makers of the Lighthouse have calculated that 4,100 kWh requires the house to have 4.7 kW of solar panels. By 4.7 kW, I am referring to the figure for the total maximum generation from the panel array at noon on a June day. Typically, we can assume that 1 kW of panels generates about 1,000 kWh a year in the English Midlands. So Lighthouse is being a bit generous with its solar panels – it might have been possible to get away with 4.1 kW, or even 3.5 kW on the English south coast. An installation that costs 4.7 kW will cost at least £25,000 (partly because the ridiculously generous German feed-in tariffs are pushing up global demand for solar panels). So using solar panels to avoid an electricity bill of £400 a year (and making the house ‘carbon neutral’) is adding £25,000 to the cost of the house. Working out the full economics of solar electricity in the home is complex but the net return on the investment of £25k is no more than about 5%.

The people attending the Lighthouse seminar liked the idea of carbon neutrality and selling electrons back to the national power network. But the cost of this is enormous – if the panels last 25 years it is may be as much as £600 per tonne of carbon dioxide. When CO2 is trading on the exchanges at about £17 per tonne, it is really unclear why the government is telling us that home generation is the best solution to climate change. Roof-mounted solar PV is, in effect, a requirement if we want to get to Level 6, but is adding 15% to the cost of a house. If, instead, the government allowed housebuilders to invest in local commercial-scale wind farms instead, carbon neutrality might cost as little as a few hundred pounds.

To summarise, let’s look again briefly at the cost of building homes under the CSH, as calculated by Potton, makers of the Lighthouse:

Level 3 house of 1,000 sq ft £75,000
Level 4 house of 1,000 sq ft £130,000
Cost of solar panels (PV for electricity) £25,000
Cost of solar hot water £3,000
Cost of wood-burning boiler £5,000
Total incremental cost of renewables £33,000
Other costs to get from Level 4 to Level 6 £17,000
Level 6 house of 1,000 sq ft £180,000

Wimpey Homes
At Oxley Wood on the outskirts of Milton Keynes, Wimpey Homes is developing a large estate of genuinely modern homes. These aren’t conventional houses covered with a layer of eco-bling, they use proper north European construction techniques to provide good levels of insulation and real air-tightness.

Wimpey Homes in Milton Keynes
Wimpey Homes in Milton Keynes

Oxley Wood is being built with the future in mind. Managers at Wimpey are visibly worried about the cost of the houses. It’s clearly been an extraordinary surprise to see just how difficult and expensive house construction can be. These are people who knew exactly how to put up a brick and block house on a tight schedule and on budget. But today, time after time, they refer to the huge investment they are making at this site, while reassuring us that they believe that the lessons they are learning here are going to help them on future projects. ‘We could have just sat and watched,’ someone said, ‘but we decided it would be cheaper in the end if we grasped the problems posed by the demands of the Code.’

Sales are going reasonably well. 34 homes have been sold and the levels of interest are high. Some of the viewers go away hating the estate – it is totally different in appearance to a conventional new development. And Wimpey people have also found that real eco-nuts have left disappointed. ‘Call this an eco-house,’ said one disgruntled viewer, ‘it doesn’t even have composting toilets.’

Wimpey is keen to say that so far the purchasers are largely well-educated professionals. They like the modern feel and the effort Wimpey has put in to ensure that the layout has the feel of a close-knit community. The roads will look like Dutch or German ‘Homezones’ enabling pedestrians and cyclists to use the streets safely.

Some potential buyers have been worried about the resale values of the houses. Homes that look this different are difficult to value. Local mortgage companies have not been falling over themselves to offer to lend on the estate. Wimpey says it is only achieving prices in line with local conditions – about £220 per square foot – and there isn’t even a small premium to reflect the lower utility bills that the houses will have.

Here’s the crunch. Wimpey gets £220 per square foot for its Level 3 houses. The Level 6 Potton Lighthouse costs £180 per square foot to build (and the self-builder is putting in his work for free). Where is the margin for the builder, and the money to pay for the land? Unless costs change dramatically, the arrival of the Level 6 requirement is going to disrupt the balance between land prices, builder profits, and final prices. My sense is that the most vulnerable element is land values. The painful drive to Level 6 is going to oblige builders to pay less for their land. At a time when the mass market housebuilders are already quietly liquidating small portions of their land banks, the downward pressure on the price of development sites is going to continue.

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  1. Robert Palgrave’s avatar

    While it is right in theory for the Govt to insist on zero carbon homes, and the sooner the better, your carbon cost calculations illustrate how far this policy is from making economic sense given the poor state of Britain’s existing housing. The law of diminishing returns applies (as always). The money being spent going from Level 3 to Level 6 would almost certainly give a better return for society and mankind if used to retrofit thousands of existing under-insulated houses with loft lagging and new boilers.

    Your analysis suggests to me that one consequence of CSH might be that already built, high quality, well insulated and maintained houses will enjoy a price rise above the market in future years as the higher prices of new houses hit the market. Another incentive (like EPCs?) for home owners to start investing in their current properties to make them low energy?

    One aspect of future housing which doesn’t get a lot of coverage is adaptability. Here the Code for Sustainable Homes is silent – as far as I know. A large proportion of houses are eventually modified in some way, either internally, or are extended. Will the new zero carbon homes be built in a way that facilitates this? How will local authorities implement building control to ensure that an extended level 6 house is as airtight, has a larger PV panel to guarantee zero carbon etc etc?

    Similary with maintenance. What happens if your 4.7kWp PV panel fails at 12 years old and you can’t afford to repair it? Maybe you don’t feel you should if you choose to buy green electricity from the grid instead. Do you have that choice? Do you have to face the consequences of failing to be zero carbon only when you come to sell and your HIP finds you out?

    Strangely the Govt policy on new houses doesn’t really square with their approach to aviation. Here I’m quoting Hilary Benn from evidence he gave to the Environmental Audit Committee in December 2007, when challenged to explain why there seemed to be little enthusiasm to try to curb the growth in flying:

    “However, we still come down to a choice about where we emit.
    I think one of the issues that we have to address is are we saying that
    there are certain types of greenhouse gas and carbon emissions that we
    think, because of their character in some shape or form, are particularly
    bad as opposed to other types? I made the point that agriculture and
    aviation are currently seven per cent each roughly of UK emissions. Are we
    able to accommodate a system in which in the end people or the system will choose where emissions take place? As long as you meet the overall target, does it matter whether the emissions came from this sector or that sector as long as you achieve a reduction? That, it seems to me, is the issue that we are debating here.”

    Read literally, it appears that in 2016 we will be able to choose to emit as much GHG as we like by driving and flying, but if we want a new house we have to ‘choose’ the zero carbon option. Perhaps the idea of zero carbon homes is to free up emissions capacity so activities like flying can continue longer into the future?


  2. mark brinkley’s avatar


    A nice, well-informed piece. But one point I must take issue with:

    >>The more conservative elements in this most old-fashioned of industries are quietly and not-so-quietly saying that the rules will be impossible to meet and calling for a concerted campaign to persuade the government to relax the Code.

    I am one of the ringleaders of this campaign to “relax the Code” but I don’t regard myself as one of the industries conservatives. In fact I fully agree the sentiments expressed in your article: turning houses into renewable power stations is a nutty policy. Expensive, unrealistic and wasteful. Homeowners won’t understand the systems that have been landed on them, they won’t maintain them and the promise of a zero-carbon home will be quickly revealed as an empty one.

    There are other aspects of the CSH which are questionable too – only 36% of the points required to get to Level 6 have anything to do with energy saving. When the big issue is carbon saving, why is all this other stuff cluttering up the future building regulations. The Code is a repository of good intentions, but bears little reality to the economics of development, as you have pointed out. That is a fundamental flaw.

  3. Alex Cranswick’s avatar

    I came to this site, having seen the announcement today about Centrica buying Ceres to develop CHP units and searching for articles on Ceres. I am in favour of developing techniques to minimse carbon reductions (and other polution), but am skeptical about some of the enegy usage figures and savings acheivable. I wonder about the TOTAL lifcycle polution costs of some of the solutions being proposed – initial manufacturing costs, running costs, maintenance costs and disposal costs. For instance the provision of PV cells is put at a very high cost. I don’t know the figures, but having worked for most of my career in the semiconductor industry where the energy, chemical and water usage is high, I suspect it is not dissimilar for PV cells. How does this affect the overall calculation for carbon neutrality?

    The space heating cost is commenbaly low in both monetary and carbon terms, but in the longer term how sustainable is the use of wood? Can we grow enough locally on a sustainable basis to avoid transporting it long distances?

  4. martin’s avatar

    Will the goverment be assisting on giving a discount for buyers?

  5. David A Jones’s avatar

    A greater problem is the concept of an eco-town – a site of 5,000 to 20,000 houses (approximately 10 of these in the thinking of the UK government) that is self sustaining with a ‘zero carbon footprint’. As yet no-one has come forward with a plan in sufficient detail that can be challenged, but our guess is that the extra energy required to build the town will not be factored into the equation – only the benefits (sic) after the town is built. This situation is clearly similar to the one re biofuels in that energy input is ignored and the possible benefits of output grossly over stated.

    Near here there is an outline proposal for an eco-town for 15,000 houses (for 35,000+ people), shops, six schools, playing fields, a tram system, a new railway station, a bridge with houses over a main road, leisure facilities, etc. (The Weston-Otmoor proposal) They are trying to reduce car use, but at the same time are planning a large ‘park and ride’ area with regular busses/trams to Oxford and trains to London.

    Ideally we want to know the energy cost of producing this eco-town, the energy cost of producing the same as an ordinary town, and then determine the time it would take to recover the difference between the two for different efficiencies of the eco-town relative to the same normal town. My County Councillor believes ‘never’!!!

    Has anyone done the sums?

  6. Mike Briggs’s avatar

    Chris, the Government share your analysis that the additional costs will be balanced by a reduction in the cost of land, as set out in the original consultation document ‘Building a Greener Future: Towards Zero Carbon Development’ ( This includes the following section:

    “Land values are, in effect, arrived at as a residual (i.e. development value less costs, including remediation, constructions costs, Section 106 agreements and normal profit). This should not, therefore, distort investment decisions. Apart from providing certainty for the industry, this is another reason why there is an advantage in setting a clear timetable for future environmental regulation.”

    While challenging, I believe that the financial and technological aspects of zero-carbon – which are getting most of the attention – are actually at the easier end of the scale. Changing the culture of the industry to actually achieve the required quality of construction, and educating the other parties involved – for example the estate agents and the public – are likely to be the most demanding aspects of the change. The following article on my Web site explains why, and also proposes the use of an integrated change management approach to address the issues:

  7. Keith Simmonds’s avatar

    A very illuminating article.

    I attended one of the seminars on the Lighthouse by Potton, and the presenter was very cagey when the notion of costs came up. No ‘exact’ figures were given, just a series of ‘ball park’ figures. But as the questions rained down, it was clearly evident that there were a list of more ‘hidden’ costs, including additional fees for a Potton site manager (recommended), the ‘wind catcher’ was ‘extra’, most of the high tech energy devies were indeed ‘extra’. From my rough estimation, when you factor in a bit of land to errect the building, you were looking at £400,000………no wonder one 2 had been built last year according to the presenter, and one of those was the showhome!

  8. tim bastable’s avatar

    the notion that “carbon costs needs to be offset by( in house) electricity generation” is ludicrous – domestic solar panels are probably the worst renewable option on the market – it would be far cheaper for builders to invest in adequate low carbon energy generation off-site.

    Solar panels represent an massive over simplification of the renewables problem – in the UK at the moment they develop an EROEI of about 4:1 at best and represent massively poor value for money.

    The solar panel issue is symptomatic of lack of focus in the sustainability debate. The issue is “bangs for bucks” and investment in retrofitting the existing housing stock, smart metering and grids will deliver far higher carbon savings than the development of a level 6 building standard.

  9. Alessandro de maida’s avatar

    actually a solar thermal plant for hot water (unlike PV for electricity) is indeed a very good idea even in an UK context, a few m^2 are enough for a family of 3 or 4 and the bugdet needed is really modest


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